The Impact of Coal on the West Virginia State Budget
Rory McIlmoil, Evan Hansen, Ted Boettner, Paul Miller
In 2009, the Mountain Association for Community Economic Development produced a report titled The Impact of Coal on the Kentucky State Budget. The report analyzed the Kentucky coal industry’s net fiscal impact on the state budget by estimating the amount of tax revenues contributed by the industry, as well as the state expenditures associated with supporting the industry and its employees. The study concluded that the coal industry had a net negative impact on the state budget for Fiscal Year 2006, primarily as a result of the annual cost of repairing and replacing the roads impacted by the operation of overweight coal trucks. Other costs attributable to the industry included state agency expenses for supporting or regulating the coal industry, tax expenditures such as exemptions and credits, and general state expenditures supporting those directly and indirectly employed as a result of coal industry activity.
The report showed that, while the coal industry provided significant benefits to the state and local economies in Kentucky, a true accounting of coal’s economic impact must also consider the associated costs, and for Kentucky, those costs were significant. The report’s conclusions raise questions about Kentucky’s policies related to energy and economic development, particularly given the realities of a decline in coal production, pending legislation that could reduce the competitiveness of Kentucky coal, and the growing impact of coal on economic, social, and environmental health.