By JULIA ROBERTS GOAD
PIKEVILLE, Ky. - The use of coal severance tax funds in Pike County is the subject of some varying opinion by representatives.
Pike District Six Magistrate Harris said he realizes Kentucky’s dismal financial outlook is not the fault of legislators in Frankfort.
“Expenses are up, revenue is down, that is not their fault” Harris said recently when he addressed the Pike County Fiscal Court. “But they could have helped.”
He said the Legislature has said that coal severance funds could not be used for debt service, such as payments on the Pike County Jail or the East Kentucky Expo Center.
“I was shocked when I heard Sen. Jones say that,” Harris said. “This court has received debt service from coal severance money. In the last budge, Mountain Water received $750,000 for debt service. Clearly its eligible, and clearly it has happened in the past. For them to say otherwise is factually inaccurate.”
Harris said after he heard Sen. Ray Jones say coal severance funds could not be used to pay for debts incurred by the county, he researched the use of coal severance money to pay debt severance.
In the 2008 budget, Harris said, there is $300,000 budgeted directly to the City of Pikeville for debt Service for Bob Amos Park and another $350,000 budgeted directly to the City of Pikeville for debt service for Hambley Field.
He also cited $2 million in coal severance funds budgeted directly to the Perry County Fiscal Court to retire debt for road projects; $750,000 budgeted to Mountain Water District for debt service, and $50,000 budgeted for the Child Advocacy Center for debt service in the 2010 state budget.
“In the most recent state budget that was just voted on by Sen. Jones, there is $1,725,000 in coal severance funds budgeted directly to the Knott County Fiscal Court for Bond Payments for the Knott County Sportsplex,” Harris said. “That is this year’s budget that Sen. Jones just voted on. So clearly it’s not accurate to say that it’s illegal to fund debt service with coal severance funds. It can be done, and has been done many, many times by Senator Jones himself and the rest of the Kentucky Legislature.”
Harris said the lack of the legislature’s allocation of funding will force the county to use money to pay debt that could be spent on services for the county.
“The unfortunate consequence of the legislature not budgeting any coal severance funds at all for Pike County debt service is that the County will have to use its general fund dollars to service the debt,” Harris said. “This will most likely result in additional employee layoffs and cuts to programs and offices that provide basic and much needed services to the people of the County.”
Sen. Jones, however, told the Daily News severance funds should not be used to pay off counties’ debts. Jones said that while the Kentucky legislature has helped Fiscal Courts in the Commonwealth cover expenses, but that local governments need to do what they can to payr their own debts.
“The statute says that money is Local Government Economic Development Fund, that is to be used for economic development,” Jones told the Daily News. “It is a declining revenue source from an non-renewable resource. We can do it (designate other uses for the money) at our discretion as a line item, but its purpose is economic development.”
“That money was never intended to be used for debt service on a jail or a landfill,” Jones said. “If things like that are not self-sufficient, the Court needs to make them self-sufficient, but they don’t want to raise the garbage fee.”
Jones said the Legislature has allowed counties and cities in Kentucky to use coal severance funds as a bridge to help them get their finances in order.
“But at some point, we need to use that money for infrastructure, for water and sewer,” he said. “They took on obligations, how did they plan on paying it back?” Jones said. “Mountain Water borrowed money for water projects in rural areas, where there were not enough customers to pay for the improvements.”
“Counties and cities are getting this money, that the legislature doesn’t control, and are still in the hole. We need water and sewers, we need new schools. We need economic development such as senior centers and fire departments. Tax severance funds are supposed to create opportunities to create jobs.”
He said the Pike County Fiscal Court has not been judicious in its use of its budget.
“They spent money on parks without having the money to maintain those parks,” Jones said. “Like putting a cabin at Hardy Park that will use maintenance funds and caretaker’s salary when the pool is closed? Why would you need a caretaker?”
Jones said the PCFC needed to “operate as a lean and efficient operation.”