Ohio Senate cuts DeWine's proposed $4M for coal reclamation fund by half
The Ohio Senate on Thursday cut in half the $4 million Gov. Mike DeWine's proposed biennial budget would have restored to the state’s imperiled coal reclamation forfeiture fund.
DeWine’s proposed $2 million to go into the fund this year with another $2 million to follow the next year.
DeWine put the provision in the budget to help replace most of the $5 million raided from the fund when former Gov. John Kasich’s administration withdrew money in 2017 to balance the state budget after a revenue shortfall.
There’s been concern about the health of the reclamation fund from both environmentalists and coal lobbyists.
“It’s a ticking time bomb; just can’t kick this can down the road anymore. It could be a real problem for future legislatures and taxpayers in Ohio in general,” said Michael D. Cope, president of the Ohio Coal Association.
The reclamation fund, which pools money from all mining companies permitted to operate in Ohio, is supposed to act as a safety net for when coal companies abandon mining sites and don’t reclaim the land. The fund balance is about $22.2 million, according to the latest draft of the actuarial report due to DeWine’s office on June 30.
“With the current fund balance, the reclamation cost of a forfeiture of a single permit holder can be financed,” the report states. “On the other side of the spectrum, should one of the permit holders with a large number of sites become financially troubled, the cost to the fund for reclamation could easily exceed $50 million with the largest potentially exceeding $200 million.”
While the Ohio House signed off on DeWine's request, the Senate cut the proposed amount down to a single $2 million funding for fiscal year 2020, according to a main operating appropriations bill.
State Sen. Matt Dolan, a Cuyahoga County Republican who chairs the senate finance committee, said the amount was cut in half because senators "didn't know if they needed as much money. We'll put $2 million in and see how it's being used."
Dolan said no actuarial reports for the fund or other supporting documents were reviewed by the senate finance committee before the decision was made. Because the last administration felt it was OK to raid the fund, "it gives the suggestion perhaps the $2 million would be adequate," he told The Dispatch.
Dan Tierney, spokesman for DeWine, said he anticipates this will be part of negotiations as the budget process moves forward to a conference committee.
"We are aware that the Senate version that passed today only had one fiscal year of $2 million. ... We do plan on bringing this up in conference committee," he said.
Ohio has produced 3.42 million tons of coal through June 15 this year — an 11 percent decrease compared with the same period last year, according to the latest U.S. Energy Information Administration report.
“It’s not as if we’re not contributing (to the fund). We are," Cope said of coal companies. "It’s just that our production is down and it’s based on tonnage."
Coal companies pay $2,500 for each acre they will mine. That money is kept in case a company abandons the mining site; the state would use that bond money to reclaim it.
In addition to the amount posted per acre, coal companies pay a severance tax of 14 cents per ton of coal that goes into the reclamation fund. That money is then pooled to reclaim mining sites.
“If the production is down, we’re not contributing as much," Cope said.
Mike Sliva, who chairs the advisory board for the state's coal reclamation fund, said that while the fund appears to be solvent per the latest analysis, there's still concern about a shock loss and overall health of the fund.
"We continue to stress to the legislature ... We feel that's very important that those funds be returned back into our balance," he said.