House Bill 202 would qualify coal mining and/or processing companies for sales and use tax breaks provided for nearly the past two decades by the Kentucky Cabinet for Economic Development, according to State Rep. Rocky Adkins, House majority leader and the bill’s chief sponsor.
To Adkins, from eastern Kentucky’s coal mining country, the bill is a matter of simple fairness. “What this bill does is basically qualifies the coal industry for our economic development incentive, which is a very aggressive incentive package in the Cabinet for Economic Development,” he said. “This bill would qualify the coal industry and other related operations such as loadout operations related to coal. It is used to retain and grow industries.”
Adkins said the coal industry is the only industry in the commonwealth that currently is not eligible for the incentives first enacted during the administration of former Gov. Paul Patton, a Democrat and former eastern Kentucky coal operator. Patton served as the state’s chief executive from 1995 through 2003.
Adkins said that while he is not certain why the coal industry has been excluded from the incentives for so many years, he suspects it is because “until now, some people felt the coal industry was doing well, the price of coal was up and the market was healthy and there was more need for coal and all of that.”
That is no longer the case, however. A stubborn and unrelenting downturn in coal markets during the past several years has eliminated thousands of Kentucky coal mining jobs and dozens of producers, especially in eastern Kentucky’s Central Appalachian region.
In early February, the Kentucky Energy and Environment Cabinet disclosed that Kentucky produced only about 62 million tons of coal in 2015, its lowest total since 1954. Output was down in both eastern Kentucky and western Kentucky, part of the high-sulfur Illinois Basin. At the end of December, only about 8,400 miners were on company payrolls in the state, with another 3,200 losing their jobs in 2015.
Adkins said HB 202, which would provide an array of tax credits to corporations or employees, “could be an enticement that hopefully will help swing the pendulum back to the middle. It might be an attraction to bring somebody back into the business who is not mining coal now” or allow an existing producer to stay in business and be able to produce and export more coal.
While the bill is not a panacea for all of coal’s ills, “hopefully, this bill will be a tool in the toolbox,” he said.
The bill specifically provides that any “company, limited liability company, partnership, limited partnership, sole proprietorship, business trust, or other legal entity engaged in manufacturing, coal mining or processing” is eligible for tax incentives under the Kentucky Enterprise Initiative Act and Kentucky Business Investment Act.
It also directs the Cabinet for Economic Development to work with various agencies, foreign trade partners and the Kentucky coal industry to promote increased exports of Kentucky coal.
Although new Gov. Matt Bevin, also a Republican, is a strong supporter of coal, Adkins said he has not yet spoken to Bevin about the bill. This year’s General Assembly is in session in Frankfort through March. Lawmakers then recess before returning for a brief veto session in mid-April.