When it comes to the public investments that keep us healthy, educated and safe, increasingly Kentuckians are presented with a false choice in Frankfort.
We’re told that to pay down the debt in our pension systems, we can’t afford the access to health coverage provided by Medicaid expansion, or investments in our universities and community colleges, or other critical services.
But the truth is we have more than enough money in our Commonwealth to invest in vital public services, but we lose a growing share of it through holes in our revenue stream. In fact, it’s become so bad, Kentucky loses $12 billion a year due to a wide variety of tax breaks while only collecting $10 billion in revenue for public priorities like education, health and more.
Some of the special interest tax breaks are big, draining hundreds of millions of dollars from our coffers. Some are smaller, draining just a few hundred thousand or a couple million at most. But combined, it means less investment for all of us.
When we all chip in – corporations and the wealthy included – we’re able to improve our schools, roads and other public services. Eliminating tax breaks allows us to better fund education AND pensions, as well as other priorities. And the changes don’t have to be complex.
For example, in order to help pay the 10 percent of the cost of Medicaid expansion the state will soon make, we could end a break in the “provider tax” on our hospitals, which is allowing them to still pay the same taxes they paid in 2006. That’s despite the fact Medicaid expansion has led to billions of dollars flowing into our hospitals and big savings on money they used to spend on the uninsured.
In order to support investments in a stronger state and boost our fiscal health, we could also expand the sales tax to luxury services – like limos, private country club memberships and armored car services that the majority of Kentuckians don’t use. We could close loopholes that allow corporations to move their profits around to avoid paying income taxes in our state. And we could trim inefficient economic development tax breaks for profitable industries. Spending less on special interest tax breaks would allow us to spend more on the smart investments that benefit us all.
Thankfully, a coalition of nearly 40 organizations and growing has formed to encourage our state leaders to clean up the tax code so we can better invest in our communities. You can find out more about it at www.kentuckytogether.org.
The budget choices our leaders must make are always about priorities. But too often that’s meant pitting critical investments like education against critical investments like health. But reexamining our priorities also should mean bringing new scrutiny to the tax breaks that get a big chunk of our state’s resources. Are they more important than the investments needed to create thriving communities?
Honestly, it’s not that hard of a choice.
This column originally ran in the Courier-Journal on Oct. 20, 2016.