Government Spending

All Politics is Local or, I Won't Take "Free" Money if You Don't Take "Free" Revenue

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In Kentucky, a state legislator lays it on the line with a clarity that is stunning. The legislature there is pushing a bond measure to stimulate the flagging Bluegrass State economy.

The revenue enhancement — meant to raise more than $300 million in the next two years — passed the House last week on a 64-36 vote along mostly party lines. Every Democrat except two supported the measure. Republicans were united against it with one exception.

"That was their choice — they made that choice," [House speaker Greg] Stumbo said when telling reporters that opponents of the revenue plan would not be in line for school construction projects as part of the spending plan….

The flurry of construction projects, he said, are aimed at creating about 25,000 jobs in a state plagued by high unemployment. State officials announced last week that Kentucky's annual unemployment rate for 2009 jumped to a 26-year high of 10.5 percent.

Stumbo said opponents of the revenue bill could still be in line to get road projects in their districts as part of proposed bonding for transportation work….

Got that? No yes vote, no money generated by that yes vote. But if you vote yes on the next spending package, well then, we'll talk.

There's an easy solution to this impasse, I think, and it doesn't involve the bellyaching of opposing politicians saying that new construction dollars should be allocated based on need rather than support of spending the taxpayers money: Folks represented by no votes should not have to pay any sort of tax or interest or any cost related to "revenue enhancement" or to the $1 billion-plus shortfall that's already burning a hole through Kentucky's two-year budget cycle. Without new dough, officials say, the only "alternative would be painful cuts to education and human services." Kentucky's budget is around $17.5 billion. I'm betting there is a ton of pretty painless cuts to be made in a budget that size.

Another moment of legislative greatness which is, I'm sure, representative of a state just like yours:

The proposed tax change [in negotiations for the next two-year budget that starts on July 1] drawing the most attention would temporarily suspend tax write-offs for businesses reporting losses. The proposal would generate an estimated $72 million in the first year of the next budget cycle and $90 million in the second year.

Supporters said the proposal is a tax suspension, not a tax increase. They said the write-off generally benefits large companies with multiple subsidiaries.

More here.

Did the late 20th century suck this bad?

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  1. Kentucky’s budget is around $17.5 billion. I’m betting there is a ton of pretty painless cuts to be made in a budget that size.

    But but but! They spend 17billion of that just on education!!!! ITS FOR THE CHILDREN!

    *sigh*

    17 billion dollars. Population of KY is ~4.3 million. That’s a meager $3900/person for their fantastic state services.

    (too depressed to look up MD now…I’m sure its even worse.)

    1. Yeah, but $3900 is peanuts to the average Kentuckyan. Kentuckyite. Kentuckyist? I think it’s Kentuckyist.

      1. My bad, i meant no offense to the Rich Kentucky Gentlemen/Damsels who exclusively occupy the state.

      2. Commonwealthian, or given the state of the economy these days Not-so-common-wealthy-an. See what I did there?

  2. Folks represented by no votes should not have to pay any sort of tax or interest or any cost related to “revenue enhancement” or to the $1 billion-plus shortfall

    No.

    1. Kentucky: The state where it hurts the least when you get financially raped by the legislature.

      1. Don’t forget about the Kentucky Colonels . . .

        1. Colonel Angus that is . . .

  3. alternative would be painful cuts to education and human services

    As we were all taught in school, servicing humans is one of the six reasons we have a government:
    1. Terrorists
    2. Gay marriage prevention
    3. Servicing humans
    4. Junking cars
    5. Substance protection programs
    6. First-class mail
    7. Education

    1. 5. Substance protection programs

      Well there’s no point in paying for the public schools if you can’t keep kids off the drugs.

    2. also, you forgot about #’s 8, 9 and 10:

      #8 of 6: Saving Gaia
      #9 of 6: Jobs Creation
      #10 of 6: Free Doctors

      (do 8 and 9 fall under #3? i felt they deserved their own recognition as reasons-the-govt-exists.)

