WHAT
KENTUCKIANS OUGHT TO KNOW ABOUT KENTUCKY’S 2013 BUDGET PROBLEMS SO
THEY WILL SUPPORT TAX REFORM IN 2014-2016 BIENNIIUM BUDGET!
Thirty-percent or more of Federal
Transfer payments [Retirement & Disability Insurance, Medical,
Income Maintenance and other] make up the total income of Bell,
Breathitt, Clay, Estill, Floyd, Harlan, Jackson, Johnson, Knott,
Knox, Lawrence, Lee, Leslie, Letcher, Magoffin, Martin, McCreary,
Menifee, Morgan Owsley, Perry, Rockcastle, Wayne, Whitley, Wolfe
counties .
Kentucky Christians must decide how
they want our elected representatives to handle the State Budget
deficits and apprise elected officials of their opinions.
In 1978 Kentuckians told our
politicians “People are tired of paying and paying, and until there
is a change of heart and mind there seems to be but one way to go:
reduce governmental spending in all areas outside the basic services
to provide additional money for those things Kentucky must have, one
of which is a good education system."
Look what message the
voters sent in August, 2003 in Alabama!
Even though the Alabama Governor made
Christian principals the basis of his attempt to pass this tax
increase; i.e., The Book of Genesis (1:27;4:9;9:5-6), revealing that
God created all people in His Image, equates the unjust treatment of
fellow human beings as a wrong committed against God Himself, for
God’s image may be seen in even the poorest and neediest people
among us.”
However, Alabama voters soundly
rejected the $1.2 billion tax increase, delivering a crushing blow to
their Republican governor, Bob Riley, who had staked his political
career on the vote. His ambitious plan was to close a $675 million
budget deficit, ease taxes on the poor and catapult the state's
school system from among the nation's worst to one of the best. From
the recent licking Alabama voters gave to an attempt by Alabama’s
Governor to “street talk” the public wants elected
representatives to be "good stewards, but we want a smaller
government until you prove to us you are good stewards of our
economy. [New York Times edition, September 10, 2003]
Kentucky
and Alabama’s current tax base closely resemble one another in that
they are antiquated and tax policies place a larger tax burden on the
poor.
Alabama’s taxpayers soundly rejected
Alabama’s Governor’s attempt to raise taxes to lessen the tax
burden load on Alabama's poor. They pay so much because the large
timber companies and mega farms pay so little. The State allows big
landowners to value their land using "current use" rules,
as does Kentucky in it's 1969 Farmland Use Act. This significantly
low balls its worth. Individuals are allowed to fully deduct the
federal income taxes they pay from their state taxes, something few
states allow, a boon for those in the top brackets.
All Kentucky lawmakers are not familiar
with their jobs duties & responsibilities as the public thinks.
Most of them appreciate informed voters’ comments and opinions, but
it appears they rely on party leadership to be told what to do.
In 1995 I began contacting lawmakers
through email. My concern is their lack of attention to taking
postive action. They have been misled into taxing less fortunate
higher than wealthy! They pay little or no attention—some give
lip service---to Kentuckians living in poverty. They do not really
understand poverty populated by inadequate opportunity &
stagnated personal incomes.
As I write in 2003 I’m reminded in
2003 of those living in poverty do not have health insurance and
those that do are experiencing increased cost while females pay
higher than males; those with pre-existing conditions are frozen out
of having health insurance and dependents kicked off their policies
around 18 years of age. Then the federal government irresponsible
economic policies skyrocketing federal deficit! Yet Kentucky
continues on with it deficit general fund, skyrocketing bonded
indebtedness and ballooning health care costs!
Let’s take the current mood since
1994 and the political change that took place. For example, the
public has become enamored with reducing size of state and local
governments without much regard to those less fortunate citizens.
In fact, they seem to brush aside any concern for Eastern Kentucky
county residents who receive about 30% of their county’s income
from federal transfer. They seem very satisfied to hear a politician
say they favor legislation to eliminate such waste. They've like
to hear politicians say the middle-class has been totally left out
and it’s past time to shower them with attention. In the meantime,
what we’ve been led into by our leaders and our not
participating is class warfare.
