"Bluegrass Boondoggle: Kentucky Uses Money Meant To Redevelop Coal Country To Fund Arena Renovation"
Coal and the Wildcats are both pseudo-religions in Kentucky, inescapable even for someone, like me, who comes from Louisville, which is far away from coal country and squarely in the backyard of the rival basketball team. They are the industries Kentuckians identify with most, and that few dare speak against. When Attorney General Jack Conway ran for the U.S. Senate in 2010 his Democratic primary opponent suggested that he couldn’t understand Kentuckians for two reasons: he was anti-coal, and he went to Duke.
Now, with one of those industries in sharp decline and the other enjoying its return, as head coach John Calipari says, to its “rightful position atop the mountain of college basketball,” their paths are crossing in a way that will leave many of Kentucky basketball’s biggest fans holding the short end of the stick. Kentucky Gov. Steve Beshear (D) and Lexington Mayor Jim Gray (D) announced plans this week to renovate Rupp Arena, the home of UK basketball since 1976. How the state plans to pay for the estimated $300 million cost, which includes renovations to the attached convention center, is unclear. But to cover the multimillion-dollar cost of the planning and design phase, which will begin soon, Kentucky is diverting $2.5 million in revenues raised from the 4.5 percent tax levied on the sale price of all coal produced in Kentucky.
The so-called coal severance tax generates more than $200 million a year in revenues for Kentucky. Half of that revenue goes immediately into the state’s general fund. The other half is split between two separate accounts for reinvestment into coal-producing counties, with those investments aimed at funding economic development projects that aren’t related to coal, and to foster economic development partnerships between eastern Kentucky counties. In the past, it has funded the creation of industrial parks, road, water, and other infrastructure projects, and scholarship programs for students from coal country. It is meant to address a reality that is staring Kentucky in the face: coal won’t be there forever, and the counties whose mountains have produced it for more than a century need something to turn to when the coal either runs out or is no longer worth mining.
What it isn’t meant to do is build arenas in Lexington. “That’s not what this money is for,” Carrie Ray, a research associate at the Mountain Association for Community Economic Development, an organziation based in Berea, Kentucky, told me. “It’s not intended to build a basketball arena that’s nowhere close to the coalfields.”
At first glance, $2.5 million out of more than $100 million that goes to eastern Kentucky counties doesn’t seem like much. But the amount of severance tax money available to mountain counties is declining rapidly. Eastern Kentucky coal production has declined 53 percent since 2000, Ray said, and severance tax revenues dropped 23 percent in 2012 alone. Pair that with state and federal budget cuts, and counties throughout the mountains have struggled to maintain their own budgets. Severance tax revenues that are supposed to go toward economic redevelopment are instead often used to fill budget gaps, to maintain fire and police departments, school systems, or any other local government services that otherwise may be lost.
Using the money to fund an arena, then, is a double punch to the guts of those counties. Money that should be going toward long-term projects is already being used instead to get by right now. Now, some of that money is going toward an arena in a city that isn’t even in coal country. Proponents of the project, like Kentucky House speaker Greg Stumbo (D), have argued that the funds are coming out of a severance tax account that has a surplus and is accessible for counties that do not produce coal.
“To me it’s hard to say there’s a surplus when eastern Kentucky is struggling so much,” Ray said. “And that money could be used to do so much in the region.”
“Diverting these funds seems like a big slap in the face not just to the people of eastern Kentucky but to the Big Blue Nation in general,” Carl Gibson, a organizer, consultant, and “proud Kentuckian and UK fan,” said, using a popular moniker for Kentucky’s fan base. Gibson recently launched a petition asking Calipari, who makes more than $4 million a year as Kentucky’s coach, to speak out against putting severance tax money toward the renovation. On Twitter, he has urged Kentuckians to bombard Calipari (@UKCoachCalipari) with messages against the project.
“John Calipari has the unique position to influence the mayor and the governor,” Gibson said. “Taking crucial development funds from eastern Kentucky counties, this hurts Kentucky in the long-run.”
He isn’t wrong. My family hails, in part, from Barbourville, a small town in the southeast. Coal left Knox County decades ago, and though there are still a few miners, most of the coal you’ll see there is on the trains that rumble by on the tracks that overlook the town circle as they carry it from the bigger mountains up the road. But Barbourville moved along. It is now home to Union College, and many of the people who live there work for the school in some capacity. It is far from a vibrant and growing place — Knox County’s poverty rate is 36.4 percent, double the state’s rate — but the college has helped it put its coal days behind it.
Not every county can have a college. The coal severance funds, even if they have been mismanaged or devoted to projects that don’t foster long-term development in the past, are vital to a region that has seen its jobs evaporate as coal declines and its population dwindles with it. The region is among the most beautiful America has to offer — it is my favorite part of my home state — but it is devastated not just by the coal industry but by poverty, drug abuse, and under-education.
The reality is that eastern Kentucky’s coal counties need far more than the $2.5 million the state is taking to help renovate Rupp Arena. They need local and state politicians who are willing to have a frank conversation about their future and coal’s declining role in it. They need dedicated investments and smarter programs that will help redevelop and prepare the region for that future. They need a promise that there will be a future, one that looks differently than the one that has taken shape since coal employment there began declining three decades ago. They’ll never get any of that, though, with leaders who are more committed to both Kentucky’s coal industry and Kentucky basketball than they are to Kentucky’s people.