(Midway KY November 8, 2014)- Justin Maxson and his organization are deeply involved in the potential and problems of rural Kentucky - especially of rural Eastern Kentucky. It's an area that is heavily dependent on coal for jobs and for revenue from coal severance taxes.

There's not much good news for coal supporters and governments that lean on it for sustenance.

"Kentucky has extremely limited state financial resources, an antiquated tax system, an unfunded pension liability in excess of $140 billion, and local governments teetering on bankruptcy. For generations, the economy of rural Kentucky has been plagued with challenges and cycles of poverty in large part because of the resource-dependent economy of the region..."

"Since 2011 Kentucky has lost 6,000 coal jobs, a 40 percent reduction in the industry workforce; for every coal job lost an estimated three additional jobs disappear. Kentucky coal production decreased in 2013 by more than 11.8 percent from 2012, to 80.5 million tons, the lowest level since 1963.57 Coal production will continue to drop leading to serious and potentially catastrophic job loss and significant reductions (estimated 41 percent) in coal severance tax collections that help fund local government services.."
(Kentucky's Energy Future... at the Crossroads, page 17)

Kentucky's coal country depends on coal severance funds. As coal runs out, the severance funds dry up. Spending money on industrial parks has proven to have limited success in attracting businesses to locate in rural areas. The CPI report has other uses for coal severance funds than distributing it all and hoping for the best.

Other states, like Montana and Wyoming, have established permanent funds. If Kentucky developed such a fund, it would be a permanent source of income independent of coal's ups and downs.

Eastern Kentucky is currently getting national attention with SOAR (Saving Our Appalachian Region) created by the bipartisan efforts of Democrat Governor Steve Beshear and Republican Congressman Hal Rogers. SOAR, according to Justin Maxson, President of MACED, is a work in progress.

Retrofitting the region must make sense to the business community to be successful.

Recommendations of the CPI report

• Legislate a dedicated revenue stream from the General Fund or a percentage of the coal severance tax for an endowed economic and energy development fund for rural Kentucky.
• Dedicate an independent board of directors to manage the fund.

To read "Kentucky's Energy Future...at the Crossroads" click on More