Kentucky faces a difficult budget challenge, but Governor Bevin’s proposal is based on a false assumption: that deeply cutting funding for public investments will make it easier to pay down our pension liabilities over the next few decades.
In fact, cutting our budget further will make it harder to address our debt by weakening the economy over time, slowing revenue growth and undermining our quality of life in the process.
Throughout Kentucky’s history, public investment has played a key role in the positive gains the state has made. Critical moments of progress can be linked to visionary public action, and the Commonwealth’s most revered leaders have understood that relationship.
Kentuckian Henry Clay was an early advocate of government’s role in economic development. He helped grow the 19th century American economy through a push for increased federal spending to build and maintain infrastructure like roads and canals and policies that nurtured homegrown industry.
Kentucky native Abraham Lincoln, even in the midst of Civil War, signed into law the Morrill Act to create the land grant university system — resulting eventually in the University of Kentucky and Kentucky State University — as well as the Homestead Act, which by providing land to settlers was essentially the first federal housing program.
In the industrial economy of the 20th century, publicly funded infrastructure became important to economic development — especially in Kentucky because of the state’s central location. President Eisenhower’s massive project to create an interstate highway system resulted in I-75, I-64 and I-65, and state road dollars built links to those main arteries. This system helped spur manufacturing, allowing materials to be shipped throughout Kentucky and across state lines.
That led to the growth of our auto industry over the last few decades, making Kentucky now the third-biggest auto producing state in the country. After slumping in the Great Recession, the industry has rebounded strongly the last few years thanks to federal aid that helped keep producers and suppliers afloat.
Kentucky also benefits heavily from programs created through the New Deal, the War on Poverty and related federal and state efforts to ease hardship. Social Security, food stamps (now known as SNAP), Head Start, Medicare and Medicaid, Pell Grants and more help boost Kentuckians’ well-being while injecting dollars into local economies that need them most.
Kentucky has long recognized how important these programs are to a poor state like ours. We were 1 of 22 states to launch a Medicaid program within a year of the law’s passage, doing so in July 1966. In the last few years, we’ve become a nationally-recognized leader in the expansion of Medicaid under the Affordable Care Act.
State investments in education have been essential to advancing Kentucky. After years of neglecting school funding at the state level, we significantly increased our commitment with the Kentucky Education Reform Act in 1990 and raised $1 billion in taxes to pay for it. Since then, Kentucky has jumped from the bottom of the heap in a range of education success measures.
In higher education, we grew enrollment in our regional universities and flagship institutions, created a system of community colleges throughout the state and pulled all of postsecondary education into a unified system in 1997. The share of Kentuckians over age 25 with a bachelor’s degree or higher has increased from 5 percent in 1960 to 22 percent today.
Such investments have been crucial to forward progress, and it’s only recently that public debate has distorted that connection. But we are called a Commonwealth for a reason, and we forget the relationship at our peril.
The future will belong to states with the skilled workforce, infrastructure and quality of life needed to spur the industries of tomorrow. Stepping away from those investments will worsen our long-term financial challenges.
The budget decisions we make now and over the next few years are pivotal. We need to both improve our fiscal footing and rebuild the investments that have changed the course of our state in the past.
To do that we must remind ourselves of what was once commonsense and take steps — like cleaning up the tax code — that can put Kentucky back on track.
This article first appeared in the Richmond Register on March 20, 2016.