Most of Kentucky’s Republican lawmakers and Gov. Matt Bevin would have you believe there are only three options to remedy the state’s troubled public pension systems: failure to make good on those pension promises or either huge cuts in government or increases in taxes.
It even looks like they may come up with a plan to do all three.
Democrats haven’t been much better. It seems no Kentucky lawmaker has the guts to talk about taxes. Because for most lawmakers, it’s not really about “my people back home;” it’s about retaining their seat in the legislature.
That’s why since 2000 when the systems were close to fully funded, Democrats in the House and Republicans in the Senate and governors of both parties found it easier to underfund pensions than to “make the really hard choices” they always claim they’ll make.
But folks, there’s really only one especially hard choice: whether to raise taxes or to cut services. In my time covering the General Assembly, they always chose to cut services and then brag about how they were “tightening their belts” just like the hard-working families across the Commonwealth.
In 2018, they claimed to enact tax reform, but what they did primarily was cut taxes for those least in need of it — they lowered the top rate to 5 percent. But to pay for that, they raised some lower income groups’ tax rate to the same 5 percent and placed the sales tax on some services.
Then they had the audacity to tell us they’d spent more on education than at any time in the state’s history. They based this disingenuous claim of increases in SEEK, the basic formula for funding K-12. They didn’t tell you that when inflation adjusted it is less than we spent in 2008, Or that they cut out funding for textbooks, teacher training and extended school services for poor and struggling students. Nor did they tell you that Kentucky is the only state to continue cutting higher education since the recession. Easy enough to see why tuition has gone up.
They continue to talk about tax reform next year, but the two parties have widely different views of tax reform. Republicans want to eliminate income taxes and place the sales tax on nearly everything — perhaps at a lower rate, allowing them to disingenuously claim they cut everybody’s taxes.
Democrats prefer a progressive tax rate, higher rates for higher income groups (which contrary to public perception often receive the most benefits of government spending anyway). But they are so out-numbered by Republicans they will have little to say about it anyway. So voters and taxpayers better be asking their representatives to tell them precisely where the sales tax will be newly applied.
For example, will you have to pay sales taxes on food or prescription medications or other medical services?
Until they can pass their tax reform, Frankfort lawmakers are simply shifting the tax burden from the state level to the local governments, both in the form of reduced services and funding but even more in the form of higher pension payments paid by those local agencies.
Pity the poor regional universities (UK and UofL have their own pension plans) who saw their state funding once again cut while the state at the same time demands they send more of that money back in the form of higher pension payments.
All this while lawmakers dole out millions to corporations, ponder public funding for charter schools at the expense of public schools while claiming they didn’t raise taxes. There used to be a television commercial for some motor oil in which a greasy mechanic stopped his work on a blown engine, and holding a bottle of the motor oil said: “”Pay me now or pay me later.”
Kentucky’s lawmakers have gone one better. Pay them more while getting less and while they promise they’ve not raised your taxes
Ronnie Ellis is the former statehouse reporter for CNHI Kentucky and writes a weekly column. Follow him on Twitter @cnhifrankfort.