Date Available
9-19-2025
Year of Publication
2025
Document Type
Graduate Capstone Project
Degree Name
Master of Public Financial Management
College
Graduate School
Department/School/Program
Public Policy and Administration
Faculty
Urton Anderson
Committee Member
Caroline Weber
Faculty
John Foster
Abstract
Governments levy severance taxes on the extraction of natural resources such as coal, oil, and natural gas. This can be a substantial source of revenue for these entities, but overreliance on this has led to what is now known through extensive research as the so-called ‘resource curse’. This has been observed to create political instability, corruption, and repression within resource-rich areas. Additionally, it cripples the ability of the area to pursue future non-resource related economic development after the resource is depleted. A Sovereign Wealth Fund has been touted as one such solution to bridge this gap as an intergenerational wealth transfer while also providing for current financial stability.
Kentucky’s long-standing economic ties to the coal industry and its precipitous decline highlight this issue. Several U.S. states have instituted Sovereign Wealth Funds as a measure to mitigate the effects of the ‘resource curse’ and provide a source of renewable funding for critical government programs from a depleting resource. This report examines each of those states to understand the aspects surrounding their creation and continued operation. This was used to develop a set of recommendations and key lessons to guide Kentucky toward possibly creating a Sovereign Wealth Fund.
Recommended Citation
Reed, Ryan, "Managing Kentucky's Coal Severance Tax Decline: Lessons From Other States" (2025). MPA/MPP/MPFM Capstone Projects. 465.
https://uknowledge.uky.edu/mpampp_etds/465
