Grover Norquist doesn’t live here: Reform taxes, save state

Demonstrators rallied Nov. 1 at the Capitol against earlier Republican pension reform plans.
Demonstrators rallied Nov. 1 at the Capitol against earlier Republican pension reform plans. asiltz@herald-leader.com

To say that the tasks facing the 2018 General Assembly are nothing less than monumental is an understatement.

For many years our state budgets purposely underfunded the public pension plans. Money not appropriated for pensions went toward other government functions and, along with other accounting moves, created “balanced” budgets. These gave past legislatures and governors a pass on the difficult issue of providing sufficient revenue to fund the whole of state government properly. This sleight of hand produced documents that maybe looked good on the surface but had a growing rot on the inside.

Even without firsthand participation in crafting a state budget, I can appreciate both the enormity of the task and the work that goes into them. No one is likely totally satisfied with the finished product, as untold compromises are made to get to something good enough to be passed and signed into law. However, good enough is no longer good enough.

There is a solution: find the additional revenue needed to actually deal with the unfunded pension liabilities and to properly fund state government agencies and universities.

It seems the only option we hear being discussed regarding revenue these days is basically a “zero-sum” solution in which either pensions or state government agencies receive needed funding and the other is eviscerated with drastic cuts.

This is a false choice.

Gutting state government operations to adequately fund public pensions today is as irresponsible as was the underfunding of pensions years ago. And just as the effects of pension underfunding are driving today’s budget issues, underfunding the balance of state government now will have similar and serious consequences in the years to come.

The draft pension reform plan as originally released proposes a change in paying down the unfunded liability to a methodology known as level-dollar. This would require the immediate addition of hundreds of millions of extra dollars to the pension plans in the upcoming budget. Paying down this debt faster has its benefits over time but the issues this change creates, without a corresponding increase in state revenues, put enormous stress on budgets for 2019 and the years beyond.

The current budget was “balanced” with hundreds of millions of dollars of one-time money, another sweeping of agency funds, and more. But what lies ahead without additional revenue is a state government seriously compromised in its ability to provide the basic programs and services we expect from state government.

This means even deeper cuts to education support from pre-K through the university level, health and human services turning away the neediest among us, and infrastructure maintenance being put off “until next year” year-after-year, and on and on. Not to mention a shrinking and demoralized public work force that has not seen raises in six of the last 10 years.

This is a pivotal time for our commonwealth. Relying on the natural growth in state revenues that is woefully inadequate to even keep pace with natural inflation will not tackle the enormity of the crisis that lies before us.

Albert Einstein noted, “We cannot solve our problems with the same thinking we used when creating them.” The time is upon us for statesmen (and stateswomen) to step forward and do what needs to be done for the betterment of the commonwealth — it’s been done before.

Additional revenue can and must be raised through fair, equitable and sustainable tax reform. I encourage legislators to embrace the possibilities for bold action now when it is most needed.

They should remember that Grover Norquist does not live in Kentucky but their children and grandchildren, family and friendslikely do. Seize this challenge for the opportunities it presents.

Larry P. Totten is president of Kentucky Public Retirees.