Capitalizing on coal
HUNTSVILLE — Legislation that would increase Tennessee’s coal severance tax by 400% is expected to clear the state’s General Assembly, but the question remains how much such a tax increase would benefit Scott County.
With Norma Road in need of repair after being badly damaged by trucks moving coal from mines in the New River Basin to a processing site in Campbell County, the topic of funding for the road’s repair has been an on-again, off-again subject of discussion at meetings of Scott County Commission. At a work session Monday, a petition containing the names of 81 area residents was submitted to the commission’s Intergovernmental Committee seeking help with repairing the road.
Money from the state’s coal severance tax is redistributed to local counties, with a portion of those funds being used to repair roads. The problem? By law, those funds are redistributed to the counties in which the coal is extracted. Locally, the coal is mined in Anderson and Campbell counties. The lone mine being operated in Scott County by National Coal Corp. played out months ago, and there are no immediate permits to mine more coal at sites inside Scott County. So although the coal is hauled over roadways owned by Scott County, the severance taxes go to the neighboring counties where the mines are actually located.
It’s a complex problem, and one that local representatives have pledged to look into as they push legislation that would return more coal severance revenue to local governments.
At a breakfast meeting with local officials Friday morning, state Sen. Ken Yager discussed a number of issues that could impact Scott County. Chief among them was the coal severance issue. The Harriman Republican, who is in his freshman term as a state senator after taking office in January, revealed that he is about to sign on as a co-sponsor to legislation that would increase Tennessee’s coal severance tax from 25 cents per ton to an eventual rate of $1 per ton.
Rep. Les Winningham, who was also present at the meeting, introduced the legislation in the House of Representatives last month. Winningham said the bill was presented to him by “the coal industry itself,” and represents an effort of compromise between the industry and advocates for an increased coal severance tax.
Last year, legislation was introduced that would have increased the coal severance tax to more than $3 per ton, based on the current market value of coal. Although it failed to receive serious consideration a year ago, the same legislation has been reintroduced in the current session of the legislature.
“This started from an environmental aspect, with environmentalists trying to shut down the coal industry,” Winningham said. “[This] is an effort to ward off something worse.”
The tax increase, which would begin July 1 of this year and be fully implemented by 2013 if the legislation becomes law, could generate up to an additional $2 million per year to be divvied between the counties impacted by coal mining. All of that money would be earmarked for roads and education.
Winningham said that the county legislative bodies in Anderson, Campbell and Claiborne counties have passed resolutions in support of the legislation. Scott County Mayor Rick Keeton said that he was sure the local governing body would also be in support of the bill, but indicated a need to look at the way the money is distributed among the counties.
Keeton pointed out that “80% to 90%” of the coal mining so far has taken place in Anderson and Campbell counties. And while the restoration of the former Tennessee Railroad line from Huntsville to Devonia has helped move some of the coal transport through Scott County from the roads to the rails, coal truck traffic remains a daily occurrence on the roads in and around the Norma community.
Keeton added that representatives of National Coal Corp. have been in discussions with local officials about repairing the roads once the mines in the area have played out.
Jeff Watson, who represents the Norma area from the 1st District on County Commission, pointed out that while it might prove difficult to see a change in the way coal severance funds are distributed simply because the coal is transported over roadways that fall in a different county than where the coal is mined, the coal is washed and prepared for sale at a facility that is located inside Scott County.
Winningham and Yager indicated that they will explore the matter as the legislation moves forward.
On a separate subject, Yager pledged to make sure U.S. Hwy. 27 from Robbins south remains a priority with the State Dept. of Transportation.
Yager last month called on state officials to make sure road construction funds from the recently-approved federal stimulus package are evenly distributed between urban and rural areas.
“The people at the Dept. of Transportation are going to run from me, because every time they see me I mention two highways, one being Hwy. 27,” Yager said. “I want to make sure that stays on their agenda.”