The time has come for a coal severance tax in Illinois

A recent study points out how the state of Illinois is spending more to promote the coal industry than the corporations are paying in taxes to the state. It points up the real need for a coal severance tax on these companies that are selling Illinois coal out of state for huge profits.

Also, citizens are in effect subsidizing these corporations, as much of the damage left behind by these operations is repaired with our tax money also.

“Downstream Strategies” came out in June 2013 on “The Impact of Coal on the Illinois State Budget, FY2011.” Rory McIlmoil (MA, project manager), Meghan Betcher (MS, environmental science) and Amanda Kass (MS, Center for Tax and Budget Accountability, Chicago) did the study.

Our legislators need to review the true needs and priorities of Illinois, especially with our current budget problems. We cannot afford to supplement industries with grants when they are not providing the numbers of jobs originally promised, while being allowed to ship coal out of state and even out of the country without paying their fair share of taxes to the state of Illinois. Other states charge severance taxes. Why doesn’t Illinois?

Then there are the problems of permanent damage to farms and roads, as well as air pollution and water contamination. A severance tax could provide funds for repairing the damage left behind. These corporations also could be required in their original operating permits to set up funds for this purpose.

The above referenced study showed that out of 17 companies operating coal mines in Illinois in 2010, only three were required to pay corporate income tax. The remaining 14 companies, classified as LLCs, do not pay tax. Only 34 percent of Illinois coal produced in 2010 was produced by companies with corporate income tax liability. The study showed that taxes on coal came to $1,400,860. Meanwhile, the state’s total expenses in promoting the industry also came to $1,400,860.

The authors recommended the following actions: one, a state severance tax on coal; two, a permanent trust fund to help remediate environmental damages due to mining; and three, a detailed analysis of the full costs and benefits of grant programs supporting coal-related projects, with a plan for more oversight.

Can Hillsboro Afford the Money Drain of Deer Run Mine?

Mining coal brings in millions of dollars in profits for out of state coal companies – but how much of that actually benefits the Illinois communities where coal is mined? The city of Hillsboro – where a West Virginia coal company has begun work on the massive new Deer Run mine – is concerned about the lack of funds available to manage its financial obligations. The city’s finance Commissioner, Richard Small has suggested possible ways to increase revenue including a sales tax increase, a telecommunication tax on cell phones and landlines, and phasing out extra benefit perks for employees and volunteers.

With Hillsboro’s obvious cash flow problem, it is puzzling why the city has paid over $1.6 million in 2011 for bills of Deer Run Mine. For example, at the December 13, 2011 City Council meeting, it was decided to borrow $52,000 for a scheduled water tower payment, but the commissioners voted to pay a $139,050 bill for the mine. In 2009, when the Hillsboro Zoning Board of Appeals amended the land use plan to allow underground coal mining, the stated reason for the zoning change was “… to promote economic growth of the community, conserve property values, and protect the health, safety, and welfare of the citizens of the City of Hillsboro, Illinois…” Instead, the mine has become a financial drain on the area, becoming a prime example of what should not be allowed to happen when a new coal mine comes into a community.

While the Hillsboro area is suffering financially,  billionaire Chris Cline, owner of Foresight Energy Partners and Deer Run Mine, has filed an initial public offering that is expected to bring in over $100 million. Meanwhile, the people of Montgomery County are being paid a pittance for the coal under their feet. The coal rights for over 200 million tons of coal reserves were sold by Montgomery County Board to an affiliate of the Cline Group, in December, 2004 for only $7.2 million, which then turned around and resold those coal rights to another Cline affiliate for $255 million. It is more than a tragedy that our community has been so misled.

The city and county leaders are promoting Deer Run Mine with the cooperation from the Office of Mines and Minerals and Office of Water Resources in the Department of Natural Resources. The mine has been given free range to make profits and grow. So citizens of Hillsboro, we must defend our community and quality of life for our children and grandchildren. Our government and regulatory agencies have not done their job to protect us.