Julia GoadStaff Writer
August 7, 2012
JULIA ROBERTS GOAD
PIKEVILLE, Ky. — In a heavily debated decision, the Pike County Fiscal Court agreed to support request a to use multi-county coal severance funds to fund efforts to bring commercial air service to the Pikeville/Pike County Airport.
In a courtroom filled to near capacity with people involved in the debate, the Court approved the resolution 5 - 2. Judge Executive Wayne T. Rutherford reversed his previous position and voted to throw his support behind the request currently pending before the Kentucky Department of Local Government of an appropriation of $1 million from the multi-county coal severance tax fund to the City of Pikeville, to be used to support the initial profitability and long-term sustainability of an airline.
The money is part of a proposed revenue guarantee package that would be used to recruit a major airline to service the airport (whose code letters are PBX). That package has been a point of contention at Fiscal Court. The Floyd County Fiscal Court has already passed a resolution supporting the use of the tax money to attract an airline to PBX.
The concept is that some money is set aside in as the revenue guarantee fund.
An airline doing business in the county would set a financial goal for each month. If the company falls short, money from the revenue guarantee package would be used to bring the amount of money the airline makes up to the monthly goal. The money would be given to the airline on a monthly basis so the company would not incur financial losses during the first two years of operation.
The Airport Authority has already secured a $650,000 grant from the Department of Transportation which would be part of the $2.5 million package, along with money from counties in West Virginia and Virginia that would be serviced by the airline, and funds from a travel bank.
Luke Schmidt of L.B. Schmidt and Associates, a consulting company, hired by the City of Pikeville and the Eastern Kentucky Chamber of Commerce to study bringing commercial air service to Pike County, gave a snapshot of the project so far, calling the project He said commercial air service is vital to supporting existing businesses as well as recruiting new ones to Pike County.
Two court members, District One Magistrate Jeff Anderson and District Six Magistrate Chris Harris, were the only “no” votes when the court voted to support the request.
“Until now, in the public eye, but it has been a one-sided conversation in favor of the project,” Magistrate Harris said.”That is due, in large part to a publicity campaign by the Chamber of Commerce, the newspaper … you have done a good job at getting the word out for your side of the story. But there is the rest of the story.”
“My opinion of what we are looking at is corporate welfare,” Harris said. “We are making sure that airlines will make a profit.”
He added that, if PBX has such potential for profit, he did not understand why the Airport Authority was having to work so hard to bring their service to PBX.
“I am surprised that only two airlines are interested if we are guaranteeing these folks that they’re going to make money,” Harris said.
“You can characterize it as corporate welfare, but I think it is a job creator,” Luke Schmidt said. “The money is there, communities apply for it every year, if the money is available, doesn’t it make sense to try to get your fair share it?”
“No,” Magistrate Harris said. “I don’t subscribe to that theory, that there is this money out there, and we need to waste it before somebody else does. That’s a different philosophy maybe than a lot of other politicians have, I don’t think just because the money is there that we need to go waste that money. I think we, as elected officials, have a duty to the public to protect their tax dollars, to only use their tax dollars on projects that have a good likelihood of success.”
Harris said that with the bleak financial outlook the county is facing caused by the decrease in coal severance funds, he felt government should be spending less money, not investing in the airport project.
“The coal industry is cutting back,” he said. “The airlines are cutting back because less people are flying. Our population in this area is declining. Those are facts.”
He said he thought the project was trying to attract airlines “by throwing tax dollars at them.”.
“We’re saying, ‘Here, look at all this money you can have if you come here and operate,’” Harris said. “If our area was a good candidate for commercial air service, it wouldn’t be much of a sale. I’m not convinced that this project will continue after the subsidy ends.”
Harris said people in his district do not see the project as a benefit to the county.
District One Magistrate said that while he appreciates that the Airport Authority is operating in a more transparent and communicative manner, he still does not think the commercial air service is a viable project for Pike County.
“We want the area to progress,” Anderson said. “But we have had layoffs, it’s like the industry has taken a tremendous gut-punch. We need to manage our money efficiently and effectively. Will it succeed? I don’t think so, I hope I’m wrong.”
Judge Executive Wayne T. Rutherford has had a position that the Fiscal Court was left out of much of the latest airport business by the City of Pikeville and the Airport Authority. He has publicly opposed the use of multi-county money to support the revenue guarantee, but changed his position - with reservations.
“No one worked harder to build this airport than I did,” Rutherford said. “The city needs to sit down with us, and not go off on your own with projects we have worked on. I have had serious doubts, but we are a progressive community and we need to stay that way. I am willing to take a chance, we need to move on.”