Coal Tax For Rupp Renovations

Appalachian counties are complaining about a decision to use $2.5 million of coal severance taxes to help pay for renovations at Rupp Arena in Lexington.

Kentucky collects a tax on coal that is taken out of the ground, and gives some back to coal-producing counties to assist local governments and help diversify their economies. The amount of money gathered by the tax has dwindled over the past two years, most notably in eastern Kentucky where some mines have been shuttered.

During the last 11 months, the state has collected $213 million in coal severance taxes, which is 23 percent less than for the same period a year ago.

Letcher County Judge-Executive Jim Ward told the Lexington Herald-Leader that his county is cutting its budget by more than $1 million due to cutbacks in coal severance funding.

“We have filed for water and sewer projects between our counties using the multi-county coal severance money, and there probably won’t be enough money for that,” Ward said. “That hurts us. It hampers our ability to better the lives of our citizens here.”

House Speaker Greg Stumbo defended the legislature’s decision.

“Because of shortfalls, there was no other pot of money we could find,” said Stumbo, D-Prestonsburg. “Though Rupp is not in the coalfields, many believe it plays an important role in the state because of the tradition of the University of Kentucky basketball program, and there is strong alumni support in our region as well.”

The decision got little notice when it was written into the state budget near the end of the 2012 General Assembly, but is garnering complaints as the state prepares to make the payment.

“Mayor Jim Gray and the Urban County Council’s raid on our coal severance funds for their project is only further proof that Eastern Kentucky coal has done and continues to do a lot more for Lexington than Lexington does for Eastern Kentucky,” said Pike County Judge-Executive Wayne Rutherford.

Harlan County Judge-Executive Joe Grieshop said half of the coal severance tax is supposed to come back to coal-producing counties to pay for needed items such as road and water projects, but the counties end up with much less after “all that money comes off the top for other stuff.”

“I love UK basketball as much as anybody, but this wasn’t a good use of coal severance money,” Grieshop said.

The Lexington-Fayette Urban County Government spokeswoman Susan Straub says the city and other entities are also putting funds toward the renovation project.

“Rupp is used now, and will be used in the future, by thousands of people from coal counties,” she said. “It’s a facility that benefits the entire state.”