Kentucky tsks, but takes federal funds

Polls show disdain, but state gets more than it pays

jcheves@herald-leader.comMay 16, 2010 

CARROLLTON — Shortly before Christmas, U.S. Rep. Geoff Davis called for fiscal conservatism while voting against a successful $154 billion extension of the economic stimulus package that paid for schools, roads, unemployment benefits and other items.

These "unsustainable policies rely on excessive spending, endless debt and the promise of increased taxes," Davis, R-Hebron, warned.

The same day, Davis announced that he helped get more than $1 million for the Carroll County School District to expand its Head Start program for poor children. The money came from the stimulus he had just denounced.

"In these difficult economic times, it is critical to ensure that vulnerable populations in Kentucky have access to important support services," Davis said of the Head Start funding. "I am pleased that our office was able to assist."

This contradiction — criticizing the spendthrift habits of "big government" while bringing a big slice of that federal money back home — is central to Kentucky politics.

As the state prepares for Tuesday's primary elections, Kentuckians say they want politicians to slash federal spending and reduce the $12.8 trillion national debt. In a statewide Kentucky Poll this month, 56 percent of voters said the government is trying to do too much that should be left to individuals and businesses.

But the reality is that Kentucky depends more than most states on government aid — the tens of billions of federal dollars every year that prop up its state government and fill its mailboxes with entitlement checks, among other benefits.

For every dollar Kentucky sends to Washington in federal taxes, it gets back between $1.51 and $1.82 in federal spending, depending on which study is consulted. Other states — mostly in the Northeast and Midwest — subsidize Kentucky by paying more in taxes than they get in return.

Economists say the imbalance is due largely to Kentucky's poor, aging population and its senior lawmakers on congressional spending committees, such as U.S. Rep. Hal Rogers, R-Somerset, who direct money from the U.S. Treasury to projects back home.

Even so, criticism of government spending has resonated with voters this election season. This spring's political star is Republican U.S. Senate candidate Rand Paul, who pledges to shrink the government down to its essential functions, such as maintaining an army, as mandated by the Constitution.

"Do we want a government that coddles us from cradle to grave? Or do we want a government that does the least that it can do?" Paul, the GOP front-runner, asks in speeches.

It's not clear whether Kentuckians demanding budget cuts recognize how dependent they have become on Washington, said University of Louisville economist Paul Coomes, who studies regional economies and the impact of government.

"Getting subsidized for years really deadens you. You don't realize how many of your needs are being covered by other people's money," Coomes said.

"Maybe some personal pride is emerging, particularly in Eastern Kentucky," he said. "Rand Paul is going into areas traditionally dependent on government spending and giving his speeches there. It looks like we're starting to rethink our positions."

A Head Start

Federal spending pays for a brightly decorated classroom in Carrollton, where on a recent weekday more than a dozen 4-year-olds chattered excitedly and drew in their journals with crayons. Down the hall, other children sang as they prepared to board a bus for a trip to a nearby park.

Carroll County Head Start is, among other things, a free preschool for low-income families. It offers education, meals and health services to 130 children ages 3 and 4, and parenting lessons if necessary for their mothers and fathers.

Head Start gives the school district early access to children who otherwise might arrive at kindergarten far behind their peers, said Pam Williams, the district's supervisor of elementary instruction.

"Their vocabulary, for instance," Williams said. "It's been demonstrated that low-income children can have a much smaller vocabulary if they don't have any exposure to words and language outside of the home. If you're starting school with a smaller vocabulary, that's a significant obstacle to overcome."

The $1 million federal grant that Davis, the congressman, helped secure from stimulus funds will allow Carroll County Head Start to expand for at least one year to include 80 children under age 3. Fifteen teachers are training this month to be hired under the grant.

In a statement last week, Davis spokeswoman Brook Hougesen said the congressman still believes the stimulus package was wasteful and failed in its mission. But, "Kentuckians pay federal tax dollars and should not be excluded from available federal resources simply because the overarching legislation that made them available was ill-advised," she said.

Head Start is one of many federal programs begun by liberal Democrats that mushroomed over time and yet became accepted — even championed — by conservative Republicans, such as President George W. Bush, who reauthorized it three years ago.

