Potential Revenue Sources for Economic Redevelopment in Appalachian Coal Mining Areas

Appalachian Voices
Higher poverty rates surround areas with more mountaintop removal and strip mining.

The plan proposed by John Todd and colleagues is an ambitious one: to build a new economy for Appalachia based on principles of ecological and economic sustainability. These are great ideas, deserving our attention and efforts. But even under the best conditions, implementing these new economies for the region will take years, occurring in piecemeal fashion, one location here, another there. Appalachia cannot afford to wait that long. What can be done now to help the region improve its economic base and prepare for the sustainable future envisioned here?

To build this economy, Todd and colleagues propose that nonprofit organizations and government entities fund and drive the early stages. I would like to suggest two other methods. First, several Appalachian states, where coal-mining levels are highest and economic disadvantages most profound, have coal severance taxes. In West Virginia, the tax is basically 5 percent of the sales price per ton of coal, and this tax generates several hundred million dollars in revenue for the state annually. Ninety-three percent of this revenue goes into the general fund for the state, and 7 percent is directed to local and county governments. Only about 5.25 percent goes to local and county governments in coal-mining localities. A modification to existing state policy could consist of two features. First, reverse these percentages so that coal-mining communities receive the vast bulk of funds from the coal tax. The state government would have to sacrifice these dollars, but the state would not, as the dollars would stay within the state and would be targeted to improving conditions in the most disadvantaged areas.

Corresponding to this change in revenue streams would be an equally important feature of tax policy modification: that the severance tax dollars be used only for investments in public education and economic diversification away from coal. The dollars should be used to combat poor schooling and poverty. It has recently been estimated that the power of a college education is eight times stronger than the power of advances in public health and medical science at preventing premature mortality.1 An educated population will go a long way to creating the foundation for a strong and sustainable economy.

Impoverishment is also a serious threat to public health and to corresponding state economies.2 The new Appalachian economy would reduce levels of poverty as additional employment opportunities emerge and new businesses develop. As economic conditions in the most disadvantaged parts of the state improve, the state government would recover the investment dollars in the form of reduced expenditures for health and social welfare programs such as Temporary Assistance to Needy Families (TANF) and Medicaid and increased revenue from business and income taxes.

Control of the redevelopment dollars could be handled by a regional economic development authority consisting of nonelected officials representing local business and community leaders. In this way, local communities would have the major voice in taking control of their own solutions and would not be subject to pressure from outside interests. Virginia has already implemented such a board for economic development using coal taxes to help its mining areas transition to a new economy. Production from the coalfields in Virginia is already in decline, and the pressure for economic redevelopment there is strong. We should prepare for such redirection in other Appalachian mining regions now.

The second start-up method for revenue generation is more contentious and speculative: reparations. Appalachian mining states could sue the federal government and other states for the environmental devastation and public-health disaster that has been our burden. In exchange for our sacrifice, other parts of the country have enjoyed electricity and power generation at falsely discounted rates, rates that do not include the cost of natural-resource destruction—our mountains, streams, and forests have been permanently obliterated. They do not include the cost of premature mortality for the people of the coalfields, estimated at nearly 11,000 lives and tens of billions of dollars per year.3

Short of legal action, America could voluntarily provide the necessary investments in recognition of these sacrifices. It is time for the country to back up sentiment with action and demonstrate its high regard for the people of Appalachia, who do the difficult work of providing the country with power.