Feast or Famine All Over Again
Kentucky has much to learn about fiscal responsibility

When budget storm clouds appeared last year, the Republican-controlled Senate declined to support millions to pay for political campaigns in austere economic times. The governor’s and Democrat-dominated House’s insistence on funding campaigns, and the Senate’s unwillingness to capitulate, resulted in stalemate. As always, it’s feast or famine for the state treasury with Kentucky again living beyond its means.

While the legislature and governor search for new ways to resolve a budget $144 million out of balance this year and $365 million for next fiscal year, Kentuckians wonder how the surpluses of the late 1990s deteriorated to today’s staggering shortfall. Certainly a slow economy contributed, but over-commitment and other controllable factors deserve examination.

The governor’s document, “Assessing Kentucky’s Fiscal Condition,” traces the beginning of today’s revenue woes to the 1990 tax increase for KERA. That tax increase promised $605.9 million in 1992. (It actually produced $519.3). The state committed to spend $671 million, well beyond even the projected revenue.

Until recent days, no apparent effort was made, even through attrition, to freeze state hiring, though the number of state employees exceeds the statutory limit by several thousand. Living within the legal limit could have brought substantial savings if implemented when budget woes became obvious.

No-bid personal service contracts, a common pork barrel reward for political supporters, have exploded in numbers. No-bid contracts accounted for 9 percent of personal costs in 1992 and grew to more than 17 percent in 2000, according to the Legislature’s Program Review and Investigations Committee. It determined the administration has no ability to electronically audit or monitor these contracts nor identify the spending magnitude. The study confirmed that the best way to learn about these contracts was “to know someone” since they are not advertised.

Another eye-popping expense is a $22 million civic center, with additional multi-million dollar cost overruns, which the governor insisted on building in his home county. This project is opposed by Pike County’s officials, who support a different priority: drinking water for rural residents.

By executive order, the governor expanded prevailing wages, another political payback, adding significant costs to the construction of public facilities without enhancing quality. The LRC determined the application of prevailing wages increases construction labor cost by 24 percent.

In addition to planned and budgeted projects during the last two and a half years, 21 percent of the highway contingency funds have flooded the governor’s home county. If you include the six surrounding eastern Kentucky counties, the percentage jumps to 45 percent. A record number of new courthouses across Kentucky have been funded in the past two and a half years. Are these the basic necessities?

These individual factors are not totally responsible for budgetary problems, but the litany demonstrates a pattern of traditional political payback behavior that contributes to the perpetual feast or famine cycle that burdens taxpayers.

Predictably, editorialists plus public and private agencies, which live off state funds and grants, have signed on for tax increases to resolve the budget crisis. Just as predictably, fiscal conservatives say no to tax increases and yes to addressing the spending side of the budget equation. Americans already work until late April just to pay their tax bills. Governments at all levels spend more than 40 percent of national income.

Government needs better defined priorities, not more money. Polls continue to show the majority of Americans prefer lower taxes and less government services than the reverse. When the ink is red, stick to basics. It is a perverse sense of priorities for government to continue to confiscate evermore of the citizens’ income. Neither Ronald Reagan nor John F. Kennedy attempted to tax our country out of a recession. They knew that would not work. Both took the route of tax cuts, which resulted in increased revenues to the government.

Pat Freibert is a former Kentucky state representative from Lexington
editorial@lanereport.com

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