The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Friday, March 01, 2002

Enriched uranium tax exemption bill faltering
The bill was reassigned to the House Appropriations and Revenue Committee. Bills reassigned this late in a session usually die.

By Bill Bartleman

FRANKFORT, Ky.--Legislation exempting enriched uranium produced at the Paducah Gaseous Diffusion Plant from the state sales tax may have been hung out to dry this week when it was reassigned to the House Appropriations and Revenue Committee.

"Usually, when a bill is reassigned to a committee this late in the session it kills the bill," said John Cooper, a lobbyist whose clients include the Paducah Area Chamber of Commerce.

USEC Inc., which operates the plant, sought the exemption amid preparation to move final shipping operations from its closed plant in Portsmouth, Ohio, to Paducah. The company originally planned to move the operation in 2004 but decided doing it this year would save money.

Kentucky lawmakers from the Ashland area, across the Ohio River from Portsmouth, are against the bill because moving the shipping operation would eliminate 440 jobs. Some of the workers live in Kentucky, according to Rep. Rocky Adkins, D-Sandy Hook.

The opposition persisted despite USEC's announcement two weeks ago that the move and the job losses were definite.

Adkins said he and others from that region don't want to do anything to hurt Paducah, but he questioned whether USEC needs the incentive. Enriched uranium is exempt from the sales tax in Ohio.

Exemption from the 6 percent tax would save USEC and its customers at least $5 million a year, according to USEC.

"They've already announced they are moving without the incentive, so we wonder if it really is needed," Adkins said.

The bill introduced by Rep. Charles Geveden, D-Wickliffe, received initial approval by the Appropriations and Revenue Committee on Jan. 22. It was posted for House consideration Jan. 31 but was never called for a vote. Without discussion, the Rules Committee this week sent the bill back to the committee.

House Majority Leader Greg Stumbo cited concern about a net loss of jobs for Kentuckians as his reason for not setting up a House vote. Officials said moving the operation to Paducah would create only 35 to 50 new jobs because of the number of employees already involved in shipping the unfinished uranium.

USEC officials said fewer than 40 Portsmouth workers live in Kentucky, and that some probably would not be affected by the change. Also, the company said, Portsmouth workers will be offered jobs in Paducah.

Geveden said he had not been told why the bill was sent back to committee, but wasn't ready to declare it dead. "We'll work on it and see what we can do," he said. "Nothing is ever dead until the end of the session."

Asked what he would do to revive the bill, Geveden said, "We'll talk to people."

He was told the measure was opposed by the AFL-CIO, an effort to protect union workers in Ohio who will lose their jobs when the shipping operation is moved.

USEC confirmed on Feb. 14 that steps will begin in April to move the final shipping to Paducah to make sure the process is completed by summer. The estimated $29 million cost includes $13 million to upgrade the Paducah plant.

USEC's annual savings of $40 million will be realized gradually over three or four years through job cuts and lower overhead, the company said.

Geveden and Cooper say if the bill doesn't pass, they probably could get it through in 2003 as opposition subsides in the months after the transfer is completed.

Failure of the bill could lead USEC to change shipping procedures and avoid the tax, but company officials said they'd rather not do that. They could opt to ship the final product in bulk to processors, and by doing so change the ownership transfer point from Kentucky to the state where the processing plant is located.

The enriched uranium is made into fuel for nuclear power plants.