Use CARES dollars to fund rainy day umbrella

The dramatic beginning to this year’s General Assembly involved more than the promised passage of legislation limiting the length and reach of Kentucky governors’ future executive orders during pandemic-type emergencies.

Along with overriding Gov. Andy Beshear’s expected vetoes of bills restricting those emergency powers, lawmakers also properly, and summarily, dismissed his irresponsible, big-spending budget on its arrival in the legislature.

This year’s abnormal process means lawmakers must pass a one-year budget for the second consecutive session after COVID-19’s arrival in March interrupted the 2020 legislature which, under normal circumstances, would have passed a biennial spending plan. Instead, the raging pandemic sent legislators dashing home after passing a one-year, largely continuation-type budget.

Nothing, however, is more normal than big-spending proposals from this governor's office.

After all, how much more imprudent can you get than to propose a budget which relies on $613 million in one-time funds – one-time funds – made possible only by the federal CARES Act for new permanent spending which will require finding additional state dollars to sustain it long after Washington’s stimulus spigot gets shut off?

Where, for example, will the additional money come from in future budgets to fund Beshear’s proposed $110 million annual raise for public-school teachers and classified employees – plus the additional pension and health care costs such raises incur – when additional freshly-printed dollars no longer flow from the feds to Frankfort?

Also, if legislators hesitate to give such raises out of concern for future fixed costs which must be met minus additional federal dollars, then neither should millions more be poured into Kentucky Wired, a corrupt and crony-istic broadband boondoggle which has utterly failed to keep its promise made six years and a half-billion dollars ago to bring high-speed internet to the commonwealth’s neediest homes in unserved areas.

Now, the best its apologists can do is brag about how this middle-mile network provides faster internet for some government agencies which comprise its primary customer base and have been largely poached from private providers.

Lawmakers should not only say “no” to Beshear’s proposal to pour additional funding into this failed government-owned network in Fiscal 2022, but they should also use their constitutionally mandated power of the purse to pull the plug on it altogether.

Much more also needs to be known about other programs in Beshear’s budget which seem to have been funded on autopilot for years with little accountability, including:

• What have taxpayers gained from the $112 million dumped into the so-called Kentucky Innovation Act marketed as producing a “knowledge-based” economy in the commonwealth?

• Why has Dataseam, a nonprofit organization, spent $4.5 million of the $26 million received from taxpayers on administrative overhead? Why does it continue to get state funding through no-bid contracts? Despite whatever benefit this nonprofit argues it contributes to the commonwealth’s broader well-being, legislators must demand accountability from an organization a state audit slammed for its lack of transparency.

But legislators shouldn’t cut all Beshear’s spending proposals.

They should put the governor’s plan to deposit $100 million into the state’s rainy day fund on coronavirus steroids and deposit into it any and all dollars that can be found in order to build the kind of cash reserves needed as a solid buffer against future budget shortfalls spurred by economic downturns.

A recent Bluegrass Institute report authored by Visiting Policy Fellow Andrew McNeill called for the state to hold at least $1 billion in reserves.

Putting the $320 million freed up by the CARES Act in this year’s state budget into the rainy day fund would represent a solid down payment toward that $1 billion goal and reflect much-better budgeting than increasing the costs of failed and unaccountable government programs.

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.