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West Virginia Coal Industry $100 Million Budget Drain, Report Says

Mining is costing taxpayers more than it contributes, and trend expected to worsen

By Stacy Feldman

Jun 25, 2010

According to estimates by the Energy Information Association (EIA), a division of the Department of Energy, coal production in the entire Central Appalachian region will shrink by 46 percent, or 106 million tons by 2020.

Southern West Virginia make up nearly 50 percent of Appalachian mining. And if the state follows projected regional declines, as expected, then coal output would shrink by 53 million tons in West Virginia, or approximately 34 percent.

That's a likely outcome, the authors argue, courtesy of coming federal restrictions on carbon emissions, tighter limits on mercury emissions, regulation of coal ash and the EPA's Clean Air Interstate Rule, which will force power plants in the Eastern U.S. to slash soot and smog pollution. 

"This reality raises questions about West Virginia’s priorities as they relate to economic policy and energy development," the report said.

Coal dollars in West Virginia and other mining states have historically provided vital funds to education, health and environmental protection budgets.

According to the authors, the analysis is one of few, so far, to show that the size of America's coal economy is not as considerable as previous accounts suggest.

"The aim of this report is to broaden discussion about the coal industry's effect on the people and economy of West Virginia. It shows that the while the coal industry does contribute significantly to state revenue and jobs, it also relies heavily on taxpayers for support," said Boettner.

A similar report in Kentucky by the Mountain Association for Community Economic Development found that the coal industry there cost taxpayers around $115 million in 2006. 

Chamber of Commerce Fires Back

To arrive at their conclusions, the analysts in West Virginia compiled data and estimates available on tax revenues and expenditures related to the industry from July 1, 2008 through June 30, 2009.

The researchers admit there is great uncertainty in their results and do want to "provide a false impression of precision."

"In calculating these estimates, there is an inherent degree of uncertainty associated with the results. We do not claim that our accounting of revenues and expenditures is precise," the report said.

The $97.5 million figure, it added, "is a reasonable and plausible first approximation."

Some of the state's biggest coal supporters fired back at its uncertain results. The West Virginia Chamber of Commerce, a lobby representing businesses, called the report a "mockery of real academic research."

"This report was created by people who are staunchly anti-coal, oppose job growth in the production sector, and who seek to drive away the coal and manufacturing industries, which pay the highest wages, offer the best benefits, and fuel much of West Virginia's economy," said Steve Roberts, chamber president, in a statement published in the Charleston Daily Mail.

In response, Boettner said Roberts is "grasping for straws" and described the WVCBP as "pro-job growth."

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