Benld City Council Eyes Support for Coal Severance Tax

Benld Council revamps comptroller’s position, eyes support for coal severance tax proposal

March 23, 2016 | Dave Ambrose
The BenGil Post

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Pam Richart of Eco-Justice Collaborative discusses potential legislation to impose a severance tax on Illinois coal sold out of state during Monday night’s meeting of the Benld City Council. The measure, if it became law, would impose a five percent tax on coal sent out of state to generate about $141.5 million annually, to be divided equally among the state’s General Fund, local counties where coal is extracted and a trust fund to help pay for remediating environmental issues resulting from mining activity. Richard and her husband, Lan (seated to the left), founded the not-for-profit Eco-Justice Collaborative after operating an environmental consulting business for several years in the Chicago area. Photo by Dave Ambrose, The BenGil Post

The Benld City Council on Monday night took under advisement the adoption of a resolution in support of legislation being sought by a not-for-profit environmental group to impose a severance tax on coal mined in Illinois. Prior to the meeting, representatives of the Community Futures Initiative, an arm of Eco-Justice Collaborative, presented a brief PowerPoint presentation outlining the proposal. The presentation can be viewed on their website.

Pam Richart, Champaign-Urbana, who founded the Eco-Justice Collaborative with her husband, Lan, told council members a five percent severance tax collected on coal currently sent out of state would generate about $141.5 million in revenue annually. Under the group’s proposal, those funds would be divided equally with one-third going to the state’s General Fund, one-third distributed to coal-producing counties on the basis of production, and one-third set aside for a trust fund to pay for recovery from environmental impacts left behind by coal production operations. Currently, coal sales are taxed at the point of sale, meaning 78 percent of Illinois’ coal production generates no revenue for the state because it is transported across state lines.

Currently, coal sales are taxed at the point of sale, meaning 78 percent of Illinois’ coal production generates no revenue for the state because it is transported across state lines

Richart said Illinois is one of only three of the top 10 coal producing states that does not already impose a severance tax. With the bulk of the coal being burned in Illinois coming from Wyoming, she said Illinois consumers already are paying the cost of the severance tax being passed onto consumers by Wyoming coal producers.

“Coal companies pass the severance tax onto its customers,” Richart said. “It doesn’t cost them anything, it doesn’t cost us anything. We already pay for it on the coal we import from Wyoming.”

The group claims that while coal represents less than one percent of the state’s gross production, the industry gobbles up nearly $20 million a year in tax subsidies, incentives and grants. Money generated from the severance tax would help cover that cost, and assist with cleaning up environmental impacts such as acidic slag piles and leaking ash ponds. Problems such as Benld’s recent issues with mine subsidence also would be subject to financial assistance through the trust fund.

Both Pam and Lan Richart said they have met with some state legislators, most of whom have been receptive to the idea.

“We think most legislators are going to want to say to their constituents that they are part of process to bring money back to their communities,” Pam said.

Mayor Gloria Sidar said she spoke with State Rep. Avery Bourne after the city began experiencing mine subsidence issues early last year.

“I told her the state needs to do something, not to just throw money at it, but something to assist with the kind of problems we’ve had here,” Sidar said, but she worried that the legislature would be able to sweep new revenue generated from the tax to help plug the growing deficit in the state budget.

Richart said that the legislation proposed by the Community Futures Initiative, the money would be earmarked in a way that would preclude it from being diverted to other purposes. Moreover, the amount of money generated, while significant for addressing coal-related environmental issues, would be insufficient for making a dent in the budget deficit.

The money coming in will not help with the state deficit, but it can do a lot at the local level

“The money coming in will not help with the state deficit, but it can do a lot at the local level,” Richart said. “What we need is a bill that mandates the split we’re proposing.”

The council took no immediate action on the resolution of support, but will likely consider it at the next regular meeting in April.

In a related matter, Sidar reported that the Illinois Mine Subsidence Insurance Agency had sent a letter advising the city it will install pins and monitors at City Hall to help the agency determine if ongoing damage to the building is the result of mine subsidence and is eligible for insurance coverage. The letter indicated the study will continue for 120 days, after which another 120 days will be required to make a determination.

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