ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Thursday, January 9, 1997 TAG: 9701100023
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
After losing nearly 7,000 mining jobs in the past decade, Virginia has stabilized its coal industry by doubling the coal tax credit and relaxing mine reclamation rules, industry spokesmen said Wednesday.
Pittston Coal Co. said the tax credit played a key role in its decision to open two mines this month and a third in March, adding 230 workers, and to reopen a coal preparation plant.
Cumberland River Coal Co. and several small mining companies plan to take advantage of the tax credit and new reclamation rules by reopening abandoned strip mines, said Mike Abbott, state Division of Mines spokesman.
Virginia Mining Association director Dink Shackleford said the industry's future looked bleak at this time last year, before the changes took place.
``There wasn't a whole lot to be optimistic about,'' Shackleford said. ``I felt we were drowning.''
The coal industry in Virginia has been in a precipitous decline as coal seams get progressively thinner and more expensive to mine. Employment was 14,339 in 1980, 12,525 in 1986, 10,265 in 1990, and 5,608 through September 1996.
Shackleford said companies that were considering a move to bigger coal seams in West Virginia and Kentucky may stick around for a while.
``This will encourage the mining of more seams,'' he said. ``We're probably just treading water now, but that's about the best we can expect.''
The 1996 General Assembly increased a tax credit for coal companies from 60 cents to $2 per ton for coal mined from seams smaller than 33 inches, and from 50 cents to $1 per ton mined from seams larger than 33 inches.
The idea was to give coal producers an incentive to continue mining seams they would otherwise abandon as uneconomical, and to forestall for a few years the mines' inevitable closing.
The tax credit, phased in over five years, will cost the state about $188 million but save 3,000 to 5,000 jobs over the next decade, lawmakers said.
The use of tax laws to benefit a particular industry is not a new public policy. Virginia offers tax credits to encourage investment in certain kinds of equipment and for creation of new jobs.
But the coal tax credit is the first to provide tax relief for each unit of a company's production, according to the Virginia Department of Taxation.
``The rest of the country is watching what Virginia does because we're the first area in the country running out of coal,'' Shackleford said.
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