Cuts now being made to child care that will leave thousands of working parents facing painful choices between jobs and family are only the latest casualty of the legislature’s failure to provide the resources necessary to meet Kentucky’s needs. State lawmakers in recent years have set back our schools and universities, health care and other vital services by presiding over $1.6 billion in budget cuts.
In the recent legislative session, they passed a meager revenue bill that provides only a portion of the money needed to pay pension liabilities and ignores everything else. The job of raising the funds necessary to cover Kentucky’s needs and reforming the tax system for the long haul remains undone.
But ducking our problems won’t solve them. Because of five budget realities, those problems will still be front and center when lawmakers write a new budget in January:
Economic recovery is a long way off.
The worst recession since the Great Depression tore a big hole in state revenue, and the slow recovery means we haven’t made up much of the ground we lost. Revenue is expected to grow only slightly faster than inflation in the current budget. If job creation stays slow, unemployment will remain higher than before the recession until the end of the decade. That means depressed sales and income tax revenues and lots of struggling people in need of low-income assistance.
The tax system is failing.
Kentucky’s antiquated tax system simply doesn’t keep up with growth in the economy, making it hard to maintain the current level of services even if economic growth was faster. State revenues are growing 20 percent slower than the economy, a trend that by itself will create a gap of $1 billion between the state’s needs and the resources it can muster to meet them by the end of the decade. Closing a variety of loopholes in our tax system would allow Kentucky to better keep pace with the cost of educating our children and promoting health and safety.
Budget tricks won’t fill the gap.
Policymakers have used every gimmick they could find in recent years to keep budget cuts from being even worse—delaying bond payments, offering tax amnesty so that scofflaws will pay up, underfunding retirement benefits and raiding various state accounts. Some of these moves have been harmful to Kentucky’s financial condition, and other one-time options have been exhausted.
Federal funds are shrinking.
Federal dollars make up about 35 percent of Kentucky’s state budget, but federal funds to states are being cut. The 2011 Budget Control Act set caps on federal spending that will reduce grants for schools, public safety, water treatment and other areas to the lowest level in four decades. More cuts will occur if automatic spending reductions, known as sequestration, become permanent or if there are additional cuts as part of another deficit reduction package.
Kentucky’s needs are many.
The $1.6 billion in state budget cuts have made college tuition less affordable, kept new textbooks out of schools and reduced access to services for the elderly and people with disabilities. While we should be talking about new investments in early childhood education and other critical areas—and working harder to help Kentuckians become healthier and more educated—the cuts are setting us back.
Last year, I was one of 16 Kentuckians who served on the Governor’s tax commission that came up with a proposal to raise $659 million for Kentucky’s needs through comprehensive tax reform. In public hearings across the state, we heard Kentuckians from all walks of life stress the need for more investment in schools, health and other resources that make our lives better and our economy stronger. They told stories about opportunities lost because of a lack of resources, and of how great Kentucky could be with a stronger commitment to our future.
Our leaders should start working now to build support for the bold revenue action Kentucky must have in order to make just such a commitment.
Published in the Lexington Herald-Leader on May 5, 2013 and the Louisville Courier-Journal on May 12, 2013..