As Schools Struggle, West Virginia Governor Still Owes Kentucky $2.5 Million in Taxes
By Will Wright Bill Estep
The billionaire governor of West Virginia said Monday that coal companies linked to his family have paid all the delinquent taxes they owe the state of West Virginia and its counties, but records show the companies still owe millions in Eastern Kentucky.
According to records from county clerk offices, companies linked to Jim Justice owe more than $2.5 million across at least five Kentucky counties, some of which are struggling to fund schools and social services due to budgetary shortfalls.
In Knott County, where Justice's companies owe the most money in Kentucky, one company called Kentucky Fuel Corporation owes about $1.97 million in delinquent taxes, according to the office of Knott County Clerk Ken Gayheart.
Assistant County Attorney Randy Slone said the county has a pending lawsuit against Kentucky Fuel to collect delinquent property taxes.
Slone said he was "a little aggravated" when he heard that Justice paid his delinquent taxes in West Virginia, but failed to do the same in Kentucky.
"The company has put us through heck" to try to collect delinquent taxes, he said. "They tell people all kinds of stuff. They never come through."
Justice told the Herald-Leader Tuesday that "we're not going to walk away from any obligation" in Kentucky, but he did not say when the payments would be made.
"We've kept working and trying to do what we could to get these obligations satisfied," Justice said. "We want to get everything paid as soon as is feasibly possible."
Because Justice has transferred control of the companies to his children, he said he could not comment specifically on how the companies are working to pay the debts.
In two West Virginia counties, Wyoming and McDowell, companies run by members of Justice's family paid each county $2.2 million for unpaid taxes in 2014 and about $1.9 million for 2015, according to the Associated Press. Justice said he did not know the total amount his companies had to pay state and local governments in his home state.
The unpaid taxes in Kentucky come from a time when the coal companies were owned and controlled by Justice, who was elected governor of West Virginia in 2016 as a Democrat. He has since switched his party affiliation to Republican.
Though the state takes a portion of property taxes collected at the county level, much of that money helps fund school districts, local governments, health departments and other services.
According to a Herald-Leader report published in February, the school district in Knott County would receive more than $1 million if Kentucky Fuel paid its delinquent taxes.
At the time, the district projected layoffs and a $100,000 shortfall for the 2018-19 budget due to a lack of revenue.
Knott County Schools Finance Officer Greg Conn said the district received about $1.2 million from the state earlier this year to help curb its budget shortfall. If Justice-linked companies had paid their taxes "the state probably wouldn't have had to do what they had to do," he said.
If the companies would pay what is owed "it would have a big impact," he said.
Conn said the district was forced to cut about $300,000 from its budget over the last year.
Justice-linked companies also owe taxes in Pike, Floyd, Magoffin and Harlan counties, according to the county clerk's offices in each county.
Those debts total $364,000 in Pike; $570,000 in Floyd as of February; more than $50,000 in Magoffin; and about $200,000 in Harlan.
Many of the debts were much smaller originally, but have accrued large amounts of interest and penalties.
In Pike County, for example, a bill originally totaling $104,000 has accrued more than $50,000 in penalties and $9,000 in interest since it was issued in May 2017.
In addition to delinquent taxes, Justice-linked companies are part of ongoing civil suits for alleged breech of contract violations in Kentucky.
One lawsuit in Pike County alleges that Kentucky Fuel broke its contract with J&S Coal Consulting Company, LLC., by failing to pay about $48,000 for 175,000 tons of coal.
According to court records, J&S entered into a contract with Benetech Mining Materials, Inc., which agreed to pay J&S $0.25 per ton of coal mined at a site in Pike County.
Kentucky Fuel at some point bought Benetech, but stopped paying J&S in August 2013 despite its contractual obligation, according to court records.
No action has been taken in that case since Nov. 2017, but an attorney for J&S said the case is ongoing.
(c)2018 the Lexington Herald-Leader (Lexington, Ky.)