For example, if significant state
and/or federal tax cuts are undertaken to eliminate deficits it will
devastate the poor and place lot’s of middle-class workers’ and
their families into poverty environment. As part of any significant
state and/or federal cuts worker’s families will be forced to
spin down their current cost-of-living or even lose their jobs due to
United States American Corporation current behavior of merging and
downsizing and competing globally by rules set by the WTO (World
Trade Organization) which is going to have a significant impact on
American workers’ families lives. Of course, don’t overlook the
fact that significant cuts means loss of State and Federal safety
nets that have taken 100 years to establish. This should be an issue
where Christians would be clamoring to keep and strengthening
state and federal safety nets. That support is very soft among
Christians.
Let’s look at the historic record of
us voters. Their record indicates wanting candidates to tell them
the truth; i.e., but when presidential candidate Walter Mondale
told American people---if elected--- he would raise their federal
taxes to balance the budget and his Republican opponent---Ronald
Reagan---said he would cut government waste and would not raise
taxes---the American electorate overwhelmingly voted Reagan for
President.
However, Paul Krugman wrote "Some
point out that Ronald Reagan ran even bigger deficits as a share
of GDP. But they hope people won't remember that in the face of
those deficits, Reagan raised taxes, reversing part of his initial
tax cut." Yet, the American people have placed Ronald
Reagan---not Walter Mondale---on a political pedestal…for not being
forthright with public concerning raising taxes after being elected.
Then there was President George Bush
and the “read my lips” breaking of a promise not to raise taxes
and he did! http://www.blogger.com/blogger.g?blogID=414734873881865183#editor/src=dashboard
In 1971 Kentucky elected its
first Republican Governor, Louie Nunn. He, like Reagan, campaigned
against raising taxes. However, when he took the reigns of state
government he found the cupboard bare----(without hesitation he knowingly violated his candidate promise of no new taxes) and added 2
cents to Kentucky’s 3 cent sales tax. It became known as Nunn’s
nickel. Governor Nunn never held another state political office.
Beshear during his first term was
greeted with unprecedented Kentucky debt. Only New York (20
million population) and New Jersey (8 million population)
has a higher per ca pita debt than Kentucky (4.2 million population).
Beshear begun his 2nd and
last gubernational term continuing to face billions of dollars of
Kentucky debt! The only way Kentucky will ever deple magnitude of
Kentucky debt is if Governor Beshear step's up and provides
leadership by urging House of Representative Greg Stumbo to craft a
2014-2016 Kentucky budget Governor Beshear will sign
containing following gubernatorial recommendations:
TO
ADDRESS $1.9 BILLION 2014-2016 GENERAL FUND BUDGET
STATE TAX EXPENSE CUTS
OF $350 MILLION
CORPORATE TAX SHELTER CUTS OF $400
MILLION
CUT
$100 MILLION FROM NON-MERIT PERS0NNEL MAKING $100,000 OR MORE;
ENHANCE
TAX RESOURCES
ELIMINATE TRUCK WEIGHT-DISTANCE TAX
In 2003, Kentucky faced deficits
totaling an estimated $1.2 billion dollars the General, Road and
Medicaid funds.
In 2010 Kentucky faces almost
same financial breath taking mountain of debt! There’s not enough
fraud and corruption existing in state government to bring Kentucky
out of this financial quagmire without tax reform, massive cuts to
state tax expenditures and some form of a tax increase to maintain
our current services.
What does Kentucky taxpayers
(registered voters) want their politicians to do? If they don’t
know the truth about Kentucky’s budget quagmire they’ll probably
follow the politicians that says I’m not going to raise taxes!
However, educating themselves will
change their attitude to significant cuts being made in state tax
expenditure followed by a “revenue neutral” tax strategy for tax
resources.
For example, voters should educate
themselves about the bad state-of-financial affairs facing State of
Kentucky! For example, As Ron Carson predicted in order to have
funds for Education, Health Care, Public Safety, essential
infrastructure and other basic services the current budget funds, the
next Administration will be forced to raise taxes and make
significant cuts in state tax expenditures.
Kentucky registered voters should
question both candidates about their “not raising taxes” and/or
“tax modernization” approach. At least, the press and the voters
ought to ask candidates what happens if after they cut out all the
fraud and waste they say there is and the budget is still in the
financial hole. What will be their specific approach to rescuing
Kentucky’s finances? What happens to Kentucky if they don’t
succeed?
Well, in 1993 and 1995 Governor Jones
established two different task forces to study and report what
Kentucky ought to do about it’s expenses exceeding it’s tax
revenues.
