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Harlan Fiscal Court must slash expenditures by $600,000 as a projected loss of $1 million in revenue appears imminent in the coming year.

Cuts in every department were discussed at a special called meeting of the court on Thursday.

Having to submit a new budget in approximately nine weeks, Treasurer Ryan Creech said coal severance funds to the county had dropped from $3.1 million in 2012 to $2.2 million in 2013.

Creech said mineral severance funds coming to the county dropped from $385,460 in 2012 to $275,875 in 2013.

Cuts were discussed for contract labor, using county employees to perform the work instead, and the county’s $50,000 budget for festivals will be slashed $40,000, leaving only the Poke Sallet Festival and the Kingdom Come Swappin’ Meetin’ with county support of $5,000 each. These are the county’s longest standing festivals.

Magistrate David Kennedy said he will cut the Sleepy Hollow Golf Course budget by 50 percent. He suggested cuts also be made at the Stone Mountain Boat Dock, with a fee increase of 50 percent for boat dock and slip rentals.

Kennedy said he would like to see the dock only open certain hours to reduce overtime costs.

Harlan County Sheriff Marvin Lipfird said he will cut contract labor with Longworth Auto Repair, letting county employees do the work to save money.

Lipfird said he recently lost one employee and another is retiring. He said he can cut two more positions and overtime if needed.

“The biggest issue we’re going to have in 2013 is coal severance,” said Judge-Executive Joe Grieshop. “Where it has been running about $40 million sent up to the state, and we only get 23 percent of that, will drop to about $17 million for 2013. We’re really going back to the 2005-2006 era of pricing and volume of coal.”

Grieshop said, “This budget, which in the past has been so strongly reliant on coal, will not be the same budget laid before you next week. There will be cuts and if you don’t do them now, they will be done to you. You can’t spend what you don’t have.”

Creech said coal severance monies fund county parks, recycling, festivals and other things, such as Little League, the boat dock and golf course.

“When you talk about over a $1 million drop in revenues from a prior year, that’s a big drop,” said Creech.

Kennedy said Alpha Natural Resources is “pulling out equipment and preparing to shut their operations down permanently” in the Tri-Cities area.

He said CSX has “abandoned another section of rail line up near Cumberland.”

“Everybody I have talked to says prepare for a long drought in the coal business,” said Kennedy. “Already in our area of the county, we’re seeing things go up for sale, young miners trying to leave because their severance pay is over and houses are going up for sale.”

Magistrate Delbert Stephens said the picture is bleak with reported cuts in education throughout the county and cuts in county and city governments.

Complimenting the Harlan County Detention Center, Creech said the jail has been successful in housing state inmates to “basically cover their wages.” This, he said, is a “huge” help to the county.

Creech said the county had been receiving $300,000 per year for housing other counties’ inmates. However, the county has been “undercut” and now receives only $30,000.

“This is where coal severance money comes into effect,” said Creech. “We’ve used general fund and LGEA money to try and keep the jail on a good path. So, when you see that revenue drop, it effects every fund. The road fund will not be getting as much money. They get 30 percent each year of coal severance money and that amounts to about $900,000 per year. They will now be getting around $700,000 or less. That’s a $200,000 drop.”

Creech said tax revenues will be down because “people aren’t working and may not pay their taxes.”

“We’ve collected only 89.5 percent this year in comparison to about 95 percent in the past,” said Lipfird. “That’s a big drop and will probably be worse next year.”

Looking at the county’s future, Magistrate Jonathan Pope said “from everything he is reading there will be a 10-year drought on coal production.”

“That’s scary to think about — 10 years of coal production being like this,” said Pope.

Since January, Creech said motor vehicle tax revenue has been dropping as well. Instead of receiving $22,000 per month, the county is now seeing only about $18,000.

“We’re just going to have to make the necessary cuts and changes to keep the county in the black and we’re ready and willing to do that to survive,” said Kennedy. “I think the general public of Harlan County, unless they’ve had their heads in the sand for the last year, know what is going on and they’re expecting these cuts.”

Magistrate Jim Roddy said he wasn’t against taking a pay cut to show residents they are sincere in their efforts to keep the county afloat.

Suggestions were made to make cuts in health care costs for county employees. Magistrates agreed employees may have to begin paying “some amount” for coverage and possibly have higher deductibles and co-pays.

“This will save the county about $24,000 per year,” said Creech. “The major cost to the county is wages and benefits. I don’t know any one who wants to look at that part of it. The biggest departments are the jail, followed by the sheriff’s office and we spend a lot of money on trash pickup.”

Kennedy suggested charging a $50 fee for dropping trash trailers for residents. He said this will pay for dumping fees at the landfill at approximately $45 per trailer. He said instead of cutting the project completely, charging a fee will eliminate county employees picking up trailers only half full and then having to return them to the same area within days.

“The county just can’t continue providing these free services — it’s just got to stop,” said Kennedy.

Suggestions were also made to purchase uniforms for county employees instead of renting them, and cut the laundering service.

“I’m new at this — this being my first time on the budget, but I see the writing on the wall and I can read it — we’re in trouble and we’re going to have to cut from the sheriff to Lakis (Mavinidis) to the road department. Everybody is going to have to pitch in or we’re going to sink the ship,” said Stephens.

Harlan County Clerk Donna Hoskins said her office is not collecting revenue like last year. She suggested cutting office hours to save money, even though it will not be popular with the public. She said for the quarter, revenue is down $100,000.

After reviewing bills to be paid, Roddy questioned a recent large expenditure for a concrete restroom placed on a trail near Kingdom Come State Park. He said magistrates were not consulted on the issue. He warned Grieshop about spending before consulting his court when cuts are having to be made.

“You need to involve us in this kind of stuff,” said Roddy. “I’m not going to come down here wasting my time trying to cut back on everything including the people in my district when you’re still making large expenditures.”

The issue was tabled after it was decided Grieshop and Creech will meet with all department heads asking for cuts in every department. They will return with a plan for magistrates to approve.

Reach Nola Sizemore at 606-573-4510, ext. 115, nsizemore@civitasmedia.com