FRANKFORT – Over the last few years, it has become abundantly clear that the state’s coal severance revenue formula needs to change.
For several decades now, the state and the coal counties have split the revenue, and for much of that time, this worked well for both sides. Coal wasn’t just keeping the lights on for Kentucky; it was also a major funding source for our schools and other critical programs. As recently as the recession that began in 2008, coal severance was an early life preserver when other revenues were in freefall.
Since 2011, however, it has been coal severance that has been in freefall, dropping faster than anyone could have realistically expected. In just five years, monthly revenues that once exceeded $20 million are now less than $9 million, a number we haven’t seen in about 20 years.
Last week, I was proud to join with Floyd County Judge/Executive Ben Hale and more than a half-dozen other coal-county judge/executives and magistrates to advocate for letting coal counties keep more of this money. We appeared before the House Appropriations and Revenue Committee, whose members were open to begin making this change.
The upcoming two-year budget is the ideal time to begin this transition, because the state’s overall economy has returned to more normal growth.
At the same time, our coal counties cannot afford to wait much longer. Their portion of the coal severance tax is down 80 to 90 percent compared to what it was in 2008, and that is understandably cutting into core services like fire and police protection, road departments and jails.
I’m optimistic that we can begin weaning the state away from coal severance revenue during the upcoming two-year budget. The House, at the very least, appears poised to make this idea a reality.
Speaking of the budget, the Appropriations and Revenue Committee continued its work last week reviewing Governor Bevin’s proposal – and the negative impact it would have if his proposed 9 percent cuts are enacted.
Chief Justice John Minton said cutting his branch budget could cause the courts to close for up to three weeks before the end of June.
Kentucky State University’s president, meanwhile, has warned of potentially drastic measures for his school, and other university presidents noted that their state dollars have already declined by 16 percent since 2008.
His budget would flat-line per-pupil funding for elementary and secondary school students for the next two years, and other school programs would be negatively affected as well. School officials say a cumulative cut of $90 million between now and the end of the next budget cycle would lead to reductions in our family resource and youth services centers; career and technical education programs; school safety; and professional development.
The House is expected to vote on its budget within the next week or two. The Senate, which has been reviewing the budget as well, will then vote on its version, and then other legislative leaders and I will work on a compromise that will hopefully clear the General Assembly by the end of March.
Outside of budgetary matters, I was proud to appear last week before the House Banking and Insurance Committee to advocate for Rep. Chris Harris’ House Bill 408, which the House went on to unanimously approve on Friday.
Its goal is to restore the legislative intent of a 2012 law designed to protect beneficiaries of life insurance policies.
Four years ago, the General Assembly called on companies issuing these policies to do more to determine if the person who bought them had died. Many families don’t know a loved one had life insurance, especially if the policy was a relatively small one bought years earlier.
A legal challenge questioned whether this law could be applied retroactively to policies, and the Kentucky Court of Appeals ruled that since the General Assembly did not specify that intent, the law could only apply to policies bought after the law went into effect.
The Kentucky Supreme Court was scheduled to hear the case, but Governor Bevin’s administration chose not to pursue it. Attorney General Andy Beshear is seeking to take over, but in the meantime, this bill would codify the law’s original intent, making the case moot. Without this bill, or a favorable court ruling, many families may be denied potentially thousands of dollars they are rightfully owed.
As the General Assembly enters the final third of the legislative session this week, a lot of work remains to be done. Your contribution to this effort is crucial, and I have already heard from and talked with hundreds of you.
If you would like to take part, you can always email me at Greg.Stumbo@lrc.ky.gov. You can also leave a message for me or any legislator by calling 800-372-7181.
Rep. Greg Stumbo serves as speaker of the Kentucky House of Representatives.