VOL. 124 | NO. 37 | Tuesday, February 24, 2009
Tenn. Coal Industry Agrees to Severance Tax Hike
NASHVILLE, Tenn. (AP) - Tennessee roadbuilders and the mining industry are lining up behind a bill to increase the state's severance tax on each ton of coal from 20 cents to $1 over the next four years.
Rodney Carmichael, executive director of the Tennessee County Highway Officials Association, says a "gentleman's agreement" has been struck to divide the increased tax revenues between local school and road projects.
"We could never run this kind of bill over the coal industry, but they stepped up and this has all been worked out at the local level," said Carmichael. "I'm totally amazed that they've done so."
Current law directs the severance tax money to the six counties where coal is mined – Anderson, Campbell, Claiborne, Cumberland, Fentress and Scott – but doesn't specify how it must be spent.
The bill sponsored by Sen. Randy McNally, R-Oak Ridge, and Rep. Les Winningham, D-Huntsville, would increase the severance tax to 50 cents on July 1, 75 cents in 2011 and $1 in 2013.
Chuck Laine, executive director of the Tennessee Mining Association, said increasing the tax to $1 would help struggling county governments.
"The children of miners have to have schools to go to and roads to drive on," he said.
But Laine said he opposes a rival measure sponsored by Rep. Mike McDonald, D-Portland, that would set the severance tax at 4.5 percent of the value of the coal, or about $3 per ton.
That level of tax would lead coal companies to shift their operations to other states where mining costs are lower, Laine said.
McDonald's bill would give half of severance tax revenues to counties where coal is mined and split the remainder between a fund for reclaiming land damaged by abandoned mines and proposed tax breaks for solar and wind energy equipment.
On the Net:
SB1086 and HB1274 at: http://tinyurl.com/bns6ss
Information from: The Knoxville News Sentinel, http://www.knoxnews.com
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