Can Bevin turn the ‘sacred cows’ of Kentucky’s tax code into hamburger?
If there is one thing Kentucky doesn’t need, it is more government secrecy. That is especially true when it comes to the ever-growing sums of taxpayer money spent on corporate welfare.
House Bill 387 sponsored by Rep. Jason Petrie, R-Elkton, would create new exemptions in Kentucky’s open records law to hide the identities of shareholders in companies getting taxpayer “incentives” to create jobs. It also would hide the companies’ business plans, records about incentives that were offered but not awarded and any other “information declared confidential” by the Kentucky Economic Development Finance Authority.
“If this bill passes, we the people will lose every right to oversee how economic development works in this state and how our public incentives are awarded,” said Amye Bensenhaver, a former assistant attorney general and expert on Kentucky’s open records and meetings laws.
The Economic Development Cabinet asked for and helped write this bad bill. One thing it would do is end a court battle in which journalists are seeking the identities of shareholders in Braidy Industries, which has announced plans to build a $1.68 billion aluminum mill near Ashland.
Many people are skeptical of Braidy’s plans. Gov. Matt Bevin helped arranged for the state to make a highly unusual $15 million investment in the project, in addition to millions in other incentives. But there is no evidence Braidy has the capital to build the plant. The company recently sought an $800 million loan for it from a federal program that hasn’t made any loans in eight years.
Braidy says its shareholders are a “trade secret.” That’s ridiculous. But the Bevin administration loves secrecy, just like Bevin himself. Unlike every other Kentucky governor for two decades, the wealthy businessman refuses to release his tax returns so citizens can see his potential conflicts of interest. Are Bevin or his business associates benefitting from corporate welfare? We have no idea.
Another situation this bill takes aim at is journalists’ efforts to get details of what Louisville offered as part of the obscene national competition to attract a second headquarters for Amazon.com.
Amazon, run by the world’s richest man, last year reported profits of more than $11 billion (and paid no federal income tax). Yet cities competed to see who could throw the most taxpayer money at Amazon in the hope of getting thousands of local jobs. New York City activists finally pushed back, and Amazon canceled plans to move there rather than even discuss citizens’ concerns.
We can only hope that will be a tipping point. Congress should pass laws that keep corporations from so brazenly playing one state against another for financial gain. This behavior doesn’t create economic development, it just moves it around in ways that hurt our national interest. Of course, Congress will never outlaw these scams until we find a way to get big money — and the legal bribery it creates — out of politics.
But there are other ways to rein in corporate welfare, and they involve making more information available to the public, not less.
One way is to analyze tax breaks on a regular business to see whether they provide substantial benefits to the overall economy or just to the people and companies that get them. This is an especially urgent issue in Kentucky, which for years has given away more in tax breaks (now $13 billion-plus) than it collects in tax revenue. Business incentives are a significant portion of the total.
When Bevin was running for governor in 2015, he called for a “significant reduction” in tax breaks and more oversight. In his 2017 State of the Commonwealth address, he promised to turn some “sacred cow” tax breaks into “hamburger.” So far, though, we’re still wondering, “where’s the beef?”
Legislative leaders took an important step early last year when they appointed the Task Force on Tax Expenditures to study Kentucky’s tangled web of tax breaks. The group made some excellent recommendations in December, which should serve as a road map for reform during the General Assembly’s budget session next year.
Reform will be tough, though. Every business tax break has a constituency, and many of them have lobbyists who are paid a lot of money to influence legislators. They will be working overtime to protect tax breaks — and create more.
The bottom line is that Kentucky needs less corporate welfare, not more. And it certainly doesn’t need more of it cloaked in secrecy.