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The takeaway from SOAR

Al Cross

Al Cross

As I headed for the Shaping Our Appalachian Region summit last week in Pikeville, I hoped it would be the most momentous gathering in eastern Kentucky since one that probably happened around 1890 — when speculator John C.C. Mayo assembled his land agents to send them forth with broad-form deeds that effectively stole (for as little as 50 cents an acre) the mountaineers’ mineral wealth, of which they were largely ignorant.

Thus was eastern Kentucky’s lot cast for more than a century. It was a century of coal. There will not be another. Coal will still be mined, but in much lesser amounts, and diversifying the region’s economy is the goal of SOAR, created by Democratic Gov. Steve Beshear and Republican U.S. Rep. Hal Rogers of Somerset.

There have been countless meetings and lots of talk about the future of eastern Kentucky, but this one was different. The crowd of 1,500 was much larger than Beshear and Rogers first expected; the two political leaders seem committed to accomplishing something; and there is a sense of urgency, as economic, geologic and political factors have axed more than 40 percent of the region’s coal jobs in the last two years.

“As bad as it is, it’s not over,” said Paul Patton, a former coal operator, governor and president of the University of Pikeville. He told the crowd that 31 coal-fired power plants supplied by the region will close in the next five years, leaving it with about a third of the coal jobs it had.

Some early panelists talked about their passion to help the region, but “Someone said it’s panic, not passion,” that produced the big crowd, said former Louisville Councilman Hal Heiner, who worked in the region’s coal industry many years ago and is planning to seek the Republican nomination for governor in 2015.

The current governor told the crowd, “This situation has reached a critical point. . . . The need to diversify this economy has never been greater.” Some of the quickest applause came when Beshear said, “The first thing we need to do is forget about being Democrats and Republicans,” and when Rogers said, “We’re not here to do another study.” He added, “It’s really rare you have this kind of bipartisan cooperation reaching toward a single goal.” But a more important form of cooperation is needed: across the county and city lines that divide the region into fiefs that are often poorly governed — typically because they are small and their politics is dominated by personalities and patronage.

Rogers knows that. “I want us to think about our region, and not about our counties and towns,” he said.

“We’ve got to unite, we’ve got to dream big.” Senate President Robert Stivers, R- Manchester, went farther. He nearly committed mountain political heresy when he said, “We’ve got to blur the county lines.” And then he said, “We WILL blur the lines.” But a lot of that depends on who runs for key local and legislative offices and in 2014, and on who gets elected. Stivers said politicians shouldn’t worry about getting re-elected or “about paving the road where there’s 35 votes, but looking at creating 35 jobs.” Another form of cooperation can come in the legislature, because the presiding officers of both chambers are from the coalfi eld. House Speaker Greg Stumbo, D-Prestonsburg, was among several who said the region needs better education — perhaps an engineering school — and more entrepreneurs.

Progress in education was noted, but not much has been done to attract and encourage entrepreneurs and provide access to capital. I suggested a state tax credit for investments in a venture-capital fund limited to the area, and a regional community foundation that could attract bequests and other donations from the region’s many expatriates.

The biggest money idea at the meeting was investing part of the state severance tax on coal and using only the earnings for longterm benefits, a concept delivered by speakers from the Iron Range of Minnesota, where iron mining plummeted about as much as Patton said coal will in eastern Kentucky.

An investment fund would help, but not much, and certainly not soon. As one attendee said, that’s almost like starting to save for retirement when you’re 60. “It probably should have been done 20 or 30 years ago,” state Sen. Robin Webb, D-Grayson, told Dave Krusenklaus of Lexington’s WVLK Radio.

Raising the severance tax to 5 percent (West Virginia’s rate for most of its coal) from the current 4.5 percent, and dedicating it to long-term regional efforts, would help. But the coal industry is likely to argue — successfully, if past patterns continue — that more tax would make eastern Kentucky coal even less competitive. Similarly, calls for returning more of the tax revenue to the coalfield are likely to fail because of the state’s severe budget problems.

The coal industry was conspicuous by its relative absence at the summit. Sure, Monday is the worst day to ask people in a struggling industry to attend such a meeting, but coal folks appeared to be only 1 percent of the crowd.

Kentucky Coal Association President Bill Bissett told me he didn’t think the industry “is in any way an impediment” to the region’s economic diversification, and “I think coal’s going to be connected to this.

We’re going to be watching very closely.” It will be interesting to see if the coal industry encourages development of tourism and agriculture in an area where it levels mountaintops, but Inez coal operator Jim Booth is a major player in SOAR and the state’s power structure, and he should be a positive influence.

The industry might also help spring some of the idle $2.5 billion in federal abandoned-mine reclamation funds for a public-works jobs program to temporarily boost employment in the region, as The Mountain Eagle of Whitesburg suggested in an editorial. Patton’s for it: “I would view it as that kind of a crisis,” he told me.

Rogers and Beshear could get that done. Rogers is chair of the House Appropriations Committee, and will have more room to maneuver if the House-passed budget deal passes the Senate; that will also give him room to help fund expansion of high-speed Internet in the region. As he pursues that, Beshear is expected to put four-laning of the Mountain Parkway from Campton to Salyersville into the six-year road plan.

But as Beshear said as the summit began, “We need action now.” With his electoral endorsements of Obama and his poster-boy status for Obamacare, Beshear has been, in the Appalachian idiom, “laying up treasure” with the president. He should spend some of it to get Obama to make good on what he said in his June 25 climate-policy speech at Georgetown University: “We’re going to need to give special care to people and communities that are unsettled by this transition.”

Al Cross is director of the Institute for Rural Journalism and Community Issues and associate professor in the University of Kentucky School of Journalism and Telecommunications. His opinions are his own, not UK’s.

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