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6/29/22
BIPPS Policy Fellow: General Assembly should prioritize broad reform over narrow handouts
GENERAL ASSEMBLY SHOULD PRIORITIZE BROAD REFORMS OVER NARROW HANDOUTS
By Andrew McNeill, Bluegrass Institute Policy Fellow
As the May primary results came in, “liberty” versus “establishment” in the Republican party became the theme for the night. I thought KET’s political analysts’ discussion was one-dimensional, so I emailed Renee Shaw, the network’s election-night moderator. She was good enough to read it on air:
“A fault line between the ‘establishment’ and ‘liberty’ GOP factions not being discussed is the different attitudes towards big business. The three incumbents in northern Kentucky are ‘Chamber’ Republicans. ‘Liberty’ candidates are pro-small business, pro-entrepreneur and very skeptical (to say the least) of the business lobby’s efforts to secure special treatment.”
Al Cross, a longtime vessel for Frankfort’s conventional wisdom, jumped in, “That may be, but it’s not what they’re voting on.”
In the days that followed, working journalists did some real reporting. The Herald-Leader’s Austin Horn tracked down Steve Rawlings, the primary challenger who beat incumbent Ed Massey, and asked him for his take: “The legislators now seem to be representing the Chamber of Commerce and not the people’s interests. We sincerely want to serve the people and do what’s right for the community.”
Rawlings is on to something.
Kentucky’s elected leaders spend much of their time listening and responding to narrow interests, skewing their perspectives toward groups that can afford to hire Frankfort’s best-connected lobbying firms. The benefits subsequently showered upon those businesses and organizations are intended to fly under the radar. Through non-traditional and social media, however, word gets out and is motivating people to get involved.
Usually, this type of corporate-welfare is rolled into committee amendments late in the session and put on the floor in a way that denies rank-and-file members the time to read what they’re voting on. Lobbyists like it this way, even though it burns legislators when the light is eventually shined on the special interest largess contained within the last-minute legislation.
What kind of favoritism am I talking about?
▪ A $6 million handout in the form of refundable tax credits given to a hospitality hedge fund to renovate the Seelbach Hotel in downtown Louisville.
▪ A $35 million partially forgivable taxpayer loan to the University of Louisville’s health care system, where the legislature blindly accepted the claim from university leadership that private financing wasn’t an option.
▪ A billion-dollar tax increment financing zone covering west Louisville, sold as a response to the social justice demands from 2020 that later was revealed to be the brainchild of one of the city’s largest commercial real-estate developers.
▪ A state program that subsidized a strip mall in Morehead after dozens of low-income renters were evicted from their mobile homes.
The Herald’s Horn quoted Congressman Thomas Massie as saying, “Hopefully, this is a wakeup call for the people in Frankfort – who are just voting with the agenda of the lobbyists – that that’s not going to get it done anymore.” Massie is pointing the way forward for the Republican supermajorities to unify around an economic freedom agenda for the Bluegrass State.
There should be wide support for structural reforms like lowering tax rates, responsible budgets, streamlining regulation and encouraging Kentuckians to enter the workforce.
Instead of carving out another corporate tax break for what is being pitched as the next big thing (data centers, “rural jobs,” crypto currency mining, etc.), eliminate Kentucky’s death tax, which drives wealth out of the state and hinders capital formation.
Focus on creating an even playing field that allows entrepreneurial talent to rise and challenge incumbent industries. The resulting competition will be the steel that sharpens steel.
Prioritizing broad policy frameworks motivated by freer markets over narrowly tailored rewards based upon lobbying power is the recipe for a more dynamic economy. The invitation to participate should be open to everyone.
Andrew McNeill is a Visiting Policy Fellow at the Bluegrass Institute for Public Policy Solutions. He can be reached at amcneill@freedomkentucky.com.
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NOTE: This op-ed was originally published on June 9th in the Lexington Herald-Leader.
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