Fund that helps black-lung victims at risk if coal tax eliminated: watchdog

The government’s potential failure to reauthorize a tax on coal production could pose a threat to a program that helps coal workers suffering from black lung, a federal watchdog has found.

A Government Accountability Office (GAO) report released Monday warns that the Black Lung Disability Trust Fund will be at risk if the government fails to extend or increase a tax on coal production, which goes toward funding the program.

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The report estimates that a 55 percent decrease on the coal tax rate, which is expected to take effect in 2019, along with declining coal production, will threaten the program. This in turn could lead to increased borrowing that may exceed $15 billion by 2050, the report found.

Currently, coal companies have to pay a tax of $1.10 per ton on underground coal production toward the fund, but that amount will revert to 50 cents, the 1977 level. 

The trust fund provides monthly payments and medical treatment to coal miners disabled from pneumoconiosis, or black lung, as a direct result of their employment at or near U.S. coal mines. According to the GAO, the trust fund has paid $184 million in benefits to more than 25,000 coal miners and their dependents. 

“With the scheduled 2019 tax rate decrease, our moderate case simulation suggests that expected revenue will likely be insufficient to cover combined black lung benefit payments and administrative costs, as well as debt repayment expenditures,” the GAO report read.

The report additionally noted that the fund has for decades had to borrow from a Treasury Department trust fund to break even, and at times has been granted debt forgiveness, which is paid off by taxpayer money.

Coal industry representatives argue that the trust is threatened not due to the change in tax revenue, but rather to the trust’s issues with balancing its budget.

“Borrowing is necessary not to cover claims but for the government to essentially repay itself for legacy debt from the 70s and 80s,” read a statement from the National Mining Association Industry released Monday. “Industry should not be subject to a tax increase due to government mismanagement of a program, and the resulting debt the government now owes itself.”

In its report, the GAO gave three suggestions to try to improve the fund’s solvency: continue the coal tax at its current rate; increase the rate by 25 percent to eliminate debt entirely by 2050; or, absent the two previous choices, find a way to appropriate $7.8 billion into the fund.

The third option would be a major change of course for the fund, putting the responsibility of paying for the care of people with black lung from coal companies in the hands of taxpayers.

The third option would transfer the liability burden from coal companies to taxpayers.