By T.L. HEADLEY, MBA, MA, BA
CHARLESTON — In 2008, the year President Obama was elected, West Virginia produced 165 million tons of coal and more than 27,000 West Virginians were directly employed in the state’s coal mines. Current projections by the State Tax Office for 2013 show production of only 115 million tons and according to the Office of Miners Health, Safety and Training, direct employment is down to just 19,320 active miners. This represents a drop in production over the past four and a half years of 31 percent and a drop in employment of 29 percent.
The decline in production has been sharp and steady since Obama took office in January 2009, with production fall by 21 million tons in 2008 and 2009 alone and another 10 million tons this past year. Employment, however, remained steady until late 2012, when the price of coal saw a significant drop.
The result has been unemployment rates in the coalfields region exceeding 10-11 percent for most of the past year and counties struggling to balance their budgets and meet basic needs. Now the pinch is being felt even at the state level as Gov. Tomblin has been forced to trim budgets by 7.5 percent for 2013 and has asked state agencies to prepare for another 7.5 percent cut in 2014. State Budget Director Mike McKown says the state faces a more than $300 million budget gap for the fiscal year that begins July 1, 2014.
With the State facing a budget shortfall of more than $300 million, the question is how much of that shortfall is the result of the Obama Administration’s assault on coal?
In 2012, the state set a record for coal severance tax collections at $531 million and was able to balance its budget. According to Mark Muchow, deputy director of the State Tax Department, coal severance in 2013 is expected to be down to just $484 million – a drop of $47 million or 16 percent. Muchow said coal severance collections are projected to decline by another $64 million to just $420 million in 2014 – a total decline of 21 percent in just two years. And Muchow cautioned that even those numbers would probably have to be revised.
“We have a slight increase in coal prices projected into the forecast that will probably not be accurate,” Muchow said, “… about $3 a ton from $79 to $82 a ton… and we only have production declining by another 2 million tons, so we will probably miss that forecast.”
Current estimates by the state tax office for coal production to be at about 115 million tons in 2013. At our current rate of production, as reported by the Office of Miner’s Health, Safety and Training, production at mid-year is only at 55 million tons, which would put the state at closer to 110 million tons or lower for the year.
Muchow said it is safe to estimate that about 25 percent of the state’s budget problems are directly attributable to the problems faced by the state’s leading industry – coal.