Republican gubernatorial candidate Phil Moff ett proposed major changes Tuesday to the way coal severance taxes are collected and spent in Kentucky.
The Louisville businessman said he wants to eliminate the state tax on mined coal and allow coalfield counties to impose their own levies.
That, Moff ett said, would allow coal counties to keep all the coal severance tax revenue, which, in recent years has ranged from $220 million to $290 million a year. Half of that money currently goes into state government coff ers.
Moffett said under his proposal county leaders could spend all the money without any state restrictions. That would free up the funds to be used in various ways, including paying for road construction, increasing teacher salaries and bolstering police forces.
“I think the coal counties and the coal operators need to form an association and agree on an assessment,” Moff ett told The Associated Press. “I think that assessment should be the same as the current coal severance tax.”
Moff ett, the first of a potentially crowded field of Republicans in the 2011 governor’s race, has built his campaign around a proposal to eliminate the state income tax, instead relying entirely on a sales tax to fund government operations.
He has allied himself with Republican U.S. Senate candidate Rand Paul, and has even hired Paul’s former campaign manager, David Adams, to lead his effort.
The political newcomer will likely face Senate President David Williams in the GOP primary. Williams is expected to announce his candidacy for governor soon.
On the Democratic side, incumbent Gov. Steve Beshear is seeking re-election, and Harlan County demolition contractor Otis Hensley has announced that he also will run.
Independent candidate Gatewood Galbraith also has said he will run.
Candidates can’t officially file to run until Nov. 3, but they can begin raising money by submitting letters of intent to the Kentucky Registry of Election Finance.
Moff ett said coal counties have come to depend on the coal severance tax, and that, after talking to local leaders in eastern Kentucky, he modified his earlier call for elimination of the levy. It would cease to exist in it current form under his proposal, and would be recreated by a coalition of local governments working in cooperation with coal companies
“The state will continue to collect that money and turn it over to the coalition,” Moff ett said. “I think this is an opportunity to get back to the original intent of the coal severance tax, and allow the people of eastern Kentucky to determine how to use that money.”
In Knott County, local leaders have used coal severance funding to extend municipal water lines to rural residents, many of whom had been using well water that had been spoiled by coal mining. Judge-Executive Randy Thompson said about 65 percent of Knott County residents now have clean municipal water.
Thompson said local leaders would like to have more control over how the coal severance revenue is spent, though he said he couldn’t comment specifi- cally on Moff ett’s proposal.
“I believe the revenue should come back to the county where the coal is being mined,” Thompson said.