Bluegrass Beacon: Taxpayers should be wary of changing Kentucky’s Constitution

Our commonwealth’s founders wisely set a high bar for changing Kentucky’s Constitution.

The process requires support of two-thirds of the members of both the Kentucky House and Senate to place a proposed amendment on the ballot.

And just in case a steamroll gets started in the legislature on bad policy, the Constitution gives voters the final say as a last line of defense against changes to the guiding document that could result in long-term vague or harmful policy changes affecting their lives and liberties.

That line will need to hold this fall if House Bill 475 succeeds in passing during this legislative session.

Supporters claim this bill only makes it possible for the legislature to move forward with re-framing local tax policy and promise a vigorous debate in the legislature before any final decisions are made to change tax policy for local governments.

They claim it’s ultimately about helping communities move toward a model which relies on taxing sales rather than incomes.

While we’ve often endorsed the idea of changing Kentucky’s tax code toward a consumption-based approach, that argument is the red herring in this particular debate. In fact, it’s disingenuous for advocates to claim this bill will lighten the tax burden on productivity when it does nothing of the sort.

Instead, this bill represents an end run around the founders’ protections against local governments piling on by allowing a legislative discussion on more ways to raise your tax burden. Period.

If that debate occurs in the General Assembly, taxpayers had better hold on to their wallets with both hands. Like Bernie Sanders ignoring the declining situation in Venezuela because it doesn’t fit his narrative of a socialistic American utopia, so supporters of HB 475 ignore certain challenges to its underlying assumption: local governments don’t already have the necessary revenue to provide appropriate services their constituents expect.

Taxpayers at the very least should force politicians – and the enabling media as well as establishment bureaucrats who run the chambers of commerce and quasi-government groups lining up behind this plan like failed Democratic presidential candidates now jumping on Joe Biden’s train – with this challenge: “prove it.”

Along with proving that city and county governments currently don’t have enough revenue to fulfill their obligations under the current tax policy, there must also be proof that allowing this process to move forward will not increase taxpayers’ burdens.

What if, for example, constitutional restrictions on how cities and counties could raise revenue were removed only for those local governments to simply tack on additional taxes to existing ones? How much does it matter whether the source of increasing taxpayers’ burdens is Frankfort or city hall? Either way, the load gets heavier.

Finally, there must be proof of a full and serious attempt to confront and address problems which have cash-strapped local governments, like the rising cost of public pensions.

It’s much easier for politicians to talk tax increases under the guise of “reform” than risking a tough political fight over pension policy. Some local politicians want to shrug and claim the state’s actions have resulted in rising pension costs they can’t control and so raising taxes is the only way to meet their budgets.

But voters shouldn’t accept that narrative until they’ve seen real heat applied by local politicians in the direction of Frankfort to fix the crisis facing the retirement systems. Otherwise, both state and local politicians can conveniently provide political cover for each other, leaving taxpayers out in the cold.

Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com and @bipps on Twitter.

The Bluegrass Beacon is a weekly syndicated newspaper column posted on the Bluegrass Institute’s website after being published by newspapers statewide.