The Paducah Sun
The Paducah Sun
Paducah, Kentucky
Monday, April 01, 2002

Budget plans exempt sales tax for USEC
The Senate plan would penalize the Paducah plant's operator for layoffs, but the House plan would not. Neither plan is assured.

By Bill Bartleman bbartleman@paducahsun.com--270.575.8650

FRANKFORT, Ky.--Separate budgets being prepared by the House and Senate will include provisions to exempt enriched uranium produced at the Paducah Gaseous Diffusion Plant from the state's 6 percent sales tax.

However, the provisions will be different and will have to be resolved by House and Senate negotiators.

The Senate version drafted by Sen. Bob Leeper will tie the exemption to the current employment level of 1,496, while the House version proposed by Reps. Frank Rasche and Charles Geveden is a straight exemption without requiring commitments by USEC Inc., the plant operator.

Whether either provision is approved depends on lawmakers resolving other major differences over the budget. Negotiations broke down on Saturday over public financing for gubernatorial campaigns. The Senate wants to eliminate tax-funded campaigns, while the House wants them to continue.

If the House and Senate can't agree on a budget by April 15, when the 2002 session must adjourn, Gov. Paul Patton will be forced to call a special session before the current fiscal year ends on June 30.

USEC wants the tax exemption because it is moving its final shipping operation from Portsmouth, Ohio, to Paducah. Work to upgrade equipment in Paducah is expected to be completed early this summer.

Without the exemption, USEC and its customers will have to pay the sales tax on enriched uranium that is shipped from Paducah.

A bill proposing the change appeared headed for easy passage last month until it was blocked by leaders of the plant's production workers union who wanted it tied to job guarantees and northeastern Kentucky lawmakers who were upset over job cuts in Portsmouth, located across the Ohio River from Ashland. Some Kentuckians lost jobs because the Ohio plant was closed and because of the relocation of the final shipping operation.

Leeper said that under his provision, USEC would get the full exemption if it continued to employ 1,496 or more in both union and nonunion jobs. If it drops below that level, the exemption would be reduced in proportion to the job cuts. For example, if employment dropped by 10 percent, USEC would lose 10 percent of the $6 million it would save under the full exemption, Leeper said.

He is asking for the job commitment because of concerns by the union that as many as 100 jobs could be cut in Paducah this summer.

"It gives a signal that we are concerned about USEC making a commitment in exchange for the incentive and at the same time recognizing the importance of the plant and the jobs in the community," Leeper said.

He would not say if his provision is negotiable when efforts are made to resolve differences in the House and Senate versions. "All I can say is that there are two steps left in the budget process where changes can be made," Leeper said.

Rasche said Leeper's proposal makes a statement for the issues that have been raised between the union and USEC. Officials on both sides have been discussing numerous issues for several weeks in hopes of reaching a compromise and removing the union's objection to the exemption. However, those negotiations ended last week without an agreement.

"I haven't seen Sen. Leeper's proposal in writing and don't know exactly how it will work or how practical it is," Rasche said. "I plan to go to Frankfort early to review the issues in an effort to try to work things out" and please both the union and USEC.

USEC spokeswoman Elizabeth Stuckle, contacted late Sunday, said, "Since it is a legislative issue, I don't want to get between the two sides."

Leon Owens, president of the union, did not return a phone message Sunday night. Geveden, D-Wickliffe, was not available for comment.