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State budget agreement leaves many coalfield legislators upset

Blocks use of coal severance tax funds for water and sewer

A two-year state budget agreement between the House and Senate may prevent Letcher County and other coal-producing counties from using coal severance tax money to pay for water and sewer projects.

Some legislators said they disagreed with the idea of not appropriating any money from Kentucky’s coal severance tax or revenue generated from the state’s national tobacco settlement for water, sewer or road projects.

Rep. Hubert Collins, DWittensville, said he and other lawmakers from coal-producing counties were not happy that there were no appropriations for water or sewer lines in their home districts.

“There’s nothing in it for a lot of people,” Collins said. “I don’t have anything to take home – nothing.”

Rep. Jim Gooch, D-Providence, said budget negotiators deleted all line items included in the budget for coal severance projects, which has angered many lawmakers in the state’s mining counties.

“I think it’s questionable at this point whether this budget can pass the House,” said Gooch, chairman of the House Natural Resources and Environment Committee.

However, state Sen. Robert Stivers, R-Manchester, said many of those line items didn’t meet the criteria for projects that should be paid for by coal severance revenue. House lawmakers, he said, wanted to use coal severance revenue for “nickel-anddime patronage expenditures,” instead of the economic development projects it is intended for.

Coal county officials, under the plan being voted on today (Wednesday), would apply for funding through the Governor’s Office of Local Development, Stivers said.

Legislators were hoping to vote on a final budget agreement by midnight Wednesday in order to preserve their authority to override any possible vetoes by Beshear.

The budget agreement may render moot a continuing battle between members of the Letcher Fiscal Court and the county’s two representatives in Frankfort, Leslie Combs and Ancel Smith.

The disagreement the fiscal court and the two legislators became public in early March when the court voted 5-1 to adopt a resolution asking the General Assembly to throw out a list of 46 projects identified by Combs (D-94) and Smith (D-92) as those most deserving of being funded with $6.185 million in severance money. The money is generated from a 4.5 percent tax on each ton of coal that is mined.

Every court member with the exception of District Five Magistrate Wayne Fleming called on 29th District State Sen. Johnny Ray Turner to amend the list submitted by Combs and Smith so that it contained only the 32 projects recommended by the court for funding at its January meeting, most of them water- and sewer-related.

Many legislators said they were displeased at the proposal’s lack of funding for education and special projects. Some questioned whether the proposal, which legislative leaders crafted behind closed doors, could muster enough support to win legislative approval and head to Gov. Steve Beshear.

“People may calm down, I don’t know,” said Rep. Greg Stumbo, D-Prestonsburg. “But as of right now, I think that if you took a vote right this instant, that it would fall far short.”

Legislative leaders in the House and Senate wrapped up seven long days of tedious budget negotiations Tuesday morning with a final session that stretched more than 20 hours. When they emerged, lawmakers said they had a tentative agreement in place.

The negotiated proposal scuttled any plans for raising additional state revenue through an increase in the state’s tax on cigarettes or to impose the state’s sales tax on certain services. Instead, lawmakers settled on a scaled-down spending blueprint that will include 3 percent cuts to public universities.

Economic forecasters predict Kentucky state government is facing an approximately $900 million revenue shortfall over the next two fiscal years.

Beshear proposed an austere two-year budget that called for 12 percent cuts to public universities and numerous government agencies and programs. Beshear called on lawmakers to avoid the cuts by passing a cigarette tax hike of 70 cents a pack to generate nearly $200 million per year.

Beshear, a Democrat, also pushed lawmakers to approve a constitutional amendment aimed at legalizing casino gambling. The plan could have generated at least $500 million per year in gambling proceeds if approved by voters, Beshear said.

The House and Senate proposed different approaches aimed at raising millions more in revenue to carry Kentucky government through the tough financial times expected ahead.

The legislation is HB 406.

Compiled from Associated Press and Mountain Eagle reports.

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