The Impact of Coal on the Kentucky State Budget

Rapid and dramatic changes in the world’s approach to energy have major implications for Kentucky and its coal industry. Concerns about climate change are driving policy that favors cleaner energy sources and increases the price of fossil fuels. The transition to sustainable forms of energy is becoming a major economic driver, and states are moving aggressively to develop, produce and install the energy technologies of the future. Long reliant on coal for jobs and electricity, Kentucky faces major challenges and difficult choices in the coming years.

In this critical energy, fiscal and economic context, it is increasingly important for Kentuckians to understand the role and impact of coal in our state. Coal provides economic benefits including jobs, low electricity rates and tax revenue. But the coal industry also imposes a number of costs ranging from regulatory and public infrastructure expenses to environmental and health impacts.

The Impact of Coal on the Kentucky State Budget tells one aspect of the story of coal’s costs and benefits. The report provides an analysis of the industry’s fiscal impact by estimating the tax revenues generated by coal and the state expenditures associated with supporting the industry. The authors estimate for Fiscal Year 2006 Kentucky provided a net subsidy of nearly $115 million to the coal industry.