Gov. Steve Beshear’s recent victory lap touted an $82.5 million deposit of what he calls “surplus” funds into Kentucky’s “rainy day fund.”
Beshear claims it’s a “sign of a healthy economy” and attacks his critics who “keep running their mouths about how bad things are,” reports WHAS-TV’s Joe Arnold.
However, I’m concerned that Kentuckians who hear the governor’s glossy spin about a robust recovery will lack motivation to confront the serious challenges offered by a status quo that includes a dire public-pension crisis.
While the truth poses inconveniences to politicians frantically seeking legacies beyond having grown government and their constituents’ dependency on it, Kentuckians deserve to hear it anyhow.
So in the spirit of Beshear’s statement that—as Arnold reports—“his best defense are the facts,” let’s look at some:
· Fact: The $82.5 million deposit in the savings account was possible because the state didn’t pay its bills.
“So yes, if we don’t pay our bills, we can put money in a ‘rainy day fund’ and pat ourselves on the back,” Western Kentucky University Economist Brian Strow said on KET’s “Kentucky Tonight.”
“If we had paid for the pensions as we’re supposed to, it would have been more than eaten up,” Strow said in reference to that rainy day fund deposit.
While the legislature took some baby steps in 2013 to address the pension crisis, most of the benefits of that legislation won’t manifest for decades. Meanwhile, the system’s unfunded liabilities continue to grow.
· Fact: George Mason University’s Mercatus Center ranks Kentucky’s fiscal health at No. 45, meaning only five states are in worse condition.
Unlike the vague Site Selection magazine award touted incessantly by Beshear showing Kentucky supposedly ranks first in a nebulous “most new projects per capita” category, we actually know something consequential about how Mercatus Center researcher Eileen Norcross arrives at her rankings.
She ranks Kentucky No. 47 in “budget solvency,” No. 44 in “long-run solvency” and No. 46 in “trust fund solvency,” which compares state debt to personal income.
Arnold concludes his coverage of Beshear’s announcement with the governor claiming that Kentucky doesn’t need to look at economic-enhancing policies such as right-to-work and getting rid of the punitive personal income tax like better-performing states are doing because “we were number one; they weren’t,” again referring to that Site Selection award.
Nos. 47, 44 and 46 are a long way from the top, Governor.
· Fact: According to the Bureau of Labor Statistics (BLS), Kentucky does rank No. 1 in one category: the percentage of jobs requiring only a high-school degree.
“Our wages reflect that,” Strow said. “When we don’t have a high level of education, we’re not going to command wages the other states get, and this is one of the reasons we’re in the bottom five in terms of household income.”
· Fact: While government revenues and spending have increased steadily in Kentucky each year since 2010, BLS numbers reveal that private-sector weekly earnings are up less than 1 percent annually since Beshear took office before the Great Recession arrived.
In fact, much of the increased tax revenue touted by Beshear can be attributed to lower gas prices that give individuals more disposable income to spend on items most likely to be subject to a sales tax.
But is that really evidence of higher wages, better jobs and a booming turnaround, as the governor and his supporters contend?
Claiming a robust economy while personal incomes remain stagnant and government revenues, spending and programs become more bloated is like a Kentucky college basketball coach declaring a spectacular season has occurred even when his team lost more games than it won.
In such a case, I’m certain there would be no lack of motivation to confront the status quo.
Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at firstname.lastname@example.org. Read previously published columns at www.bipps.org.