The 1993 task force---Commission On
Quality and Efficiency---recommended cutting $1 billion dollars
of appropriations over 5 years; 1995 Task Force---Commission of
Kentucky Tax Policy---ended a reform of Kentucky antiquated tax
policy by eliminating, reducing and raising some taxes, which is a
“revenue neutral” approach. Kentucky legislators and the new
Governor have templates they can update for rescuing Kentucky from
such devastating deficits.
However, Let’s look at some of
Kentucky’s financial and social facts.
Kentucky's poor should receive tax
relief because statistics tell us Kentucky leads the nation in
applying a larger tax burden on the poor than any other state!
Kentucky’s Eastern Kentucky
dependence on Federal Government entitlement and other programs has
been established without question. Statistics tell us approximately
25 Eastern Kentucky counties receive about 30% or more of their
total county income from federal government programs; i.e., 36% from
SS retirement and disability income, 40% from federal medical income,
16% from income maintenance and 8% other income. Therefore, any
federal disruptions in this federal income to this part of Kentucky
will be devastating.
H. Brinton Milward of the University of
Kentucky in November 1987 candidly told the Shakertown roundtable
participants that Kentucky must develop a vision. He said “there
is a tremendous disparity between Sunbelt Kentucky and that part of
the state, particularly Eastern Kentucky, which statistically has
more in common with the Third World than with most American states.
Do you suppose our two gubernatorial
candidates knew past state government funding for Education, Health
Care, Public Safety, essential infrastructure and other basis
services was funded by executive and legislative branches of state
government raiding the Road Fund Dollars to cover State General Fund
deficits?
In good conscience, how then can
Kentucky’s two gubernatorial candidates promise “no tax
increase”, when, no matter which one wins will have to raise taxes
since past general fund deficits were covered by “raids on the road
fund” for an estimated $394 million---pointing out past
political decision-making replaced “raiding the road fund” over
asking for a tax increase?
What the general public is unaware of
is the fact for the past 15 to 20 years the Republicans and Democrats
that made up past General Assemblies and Administrations financed
the “pork” and “necessary services” by “raiding the Road
Fund to an estimated tun of 387 million dollars.
Of course, the General Fund deficits
caused by this “credit card mentality” will never be paid
back and it perpetuates the 2003 deficit situation. It meant for the
past 15 to 20 years both parties decided to “raid the road fund”
rather than raise taxes to underwrite the demand for services and
“pork”.
- To keep 2010 cost-of-services new Governor and Legislature will have to make draconian cuts to appropriations and revenue-neutral tax resource strategies. Therefore, executive and legislative branches of state government should tell Kentucky voters their specific plan for dealing with the estimated $1.2 billion of deficits as follows:
- Save an estimated $75 million by eliminating all Assistant Principal positions and save estimated $15 million by eliminating all Cabinet non-merit positions between Director & Secretary and reassign all skilled current employees serving in those positions;
- save estimated $15 million by eliminating all state personnel "double dipping" as well as plugging loophole for local officials "double dipping";
- increase tax revenue by estimated $50 million by merging Transportation Cabinet’s Division of Vehicle Enforcement Officers with Kentucky State Police with orders to identify all illegally plated motor vehicles and collect all Kentucky usage and property taxes owed;
- save $30 million by reducing number of PVAs from 120 to 50 placing PVAs and all PVAs computer assessment records under authority of Revenue Cabinet.
- Eliminate practice of technical state personnel being allowed to retire and immediately re- hired as a consultant or enrolled in a personal service contract or re-hired as a non-merit employee doing same work at significantly higher pay received as a regular merit or non-merit state employee.
- Direct Transportation Cabinets Divisions of Vehicle Officers and Motor Carriers & Revenue Cabinets Department of Property Tax to work together to collect an estimated $42 million of uncollected usage and an estimated $8 million of uncollected property taxes on illegally licensed motor vehicles using Kentucky highways. Remember. From 1985 through 1993 Revenue Cabinet's special compliance program worked an estimated one third of Kentucky's population [Jefferson, Daviess, Bell, Kenton, Campbell and Boone counties] identifying over 26,000 violators costing state coffers an estimated $35 million dollars!
- In 2003, (1) $35 million tax evasion had grown to $68 million and is still uncollected after amnesty program; (2)development of a one-page state income tax return started in 1/3/95 (3) Executive Branch reductions over 4 years saved an estimated $137 million; (4) reducing number of state employee number from over 37,000 to 30,000; (4)retrained staff and award pay increases to job holders whose positions receive added duties from re-engineering process.