    3. It’s a cookbook!

    4. +1. Substance protection programs is perfect. So perfect in fact I am surprised they don’t use the term.

  4. My bad, i meant no offense to the Rich Kentucky Gentlemen/Damsels who exclusively occupy the state.

    Sweet’n’Low, robc, and frbunny shall be along presently to demand their satisfaction, suh. Pistols at dawn!

      1. We usually go with “Kentuckian.” Assuming we have enough teeth to actually pronounce it.

      2. Well, perhaps the Cardinal’s Guards will appear to break up the duels, a new friendship will be forged in the fight against them, and wacky adventures will ensue.

        Hey, that’s how I make all my friends…

    1. Participating in a duel (or challenging someone to one) specifically and constitutionally bars you from holding state-wide office, thus, hmmmm, okay, maybe it is a good idea.

  5. Kentucky’s budget is around $17.5 billion. I’m betting there is a ton of pretty painless cuts to be made in a budget that size.

    How much does Kentucky waste on archival photo librarians alone?

    1. Too much, but apparently the health plan doesnt involve pancreas transplants.

    2. Surprisingly little. For example, I make .0008% of what they pay John Calipari.

      1. Calipari brings in WAY more revenue than you do.

        1. Well, I guess if you want to be an ass about it, that’s technically true.

          1. if you want to be an ass about it

            IF?

            1. Funny, there was a story on the radio this week about how overpaid Calipari is in comparison to the revenue generated (as most top-tier coaches are). He gets about 10% of the revenue. Find the CEO of a $34-35M that takes home 10% of that.

              1. The market says its necessary. Of course, most of the coach buying is being done by public or quasi-public institutions, so the market isnt quite free.

                Coaches arent CEOs, the ADs are. Coaches are middle management.

  6. Another moment of legislative greatness which is, I’m sure, representative of a state just like yours:

    Amazingly so.

  7. temporarily suspend tax write-offs for businesses reporting losses.

    That should do wonders for economic development.

    1. I wonder if that applies to S corps. Because that would be weird. Hopefully nothing I have to worry about.

    2. no, no, it’s okay because “the proposal is a tax suspension, not a tax increase.”

      i hope they freeze deductions next because they’re also taxes.

    3. It’s not a tax hike, it’s a temporary refund adjustment!

  8. I can see a direct negative effect on capital investment. Of course, in the case of people who have already committed themselves….

    Tough shit, sucker!

  9. Holy shit. Kentucky spends more per person than NJ?

    KY – $17.5 bil pop. 4.2 mil = $4,166

    NJ – $33 bil pop. 8.6 mil = $3,837

    1. Huh, link I found says NJ collects $6610 in taxes per capita (state and local). They running a $2800 per person surplus or is that “slippage”?

      KY collects $3243. Which would explain the problem.

      Those are 2008 numbers. Is the difference than Jersey spends more on the local level?

      1. Data from here.

        KY is at 9.4%, ranked 25th in the nation. NJ is #1 at 11.8%. Somewhere there is a disconnect (I think its that the chart Im looking at includes local revenue).

        1. I realized that NJ funds schools at the local level, whereas KY funds from the state level. Well, actually, NJ funds from both, but the primary school revenue is local property tax.

    2. We’re also a much much poorer state, so we have outrageous medicaid spending it’s destroying the budget along with our huge prison systme.

    3. Is Jersey on a two year budget cycle? Kentucky does two year budgets.

  10. I.e. if you don’t vote for big government, we won’t build schools in your district.

    I wonder what people who think that “Democracy” can result in some sort of equitable distribution system have to say about this.

    Chad? Tony? MNG?

  11. I’ll preempt RC, and note:

    Me today, you tomorrow.

    It’s not like KY is a historically blue state.

    1. Actually it is. Im not sure if the GOP has ever had a majority in the state house. The recent GOP governor was only the 2nd in my lifetime.

      The state votes GOP in presidential elections a good bit, but generally votes for the winner. McCain was the first vote for a loser in a long while.

