Two New Reports from MACED's (also new!) Kentucky Center for Economic Policy
MACED has launched a new initiative as the Kentucky Center for Economic Policy (KCEP). KCEP's work will be to, as they put it, "create economic opportunity and improve the quality of life for all Kentuckians through research, analysis and education on state fiscal and economic policy issues." KCEP and KFTC are both member organizations of the Kentucky Forward Coalition, and we're all excited to learn from and work with KCEP in advancing the work of strengthening our commonwealth by creating a fair, adequate, and sustainable tax structure.
You might already be familiar with MACED's existing report about Kentucky's tax and budget issues. "The Impact of Coal on the Kentucky State Budget" was released in June of '09, and frequently cited by KFTC members and the media. There are two newer reports, released under KCEP. Here they are, along with some main points:
This report outlines how Kentucky's budget has been impacted by the economic crisis,
and how the federal Recovery Act money has been keeping our public necessities afloat. KCEP points out that "Recovery Act monies made up 42 percent of the shortfall in the 2009-2010 state budget, and the $1.5 billion shortfall the state faced in crafting the 2011-12 state budget would have been much worse without the estimated $1.3 billion in Recovery Act revenues the state still had available.â€
This federal money was vitally important. It went to educating everyone from preschoolers to workers, to support access to health care for all, and to transportation,
public safety, energy projects, and social services. But now, the Recovery Act funds are gone, and there's no plan from our elected leaders to make up the revenue. Official state estimates are that we won't full recovery until 2012. Even that "recovery" is inadequate to moving our commonwealth forward.
The report concludes with some good, sound ways forward. "The best revenue options address ongoing structural inadequacies in Kentucky’s tax system and make the tax system fairer. Kentucky should examine revenue options that begin modernizing the tax system by applying the sales tax to more services; add more progressivity to the state income tax and preserve Kentucky’s estate tax; and address targeted tax expenditures, which are a growing drain on state revenue.†For more information on some solutions along these lines, visit KFTC's Economic Justice pages.
This report outlines the trouble with Kentucky's tax expenditures, which are tax breaks that have accumulated over the years. They're permanent and prioritized over other budget areas, but aren't scrutinized or studied their impact or usefulness. Tax expenditures are kind of like some of our Hollywood starlets. They get a lot of perks, and deferential treatment, but it's not clear why they deserve it.
One stunning factoid in the report is that Kentucky gives away more money in tax expenditures than it collects for our General Fund Budget.
KCEP offers three common-sense solutions for making sure that we're being fiscally responsible and making wise investments:
1) Make sure that there's clarity for the purpose of each tax break.
2) Make sure the impacts--good and bad--of the tax breaks are known and reported.
3) Create a review process so we can continue to evaluate the usefulness of these tax breaks.
Read KCEP's report for more information, and stop by KCEP's websiteto learn more about their work.
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