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.

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.

OK – the Finance Cabinet in Frankfort has a Division of Printing.

KRS 42.025. Division of Printing and Division of Postal Services - Duties- (1)The Division of Printing shall be responsible for the printing and duplicating needs of state agencies, as designated by the Finance and Administration Cabinet.

And yet on July 4^th – the Finance Secretary’s Office procured $584,201 of “printing and related services.” 

Gateway Press $ 92,368

Gateway Press $441,701

Simply Graphics $ 25,331

Simply Graphics $ 24,799

We know that the Division of Printing has very serious limitations with its capabilities. Many state agencies procure printing outside of the Division.

Isn’t it time to ask whether or not – whatever is being spent* on the Division of Printing - be redirected toward some other services?

………

* NOTE: Unable to determine from initial evaluation of budget documents exactly how much is appropriated to the Division of Printing.

More interesting drill down into the auditor’s report on the state’s new economy program’s performance. When the auditor’s report recommended that DCI “should produce annual reports that provide better information on the activities of the funded projects, as required by statute” the Cabinet for Economic Development responded with:

There will be many projects that have no information to report regarding return on investment because they are early-stage companies and are not expected to have a return during the formative years.

So because these companies are by nature ‘start-ups’ DCI can’t really provide information to policymakers and Kentuckians on whether or not the funds they are spending are producing anything? Haven't enough of these 'start-ups' been funded since the programs inception (seven years ago) so that it would be possible for some results to be reported?

These resources could go toward many, many other needs in a budget-constrained environment. Yet, it is too much to ask for DCI to tell us what their spending has produced for Kentucky?

During the special session, this was reported in the Courier-Journal:

“(House Speaker) Greg Stumbo said it would require a bond issue of about $700 million, or slightly more than $60 million in annual debt payments to replace all 160 schools.”

For the sake of discussion can we assume that for every $1 million in annual debt payments – the state gets $11.6 million in bonded funds? ($700 / $60 = $11.66) Sure – why not.

So – using this simple logic – is it reasonable to suggest that the $4.3 million that the state puts into the ICC program could provide $50.13 million to replace Kentucky’s “deteriorated” schools?

Let’s look at the most recent list of Category 5 schools in Kentucky:

Anderson County Early Childhood Center $7.1m

Beechwood Ind. Beechwood Elem. $5.6m

Carter County Carter Elem. $8.3m

Clark County* Central Elem. $12.8m

Fleming County Ewing Elem. $9.6m

Fleming County Hillsboro Elem. $2.3m

Jackson County Jackson County High $12.1m

Leslie County W.B. Muncy Elem. $4.1m

Metcalf County N. Metcalf Elem. $10.3m

Perry County D.C. Wooten Elem. $13.4m

Pike County Phelps Elem. $11.1m

 Total: $96.7m

So – can we conclude that if the legislature redirected the funds currently dedicated to the ICC program toward bonding for school facilities – we could provide enough resources to completely address Kentucky’s Category 5 problem within two budget cycles?

Let’s see: $4.3m x $11.66m = $50.13m. And $50.13m x 2 (the number of budget cycles) = $100.26 million. There’s even some to spare to get to work on Category 4 schools.

Now, we admit that we’re being a bit sarcastic about the exercise – but let’s look beyond the tone and look at the substance.

We’re told Kentucky is in “fiscal crisis” and we need to be prepared to continue “tightening the belt” (which we support). But what we must also take into account is whether the dollars we are currently spending are producing enough return to justify their ongoing appropriation. It would be nice to know if the ICC programs are doing that. Why?

Because if not, we just found $50m in the next biennium to fix Kentucky’s “deteriorated” schools.

-----

* Fannie Bush Elem is listed as a Category 5 school though with $0 in facility needs. There is a note to “see Conkwright Middle” which is a Category 4 school in Clark County with a resource requirement of $8.6m. It is unclear exactly what this means, though. So we have left Fannie Bush Elem. off this list. Further, Pilot View Elem in Clark County is a Category 5 school but also with a $0 facility need. Any other Category 5 school in the state that had a $0 resource requirement was not included.