Kentucky's Tax Burden

Interesting data from the Federation of Tax Administrators. Of our surrounding states, Kentucky has the 2nd highest (behind West Virginia) tax burden - as measured by a percentage of personal income. Kentucky's national ranking is 15th highest tax burden - higher than Massachusetts (ranked 27th) and New York (ranked 20th).

Data worth considering when we're next told that there isn't enough money in Frankfort.

KSTC: ICCs Got a Loose Belt

In this era of state government "belt tightening" we were interested to find that the ICC program, funded by DCI and managed by KSTC, has seen its operational funding increased by 36% from FY '05-06. (NOTE: We are using FY '05-06 as the benchmark because that year's contract is available publicly).

In FY '05-06, KSTC was awarded a sole-source contract from DCI for $1.4 million.

The FY '08-09 & the FY '09-10 sole-source contracts were for $2,194,500 each year - a total of $4,389,000 over the budget biennium. That represents a 36% increase in each year from the FY '05-06 allocation.

Our review of the publicly available documents has yet to uncover any suggestion that this program has been required to reduce these expenditures as the vast majority of state agencies have been required to do. Along with that, for all the money we're throwing (and have thrown) at these "incubators" - best we can tell, Kentucky taxpayers have never (and likely are not to this day) getting much in the way of return - jobs, start ups, economic growth, etc.

Boards & Commissions - KUDOs

After digging a bit deeper yesterday, we uncovered that SB 181 (sponsored by Dan Kelly and Ed Worley) filed in the 2009 regular session eliminated the boards and commissions that were targetted in HB 623 in 2006. Kudos to Senator Kelly, Senator Worley and the Beshear Finance Cabinet for taking this initial step.

We'd encourage Frankfort to build on this by taking on a comprehensive examination of the hundreds of Boards and Commissions that litter the KRS statutes. Our intuition tells us that many, if not most, are either no longer functioning or have outlived their usefulness.

Best to go ahead and wipe them off the books.

Boards and Commissions

Interesting item out of Louisiana. Governor Bobby Jindal has proposed the elimination of defunct boards and commissions. Basically - these 22 boards and commissions are no longer functioning or have fulfilled their mission. Makes sense to eliminate them.

Kentucky should follow suit. There has been legislation filed to this affect in years past. In 2006 Mike Cherry, D- Princeton, filed H.B. 623 that would have eliminated several boards and commissions that no longer meet or have any membership. His position as chairman of the House State Government Committee places him in a great position to continue this effort.

We would encourage Represenative Cherry to take it further by examining the possibility of consolidating and eliminating a range of boards and commissions. In doing so, Mr. Cherry could further the process of right sizing state government in the face of shrinking resources and serve the interests of limited government by wiping obsolete boards off the KRS books.

More Belt-Tightening on the Way

State Budget Director Mary Lassister recently informed state agencies that further budget reductions within certain state agencies will be required to keep the budget balanced. The reports indicate that reductions would be in addition to the anticipated 2.6% reductions that were authorized during the recent special session. According to Ms. Lassiter:

“Most of the priority areas of government were protected from additional cuts – , the SEEK calculation or funding for post-secondary education, Medicaid, corrections… A very large percentage of the dollars in the General Fund aren’t subject to cuts. The original 2.6% proposal was versus ’09 spending levels for kind of the rest of government beyond most of the agencies that (she) mentioned.”

This new round of belt tightening is due to the tax credits also authorized during the special session. Given that the essential services in education, Medicaid and corrections will not be subject to the reductions, we can assume that these cuts will be in the “slack” resources that have existed in state agencies for years.

This further “right sizing” of  state government is welcome. Since these cuts have been made for the better part of two years now and state government continues to function sufficiently, we’ve got to wonder why these appropriations have been made all these years. We can only hope that when the economy turns around, the commitment to fiscal responsibility – asking whether these slack resources are necessary to begin with – remains a priority for policymakers in Frankfort.