In 1965, President Lyndon Johnson launched it as a modest eight-week summer project, part of his War on Poverty. Today, Head Start costs $7 billion a year. Kentucky gets more than $100 million of that to serve about 16,000 children.

Nowhere does the Constitution mention Head Start. Its costs have jumped by 31 percent over the last decade. All the same, it would be a mistake to eliminate it, Williams said.

"If we lost it, children in our community would not be getting the educational and social skills they need to start school properly," she said. "And quite frankly, some children would go hungry because they would not be getting access to meals through our program as they do now."

Follow the money

Washington sends money to Kentucky in many ways.

Of the $27 billion the state government's executive branch plans to spend this fiscal year, $12 billion, or 42 percent, is federal funds.

Some state agencies rely chiefly on federal money. They include the Health and Family Services Cabinet, which runs the Medicaid program that provides health care to one in five Kentuckians. The federal government picks up 80 percent of the tab.

For all the sentiment against creating a government health plan during the recent health care reform debate, close to 800,000 Kentuckians already use Medicaid, with its public funding and price controls. Several thousand more enroll monthly.

"There is a world of people out here who wouldn't have any access to health care at all if they didn't have Medicaid coverage. They literally wouldn't get to see a doctor, and they would just have to pray they didn't get sick," said Nelda Barnett, Kentucky president of AARP, a seniors' advocacy group.

Monthly entitlement checks go directly to Kentuckians, including $5 billion a year for Social Security retirement benefits, $2.5 billion a year for Social Security worker-disability benefits and $1 billion a year for Supplemental Security Income, which is disability aid for people with no work history.

In 2005, 18 percent of Americans drew at least one of those checks, according to the Social Security Administration. That figure edged up to 22 percent in Kentucky. In parts of the state with the poorest, oldest populations — Owsley County, for example — it jumped as high as 40 percent, creating what's known as "the mailbox economy."

The federal government also helps Kentuckians with flood insurance (to the tune of $2.1 billion a year), mortgage insurance ($877 million), crop insurance ($667 million), food stamps ($674 million), veterans disability benefits ($478 million), Pell Grants for college students ($182 million) and welfare for families ($181 million), to name some of the costliest assistance programs tracked by the U.S. Office of Management and Budget.

Pork and politics

Kentucky's congressional delegation earmarks funds in the federal budget to be given to public and private entities — sometimes to campaign donors — with no outside review. The sum varies widely from year to year, but it typically exceeds $200 million to $300 million.

For the current fiscal year, Senate Republican Leader Mitch McConnell, R-Ky., added $60 million in individual earmarks, not counting those he shared with other lawmakers. McConnell ranked eighth out of 100 senators, according to Taxpayers for Common Sense, a non-partisan budget watchdog.

Rogers, the Republican congressman from Somerset, added $68 million in individual earmarks, ranking him fourth out of 435 House members.

Yet, when he endorsed Secretary of State Trey Grayson in the Republican U.S. Senate primary this month, Rogers praised Grayson for being "a strong fiscal conservative."

"That's the kind of leadership we need to cut out-of-control spending, pay down the debt and balance the budget," Rogers said May 3, just a few days after announcing $100,000 in federal funds for sewer improvements in Knott County.

Communities in his southeastern Kentucky district say they're grateful for the taxpayer money Rogers brings — opening federal prisons, launching litter-control and anti-drug programs, steering homeland security contracts to local companies.

For instance, in January, Rogers announced a $100,000 grant from the U.S. Agriculture Department to Letcher County so the fire department could replace an old pumper truck. Urban areas take that sort of purchase for granted, said Judge-Executive Jim Ward.

"Our fire department works on a very small budget," Ward said. "It's not like Lexington. There's maybe 3,200 people in the city of Whitesburg and not much tax base."

Coomes, the Louisville economist, said the hazard in the Kentucky model lies in penalizing stronger economies in favor of weaker economies.

"It's not good for the country as a whole, it's not an efficient use of our resources, if you're guaranteeing outcomes so much through these subsidies," Coomes said.

"We've used federal money to pave new four-lane highways through towns in the middle of nowhere that have only 5,000 people living there," he said. "It would have been better to take that money and invest it in the transportation needs of, say, Chicago, where there is real traffic congestion and where the wealth is created."

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