Legislators Extend Coal Severance Tax to Support West Alabama Communities Through 2031
April 12, 2021 - A critical source of funding for West Alabama counties, communities and organizations has been renewed by the Alabama Legislature.
The coal severance tax, a fee levied on the tonnage of extracted coal with proceeds returned to the coal’s county of origin, was set to expire Sept. 30 of this year but now has been extended through 2031.
This extension, which means millions of dollars each year to Tuscaloosa, Fayette, Winston and Walker counties, was the result of legislative efforts by a team of Republicans that included Sen. Gerald Allen of Tuscaloosa, Senate Majority Leader Greg Reed of Jasper, who sponsored the legislation in the Senate, and Reps. Bill Poole, Rodney Sullivan, Rich Wingo and Kyle South, the original sponsor of House Bill 219 that was signed into law by Gov. Kay Ivey on April 1.
“This is a very important resource for our community and it has a significant economic impact in Fayette County,” said South, of Fayette, in a news release announcing the tax extension. “Reauthorizing this coal severance tax was a key priority of mine in the House, and I appreciate the support it has received from the coal industry, the people of Fayette County, and the local leaders who have aided in this effort.
“I look forward to seeing the benefits this legislation will provide the people of my district.”
According to the newly adopted legislation, which dates back to 1971 and expires every 10 years, the coal severance tax will bring the following to each county:
• Winston County: $100,000 per year, transferred to the Winston County General Fund.
• Walker County: $100,000 per year, transferred to the Walker County Economic and Industrial Development Authority.
• Fayette County: $50,000 per year, transferred to the West Alabama Development Association of Fayette County.
• Tuscaloosa County: $500,000 per year to the Tuscaloosa County General Fund.
Sen. Maj. Leader Greg Reed
The Tuscaloosa County allocation, being the largest, also gets divided up among the most groups and agencies. Based on the new legislation, these proceeds will be divided thusly:
• $225,000 to the Tuscaloosa County Board of Education
• $150,000 to the Tuscaloosa County Public Library
• $100,000 to the town of Brookwood
• $50,000 to the town of Vance
• $13,000 to the town of Coaling
• $13,000 to the town of Coker
• $13,000 to the town of Lake View
• $11,000 to the Tuscaloosa County Judicial Library Fund.
Depending on the amount of coal extracted each year, the annual revenue from the coal severance tax fluctuates. The legislation accounts for that.
If the total amount available to the Tuscaloosa County general fund is less than $575,000, the amount that is available will be prorated among the entities named in the same proportion as the designated allocations.
And should the Tuscaloosa County General Fund receive less than $225,000, the Tuscaloosa County school system will receive the entire distribution.
But if Tuscaloosa County gets more than $575,000, then a new designation kicks in:
In the event the allocation to the Tuscaloosa County General Fund is $575,000 or, the total amount the excess available gets prorated as follows:
• 80% of the excess will go to the Tuscaloosa County Board of Education
• 12% of the excess will go to the Tuscaloosa County Public Library
• 8% of the excess to the Tuscaloosa County General Fund for the purpose of supporting the volunteer fire departments in Tuscaloosa County.
“This legislation will provide for critically important funding for Tuscaloosa County,” Allen said. “The extension of the coal severance tax will reinvest millions of dollars back into our community to promote educational, community and economic projects.
“I look forward to seeing what these important resources do for our community. Bringing financial and economic support to Tuscaloosa County will continue to be a top priority of mine in the Senate as I work to improve the quality of life for the citizens of Tuscaloosa.”
And Reed, whose district includes parts of five Alabama counties, said one of the reasons he supported the bill is because of coal’s history within his family.
“The roots of coal mining run deep in our community, and the significance of this critical industry is on full display in the resources provided by this bill,” Reed said. “Coal is in the fiber of who I am. My wife’s grandfather was a coal miner. Her daddy was a coal miner. Both of my grandfathers were retired coal miners. And through this legislation, coal mining will continue to provide a great benefit to our community in the form of millions of dollars to Fayette, Winston and Walker counties.”