State Using Coal Severance Tax Money for Rupp Arena

The Lexington Herald Leader broke a story last night that is sure to cause some controversy over the next few days. The Kentucky State Legislature is using money from the coal severance tax to fund the design phase of the new Rupp Arena project. For those of you unfamiliar with that tax, it is placed on owners of coal mines based upon the work done upon their lands. The theory behind the tax is that because there is some taking of value from land in the mountains due to the mining, the tax is an offset of the value from such activities. Such taxes are taken by states across America and in Kentucky, a percentage of the money that comes from the tax has supposedly been reinvested back into Eastern Kentucky through projects for the area. The money has often been a source of controversy but it has generally been accepted that it would flow back into the area from which it came. However now, because the state has been unable to come up with any other source of money for the Rupp Arena design project, this Eastern Kentucky tax is being used for the Lexington project. Many leaders in the mountains are upset about this, suggesting that if the tax is taken due to the mining in Eastern Kentucky, it should be continued to be invested in the area. Kentucky state politicians have countered, arguing about the importance of UK basketball to the entire area, including Eastern Kentucky, including this quote by Speaker of the House, Greg Stumbo: "Though Rupp is not in the coalfields, many believe it plays an important role in the state because of the tradition of the University of Kentucky basketball program, and there is strong alumni support in our region as well." I have mixed emotions on the issue, but disagree with the premise that money invested in Lexington and Rupp Arena is the same as in Eastern Kentucky. Much of the Rupp Arena project has nothing to do with UK, and much of the design is being focused upon the Lexington economic area around Rupp Arena, including cultural areas that are designed to benefit Lexington but do little for Eastern Kentucky. Either way, the issue will continue to percolate over the next few weeks and should be very interesting to follow going forward.