What kind of governor does Matt Bevin want to be? We will get our first real look Tuesday night, when the newly elected Republican delivers his budget plan to the General Assembly.
“We will be more austere,” Bevin told the Kentucky Chamber of Commerce at its annual dinner Jan. 6, “because we must get our financial house in order.”
We already know about austerity. Gov. Steve Beshear and the General Assembly have nipped, tucked, slashed and burned $1.7 billion out of the state budget in 15 rounds of cuts over the past eight years.
That has weakened important state services and led to budget-balancing shenanigans that damaged what little confidence Kentuckians have in their elected representatives. For example, lawmakers short-changed public employee pension funds — creating a financial crisis that now must be dealt with — and even pilfered from a fund to which citizens donated money for land conservation.
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For an excellent primer on the state’s budget situation, read a recent report by the Kentucky Center for Economic Policy at Kypolicy.org.
The state is in this predicament mainly because recent governors and legislators have lacked the courage to modernize the state’s 1950s tax system. Kentucky will never “get our financial house in order” — much less foster prosperity — until lawmakers create a system that increases revenue as the economy grows.
Part of the problem is that Kentucky gives away more in tax breaks than it collects in taxes. The general fund is about $10 billion, but tax breaks total about $12 billion.
Some of those tax breaks are good: They contribute to economic development, social fairness and public well-being. But many are sweetheart deals for special interests that have been cobbled together over the years and never scrutinized again.
Many of these tax breaks could be abolished. At the least, they all need a hard look. Does Bevin have the courage to ask lawmakers to do that — perhaps by proposing legislation to abolish all tax breaks within four years unless they were openly debated, justified and reauthorized?
Another smart move would be to push for raising Kentucky’s still-low cigarette tax and enacting a statewide ban on smoking in public places. The main payoff wouldn’t be tax revenue, but helping Kentuckians live longer, healthier lives and avoiding huge health care costs.
Nearly one in four Kentuckians smokes, the second-highest rate in the nation. That causes $1.7 billion in smoking-related health costs each year and $2.6 billion in lost productivity, according to the Centers for Disease Control. That’s a big reason the state Chamber of Commerce supports a smoke-free law.
Among the state’s many financial challenges is the road fund, which pays for highway construction and maintenance. Nearly half the fund comes from motor vehicle license and use taxes. The rest comes from gasoline taxes, which have been falling along with gasoline prices and better vehicle fuel-efficiency.
Falling revenues are a big concern, because Kentucky’s aging highways and bridges are in constant need of repair. Much of this infrastructure is critical to public safety and economic prosperity.
Bevin could help shore up the road fund by killing highway projects whose main purpose seems to be enriching landowners, land speculators, developers and road contractors. Among the biggest boondoggles on the horizon: the Versailles bypass and the Interstate 75 connector to Nicholasville. We must stop building costly highways we don’t need and can’t afford.
The worst thing Bevin could do is keep slashing state services while pushing for tax cuts for the wealthy and businesses in the mistaken belief that they will respond by creating more jobs and prosperity. If you want to see the results of such economic nonsense, look at Kansas and Louisiana.
We can hope Bevin has more sense than some other Tea Party governors, but I’m not optimistic. He began his term by moving to dismantle Kynect, against the advice of health care experts and the Chamber of Commerce.
Kynect helped more than 400,000 Kentuckians who didn’t have health insurance get it. By giving up the state exchange and forcing people to use a federal website, Kentuckians are likely to get inferior service and higher insurance costs.
On top of that, shuttering Kynect will cost the state at least $23 million, and maybe more. A New York Times editorial last week, headlined “Kentucky’s Bizarre Attack on Health Reform,” suggested Bevin should return $290 million in federal grants used to create Kynect. Talk about costs we can’t afford.
State government is the smallest it has been in years, but we can still expect Bevin to give us some rhetoric about needing to cut “big government.” Government plays a vital role in providing health, education, safety, a clean environment, infrastructure and a level playing field that Kentucky citizens and businesses need to prosper.
What’s important is not whether government is “big” or “small” by some fuzzy ideological measure, but whose interests government serves. If you think a smaller, weaker, poorer state government will serve your interests, think again.