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Schools may lose $474,100 in taxes on unmined coal

Now might not be the time to joke with members of the Letcher County Board of Education and Superintendent Tony Sergent about getting a lump of coal in their Christmas stockings.

As Christmas nears, it would be hard to fault Sergent and the board for believing that Santa Claus might reward them this year with money for a new school bus or two given all the work they have done to tighten the school district’s financial belt during tough times. Instead, Sergent and the other school officials were told this week that a lump of coal is heading their way in the form of an unexpected $474,100 cut to the district’s 2016-17 operating budget.

At the Letcher County Board of Education’s December meeting Monday night, Sergent and Board Chairman Will Smith said they were told by state education officials that money the board had expected to receive from taxes on unmined minerals will be down this year by nearly half a million dollars.

“That’s a huge surprise shock,” Sergent told the board. “That’s a huge disappointment.”

Sergent said he was told by state officials the expected shortfall will occur as coal companies and mineral holding companies successfully appeal their assessments on coal that is still in the ground during a period of little demand for the coal that does remain.

Sergent said that based on the numbers being reported by state school officials in Frankfort, he believes Letcher County’s assessment on unmined minerals will fall by at least $75 million this year.

“That’s a bad Christmas present,” Smith replied.

“You can’t blame the coal companies really,” Sergent said. “They’re sitting on huge reserves that you can’t mine. Coal is not worth to them what it was when they were going to mine it.”

Sergent said the budget cuts, should they occur, would mean that school administrators and board members will “need to be careful and make sure we conserve — which we’ve been doing the last four years.” However, Sergent said previous budget cuts instituted by the board will mean there is no immediate danger of personnel cuts.

“I’m glad we’re not in a situation where we have to look at cutting employees,” he said. “… We’re going to be okay because we’ve made cuts where we’ve needed to.”

Sergent and Smith agreed that if the unmined minerals tax receipts do fall as much as is being anticipated, one course of action my be to stop including the anticipated tax receipts when the district’s annual budget is being prepared.

“In the future we may just have to budget that as zero,” Sergent said before recalling that the tax on unmined minerals, which was made possible in the mid- 1980s, has added as much $900,000 to the district’s budget in some years.

“For that to go to zero is tough,” he said.

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