KRS 42.455(2)(3)(4) governs the allowable uses of LGEAF funds and specifically prohibits the expenditure of LGEAF for the expenses related to the administration of government. Kentucky statute directs that coal "impact" counties must expend 100 percent of funds in the transportation category in accordance with KRS 42.470(1)(c), and that thirty percent of all funds given to coal "producer" counties must be expended on the county coal haul road system. The remaining 70 percent of the fund shall be spent on priority categories limited to the following but in no event shall grants obtained under this program be used for expenses related to administration of government:

  • Public safety, including law enforcement, fire protection, ambulance service and other related services.
  • Environmental protection, including sewage disposal, sanitation, solid waste and other related programs,
  • Public transportation, including mass transit systems, streets and roads.
  • Health.
  • Recreation.
  • Libraries and educational facilities,
  • Services for the poor, aged, and handicapped.
  • Industrial and economic development.
  • Vocational education:
  • Workforce training; and
  • Secondary wood industry development.

Policy

The budget suspends KRS 42.470(1)(a) suspending the statutory severance allocations formula and directs 70 percent of moneys in the Local Government Economic Assistance Fund to be distributed to each coal producing county on the basis of the ratio of coal severed in each respective county to the coal severed statewide. It also suspends KRS 42.470(1)(c), so that no allocation shall be distributed to non-coal producing counties and suspends KRS 42.455(2) so that no funds appropriated to the Local Government Economic Assistance Fund are required to be spent on the coal haul road system.

Before allocations to either Local Government Economic Assistance Fund or Local Government Economic Development Fund, a number of specified uses of General Fund coal severance tax revenues are outlined as follows:

Off-the-Top Funding Items: funds are provided for specified uses from General Fund coal severance tax revenues, many resulting from the suspension of KRS 42.450 to 42.495:

  • $669,700 for the Department for Local Government to administer Local Government Economic Development Fund and Local Government Economic Assistance Fund programs
  • $17,747,700 in fiscal year 2027 and $16,786,600 in fiscal year 2028 for debt service to the Finance and Administration Cabinet equating to 100 percent of the debt service needed to support bonds authorized in the 2008, and 2010 sessions of the General Assembly.