Appalachian Communities Scraping By as Coal Taxes Drop – by Kris Maher (Wall Street Journal – April 10, 2015)

http://www.wsj.com/

Counties in West Virginia, elsewhere lay off employees and weigh consolidating schools amid dwindling revenues tied to coal mining

Just three years ago, Nicholas County in West Virginia had eight working mines and took in $1.2 million from coal-related tax revenue. Today, just one mine is still churning out coal. The county’s share of the state’s taxes on coal mining, partly based on local production and county population, plummeted to about $100,000 in 2014.

County officials recently responded by laying off 20 employees, including four police officers, meaning there won’t be any officers on duty after 4 p.m., the sheriff said. An additional 74 employees will take a 20% pay cut. A spokesman for the state police said more troopers will be assigned to patrol the county.

“For the first time that anybody alive can remember, we’re having to lay off some county employees,” said Ken Altizer, president of the Nicholas County Commission. “The biggest reason is the coal severance,” he said, referring to taxes on the amount of coal extracted, or “severed,” from the ground.

For decades, severance taxes paid by coal companies helped fill the coffers of coalfield communities throughout Central Appalachia—roughly encompassing southern West Virginia, eastern Kentucky and southern Virginia. The money helped pay for road and sewer projects, parks, libraries, Little Leagues and more.

In the first decade of the century, revenue grew as the price of coal soared thanks to overseas demand. But since then, markets have cooled, and coal-fired power plants have closed across the nation under pressure from tighter federal emissions standards and a natural-gas drilling boom. Prices for coal in Central Appalachia are down 30% in the past four years.

The decline of coal-related revenue in a region that has often struggled economically even when production was high bodes ill for the future of local communities.

“Absent the coal industry, the economy in those areas isn’t large enough to support the populations,” said Mark Muchow, deputy secretary of the West Virginia Department of Revenue. “There’s going to be a period of serious adjustment.”

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