The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Wednesday, January 23, 2002

USEC tax exemption foes do not trouble sponsors

By Bill Bartleman

FRANKFORT, Ky.--A bill to exempt enriched uranium produced at the Paducah Gaseous Diffusion Plant from the state sales tax met with opposition Tuesday, but supporters don't think the measure is dead.

House Bill 294 was approved by the House Appropriations and Revenue Committee on a 14-4 vote. Rep. Frank Rasche, D-Paducah, who managed the bill, said the measure is needed as USEC Inc. considers moving the shipping operation from its closed plant in Portsmouth, Ohio, to Paducah.

The four who voted against the measure represent districts in northeastern Kentucky, just across the Ohio border from Portsmouth.

Rep. Rocky Adkins, D-Sandy Hook, said his district was hurt by last summer's closing of the production facilities at the Portsmouth Gaseous Diffusion Plant. Relocating the shipping operation will cost another 400 jobs.

"If passing of this bill means the loss of more jobs at Portsmouth, then I can't be for it," Adkins said. "We consider that (Portsmouth) part of Kentucky."

The Paducah plant is the nation's only facility that enriches uranium for use as fuel for nuclear power plants. Uranium enriched in Paducah is sent to Ohio because the Paducah plant doesn't have the equipment to prepare it for shipment to customers.

Since it is shipped from Ohio, it is subject to Ohio tax laws that exempts it from sales tax there. Rasche said the measure will not cause a decline in Kentucky tax revenue "because we aren't collecting any taxes on it now."

David York, USEC director of legislative affairs, said USEC is considering upgrading the Paducah plant so it can ship directly to customers. The upgrade would cost about $13 million. The tax exemption is one of several economic issues to be considered in deciding when that work is done.

The original plan was to move the shipping operation to Paducah in 2004 or 2005, but that could be accelerated to 2003, according to company officials.

Rep. Charles Geveden, D-Wickliffe, primary sponsor of the bill, said he doesn't think the opposition will cause problems for the bill. "I don't think they fully understand it," he said.

Rasche added that the final shipping operation is expected to be moved from Ohio, with or without the tax exemption. "It could be moved to some neighboring state that is closer to Paducah," he said. "Rather than shipping it 200 or 300 miles to Ohio, they may be able to ship it 15 miles to Metropolis, Ill."

York said moving the operation to Paducah will create only a few new jobs because it already has a crew involved in shipping the finished product to Portsmouth.

The measure goes to the full House, where it could come up for a vote later in the week.