Gov. Matt Bevin, in his budget address Tuesday night, assured his audience that the decision to eliminate state funding for 70 programs was “thoughtful, not indiscriminate.”
Like so much in Bevin’s address — indeed in his time in office — the details were fuzzy.
What was the thoughtful process that targeted programs as diverse as the breast and cervical cancer screening program and the state tree nurseries? How much money was saved? What was the cost-benefit analysis that landed these programs on the cutting room floor?
It was easier to understand why Bevin chose the one revenue-positive suggestion he made, ending the state’s film incentive program. That boondoggle has agreed to give away $162 million in tax revenue without bothering to document what, if any, economic benefit flows to the state as a result.
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But what’s perplexing is why Bevin was able to identify 70 programs he was willing to defund but only one tax giveaway he’s willing to axe.
Why didn’t he and his staff devote as much thought and discrimination to assessing the value of the hundreds of tax breaks that result in Kentucky giving away more revenue than it collects?
A year ago, Bevin spoke as if he were ready to take on what he called sacred cows, but until Tuesday’s night’s reference to the film credit, that’s about all we’ve heard.
Tax incentives and exemptions are listed, with the dollar amounts they cost, every two years in the annual Tax Expenditure Analysis, detailing revenue lost through “exemption, exclusion, or deduction.”
The most recent report, for the 2018-2020 biennium, runs to 210 pages, and provides a legislative history of the breaks, estimates on the revenue impact of each expenditure, and calculations by category (taxes on sales and use, property, corporate and individual income, etc.)
The Kentucky Center for Economic Policy figures that the total number of expenditures for the 2018 budget year is $13.75 billion.
We agree with Bevin that Kentucky needs comprehensive tax reform. Ideally, the sacred cows would be considered in a larger context.
But we are not dealing with the ideal here. As Bevin has also pointed out, the state faces difficult economic choices. In that context, how could he sharpen his pencil to find dozens of programs to zero out, make huge cuts across government, including to education at all levels, but leave all but one sacred cow untouched?
The governor prides himself on taking on tough issues, challenging the status quo. He could validate that self-image by thoughtfully eliminating tax giveaways in order to save essential government services.