- In 2013 there are estimated to be 2,100 non-merit state employees being paid more than $100,000, annually amounting to estimated $100 million needing to be eliminated;
- in addition legislative Research Commission personnel overstaffed by an estimated $1.4 million; Administrative Offices of the Court personnel overstaffed by an estimated $60 million;
- number of state testing centers reduced to 1;
- move from a "defined benefit retirement program " to a "defined contribution retirement program" for new state employees;
- merge administration and support services of the Kentucky employees county employees, state police and teachers retirement systems;
- re-engineer and automate front end processing of documents entering the Revenue Cabinet;
- activate microfilming at the department level;
- to achieve same day deposits require sheriff departments to remit payments every two weeks;
- design and implement systems and processes for measuring the costs of revenue generation;
- raise teacher salaries by the amount of “perk” tax dollars given Pva's in 2009 budget; PVA average annual pay around $104,000 per year should be reduced to average annual pay of teacher pay; i.e., $50,000;
- establish child care centers for state workers
- accelerate the date property escheats to the state to five years;
- raise the $25 floor on advertising to $100 to eliminate claimants advertising.
- finance & administration cabinet review & update and implement 1987 automated purchasing study
- As a result of passage of H.B.538 in 2000 elevating PVAs to full-time merit state employees subject to Kentucky Revenue Cabinet’s general authority as outlined in KRS 13.020 – 030; 131, 132, 133, 134 and 136; save estimated $21 million annually by reducing number of PVAs from 120 to 17 & reducing total deputy PVA pay to $30 million, annually;
- amend current department of revenue/PVA legislation that all county/state PVA computer data become property of the Kentucky Revenue Cabinet (tax rolls and all office tax records made totally accessible to department of revenue personnel) in manual and/or electronic format and all but local tax roll stored at department of revenue;
- revisit the 1992 comprehensive economic impact study of the "extended weight haul road system" on the coal producing economy looking to reduce appropriations
- require that each state agency publication be supported by a needs assessment document approved at the secretary or commissioner level
- contract with a private firm to review the state's monthly telephone bills
- use electronic fund transfers to pay telephone bills
- streamline the process of issuing checks from the state treasurer direct deposit of the state payroll directly into the accounts of employees
- Establish investment pools---as recommended by the national association of state treasurers for counties---allowing individual county instant liquidity---yet it yields a greater return on their investments since large sums of monies are being invested uniformity.
- a pool acts as a voluntary, state-managed investment option for the surplus operating the funds within a state each local government pools its excess operating funds with that of other local governments in an operation much like a money market mutual fund, but with the added
- benefit of being structured to meet the unique needs of government investors although all funds are pooled for investment purposes, each locality's participation in the pool is reported separately.
- Study the cash management practices of state universities and explore the possibility of a pool of investment funds from which universities could draw down.
- Recommend electronically transferring funds more efficiently by lowering thresholds allowing maximum interest to be earned.
- Electronic fund transfers (EFT) can be used to pay large sums of monies to vendors, and to control the date funds are withdrawn from the state's account for better controls to ensure that bills are not being paid before their due dates.
- recommend better ways for state to stop payments on checks w/insufficient funds
- legislation tightening up enforcement of collecting insurance surcharge
- amend legislation making it illegal for general assembly to use state retirement dollars for balancing state budget
- add 50 plus permanent employees to Revenue Cabinet’s sales, income and motor vehicle tax collection tax compliance with directions of prioritizing collection of all tax evasion and then routine collections of sales, income, corporate tax collections
- 25% reduction in all department of revenue “field jobs” applying savings to personnel collecting of taxes
- eliminating all state & local personnel "double dipping"
- review estimated 85,000 personal service contracts and eliminate contracts found unnecessary or political reduce current state Medicaid appropriations budget is not balanced:
- expand Kentucky sales tax base by including selected services
- combine weight-distance & motor fuels tax with truck registration fees & eliminate truck weight- distance tax;
- Amend H.B. 44 enhancing maximum school rate to 6% while amending HEX by replacing “automatic C.P.I.-every-two-year tax exemption” with “property tax circuit breaker”
Sincerely,
Bill Huff
113 N. East St
Harrodsburg, Ky. 40330-1244
859.734.2228
859.326.0223 Cell
dash@kycom.net
