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Report revises coal's costs to W.Va. downward

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CHARLESTON, W.Va. -- West Virginia's coal industry costs the state government's budget more than it pays, but not quite as much more as estimated in a groundbreaking report issued in June.

The Morgantown consulting firm Downstream Strategies and the West Virginia Center for Budget and Policy had put the coal industry's cost to state government at $97.5 million more than it paid in taxes and other revenues.

On Monday, the two organizations issued a revised report they wrote based in part on criticism leveled by coal lobbyists and by industry researchers at Marshall University.

The new report concluded the coal industry last year cost the state budget $42 million more in tax breaks, damage to roads and other impacts than industry pays in taxes and other revenues.

"We agreed with a number of their suggestions; however, several are simply mistaken and fail to acknowledge many of the costs associated with coal mining," said Ted Boettner, director of the center. "After incorporating their suggestions that were valid, we found that the net impact of the coal industry for the state budget in fiscal year 2009 remains negative, meaning that the industry imposed an overall cost on the state and its taxpayers."

The original report, funded in part by environmental groups, found that while coal mining provides West Virginia valuable jobs and tax revenues, the industry actually cost the state government budget more than it pays. Government pays huge sums each year for agencies that regulate coal, tax breaks for mining operators, and coal truck damage to state roads and bridges.

Among the biggest changes in the estimates was the addition of $31.5 million to the estimate of direct coal industry revenues to cover local property taxes that provide additional state aid to schools through county school boards.

The new report again emphasized concerns about what it estimated at $5 billion in "legacy costs" to fix damaged roads and clean up abandoned coal mines covered by West Virginia's special reclamation program.

"The Legislature should consider enacting new policies that ensure that the coal industry, rather than the state's taxpayers, pays for the costs associated with coal-related activity," said Rory McIlmoil of Downstream Strategies.

Boettner urged lawmakers to take up the suggestion of Delegate Nancy Guthrie, D-Kanawha, to fund a more comprehensive study of coal's cost and benefits. "Understanding the true impact of the coal industry is vital when making policy decisions pertaining to energy and economic development that will impact our state for decades to come," Boettner said.

Reach Ken Ward Jr. at kward@wvgazette.com or 304-348-1702.


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