  12. There’s a KY jelly joke in here somewhere, I just can’t find it. There may also be some snark in the name of the quoted legislator….i.e. “Stumbo the Destructor”!!!!!! or perhaps, “Stumbo the Burninator”!!!

  13. The proposed tax change drawing the most attention would temporarily suspend tax write-offs for businesses reporting losses.

    By “suspend”, do they mean “lose this year’s tax loss forever” or “carry it forward”? Either could be within the meaning of “suspend”.

    One wonders how many Kentucky businesses can afford to pay the tax man while losing money. I suspect a rash of business bankruptcies will soon occur in Kentucky.

  14. Gee, in the middle of a terrible recession, they decide to tax business LOSSES.

    A cynical person might think they started out their meetings asking: “What’s a biggest pot of money we can go after? We’ll justify it once we identify the target”.

  15. We don’t have government anymore. We’ve got the Sopranos.

  16. Well, we in Arizona can beat that paltry $1 billion dollar deficit. “Secretary” Napolitano left office as governor here with something like a $3 billion dollar budget deficit, and after a lot of arguing the new governor & legislature have it down to about $2 billion.

    Of course the state spent $1 billion dollars over the last few years building the world-renowned Phoenix light rail system. Sometimes I see as much as 20 or 30 people on a train during rush hour, it’s really making a dent in the traffic here in this metro area of about 3 million people. I’m guessing that the state could probably use that billion dollars now & nobody would’ve missed the light rail if it hadn’t been built.

  17. Per-capita spending in the “Vampire State” is over 8 grand a year — California would have to more than double its per-capita spending just to catch up!

  18. I am an employee of the Kentucky Community College system, and no we’re not paid higher then the private sector we make much less than counterparts in private industry and in surrounding states. Our budget has been cut over 20 percent in the past 3 years, and we have less money per student now than we had in 1996 all while our enrollment has been increasing 15 percent a semester. We also have had no raise in 4 years none at all, so we’re taking home less each year due to inflation.

    I don’t support new taxes, but I hate to break it to the author, there will be no painless cuts, if there is no new revenue our budget is predicted to take another 18 percent cut in the next fiscal year.

    Kentucky needs a total reform of our tax system but with a divided legislature it just isn’t going to happen, we need the casino bill passed and let the people decide if we want them or not. Let’s junk the income tax which goes up and down like a yo-yo and just go all in for consumption taxes.

  19. I thought prostitution was illegal in KY?

  20. truth,,,,obama people have no idea of the extent to which they have to be gulled in order to be led.”
    “The size of the lie is a definite factor in causing it to be believed, for the vast masses of the nation are in the depths of their hearts more easily deceived than they are consciously and intentionally bad. The primitive simplicity of their minds renders them a more easy prey to a big lie than a small one, for they themselves often tell little lies but would be ashamed to tell a big one.”
    “All propaganda must be so popular and on such an intellectual level, that even the most stupid of those towards whom it is directed will understand it. Therefore, the intellectual level of the propaganda must be lower the larger the number of people who are to be influenced by it.”
    “Through clever and constant application of propaganda, people can be made to see paradise as hell, and also the other way around, to consider the most wretched sort of life as paradise.”pelosi don’t see much future for the Americans … it’s a decayed country. And they have their racial problem, and the problem of social inequalities …obama feelings against Americanism are feelings of hatred and deep repugnance … everything about the behaviour of American society reveals that it’s half Judaised, and the other half negrified. How can one expect a State like that to hold TOGTHER.They include the angry left wing bloggers who spread vicious lies and half-truths about their political adversaries… Those lies are then repeated by the duplicitous left wing media outlets who “discuss” the nonsense on air as if it has merit? The media’s justification is apparently “because it’s out there”, truth be damned. STOP THIS COMMUNIST OBAMA ,GOD HELP US ALL .THE COMMANDER ((GOD OPEN YOUR EYES)) stop the communist obama & pelosi.((open you eyes)) ,the commander

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