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Budget watchdog reports black-lung trust fund may owe taxpayers $15.4B by 2050

A self-proclaimed nonpartisan budget watchdog suggested that the Black Lung Disability Trust Fund's outstanding debt to the U.S. Treasury could reach $15.4 billion by 2050 due to the reduced coal excise tax rate on coal producers.

The federal excise tax on coal mined and sold domestically provides for the Black Lung Disability Trust Fund, which compensates miners who develop pneumoconiosis, or black lung disease, from working in the coal mines. That rate had been 55 cents per ton of coal from surface mines and $1.10 per ton from underground mines since 1986. But it expired at the end of 2018 after legislative attempts to extend the rate failed. In January, it declined to 1978 levels, when the fund was established, of 25 cents per ton of coal from surface mines and 50 cents per ton from underground operations.

The Taxpayers for Common Sense, which describes itself as an organization working to ensure that the government spends taxpayer money responsibly, wrote in a report released Dec. 10 that the program was created to ensure coal miners receive workers' compensation for contracting the deadly disease, and it intended for the coal industry, rather than taxpayers, to bear much of the expense. But the fund has had to borrow billions of dollars from the U.S. Treasury's general fund because the coal excise tax rate has not generated enough revenue amid coal company bankruptcies and a declining industry.

"In fact, the Trust Fund has run a deficit every year since its inception and has had to borrow billions from the Treasury to meet its obligations," the report states. "Congress has also been forced to forgive and refinance significant portions of the Trust Fund's debt to taxpayers."

The U.S. Government Accountability Office estimated that the tax rate would need to increase by 25% from 2018's levels to eliminate the fund's debt by 2050. The office estimated that the fund's revenue may decrease from about $485 million in fiscal 2018 to about $298 million in fiscal 2019 and continue decreasing through fiscal 2050, according to the report.

The fund's expenses may continue to climb given the increasing prevalence of black lung disease. Depending on the number of affected miners and the amount of coal produced, the office estimated that the trust fund will owe taxpayers anywhere from more than $15 billion to $27 billion by fiscal year 2050.

The U.S. Department of Labor wrote in a request that this year's revenue from the fund will cover the definite appropriation for administration, indefinite amounts for benefits payments and about 16% of interest payments on bonds and advances, according to the report. But in 2020, the revenue is not expected to cover those interest payments and only 80% of the indefinite appropriation amount for benefits payments, while the definite appropriation for administration is fully covered.

A spokesperson for the National Mining Association, which advocates for the U.S. mining sector, has said in response to proposed legislation to increase the rate back to 2018 levels that raising the tax rate on coal producers could lead to the loss of more coal jobs and disadvantage producers competing with other energy sources.