February 27, 2009
Automatic Bailout Machine
NRSC Chairman Cornyn Explains His Approach
Rand Paul Interested in US Senate
Rand Paul, a Bowling Green ophthalmologist and son of former presidential candidate Ron Paul, is considering jumping in Kentucky's US Senate race.
He says Senator Jim Bunning's recent votes against bailouts and stimulus have been his "finest hour." He would not run against Bunning, but said that "we will need a conservative to run" if Bunning decides against the race.
If Bunning does not run, Republicans could anticipate at least a three-candidate primary. Senate President David Williams recently explored getting in the race, and the interest of Secretary of State Trey Grayson, contingent on Bunning not running, is well-known. Other rumored Republican candidates, should Bunning opt out, include 1st District Representative Ed Whitfield and Kentucky Commissioner of Agriculture Ritchie Farmer.
We know Rand Paul to be a strong proponent of limited government, but we do not know if he shares the anti-trade positions of Congressman Paul.
Kentucky Progress seems to have broken the news, and Kentucky Politics points out that Rand would likely benefit from the incredible fundraising support demonstrated in Ron Paul's presidential candidacy.
KEY VOTES: More Tax Bills In Frankfort
HB 53 - Titling All-Terrain Vehicles
HB 53 simply creates a new requirement that all ATVs be titled so the state can collect the titling fee. Just part of the old "If it moves, tax it" mentality, here sponsored by representatives Edmonds (D-Breathitt, '08 rank #89), Nesler (D-Graves, #75) and Rader (R-Jackson, #20)
HB 293 - Fire Marshall Tax
HB 293 creates a new $100 minimum fee for inspections by the Fire Marshal, and seems to suggest that it requires yearly inspections on just about any structure.
HB 379 - Manufactured Home Inspection Fees
HB 379 sets forth in law a new $150 fee for manufactured home inspection, allows the fee to be increased 10% each year, and the fees go to fund the inspecting agency. Sounds like a money-maker to us, and representatives Miller (D-Jefferson #56), Bell (D-Barren, #62), Clark (D-Jefferson, #62), Hoffman (D-Scott, #99), Keene (D-Campbell, #40), Richards (D-Warren, #78), Stevens (D-Anderson, new) and Upchurch (R-Wayne, #12).
HB 347 - New Sales Tax on Information Technology Services
HB 347 would extend the sales tax to seemingly any service that is provided over the internet, including things like graphic design, web-based seminars, downloading newspaper archives, internet banking? You name it, it's taxed by this vague bill from representatives Harry Moberly (D-Madison, #92) and Steve Riggs (D-Jefferson, #43).
These and other bills were highlighted in our e-newsletter. Sign up for it here.
February 26, 2009
Our Tax System Already Significantly Burdens the Rich
It's a little recognized fact.
From Greg Mankiw's Blog
The Progressivity of the Tax System
The CBO has released a new report on effective tax rates (total taxes divided by total income). Compared with previous reports, it includes more information about thin slices at the top of the income distribution. Here are the total effective federal tax rates for 2005, the most recent year available:
Lowest quintile: 4.3 percent
Second quintile: 9.9 percent
Middle quintile: 14.2 percent
Fourth quintile: 17.4 percent
Percentiles 81-90: 20.3 percent
Percentiles 91-95: 22.4 percent
Percentiles 96-99: 25.7 percent
Percentiles 99.0-99.5: 29.7 percent
Percentiles 99.5-99.9: 31.2 percent
Percentiles 99.9-99.99: 32.1 percent
Top 0.01 Percentile: 31.5 percent
N.B.: These figures include all federal taxes, not just income taxes.
Here are the CBO report's notes on income taxes:
High-income households have a disproportionate share of comprehensive income and pay a disproportionate share of federal taxes. The half-percent of the population with the highest income received 14.7 percent of total household income before taxes and paid 22.6 percent of total federal taxes in 2005 (see Tables 2 and 3). People at the top 0.01 percent of the income scale received 4.2 percent of total income and paid 6.5 percent of total federal taxes in 2005. The half-percent of the population with the highest income paid 31.5 percent of federal individual income taxes, while the top 0.01 percent paid 8.0 percent of individual income taxes in 2005.
What the Market Thinks About the Direction of Our Country
From the Club For Growth:
February 25, 2009
America, Kentucky Suffocating Small Business Owners
We received the following email today, inspired, we think, by President Obama's speech to the Joint Session of Congress last night. This small business owner is concerned that the President is unfamiliar with just how hard is is to operate a business and deal with the incredible amount of fees and inessential requirements placed on entrepreneurs by the government.
Dear Mr. President,
I am a small business owner from KY. Our family company has grown significantly over the last 12 years from very few employees and little sales to approximately 2,500 employees in 5 states (we own various hospitality-related franchises), as well as commercial real estate. Next year we expect to do roughly $100 million in sales.
Would you be willing to give me a few minutes of your time (either on the phone or in person) to discuss some unintended consequences of the Stimulus bill as well as how many of our modern day state and federal laws hurt or deter small businesses, their employees and, ultimately, the consumer?
As much as you know, which I'm certain is more than me, I bet I can still shock you with the real effects of some of current US state and federal legislation. For example, the recent Stimulus bill penalizes companies that offered health insurance benefits to their employees versus no penalty to companies that did not offer health insurance benefits. I would appreciate the opportunity to discuss this with you.
Also, we pay 150% to 200% - probably more actually - over our net income in various taxes (payroll, property, other, impact fees, income tax, etc.). If the taxes we directly generate are included (sales & wholesale taxes, etc.) then we pay upwards of 400% in taxes versus what we actually make. I willingly offer to show this to you on our P&L. It is truly disheartening and takes the air out of my lungs. There is so much more I need to show you, just not enough room to write it all.
When the State of KY passed the Alternative Minimum Tax (it has since been repealed b/c of public outrage) it actually penalized companies providing a better value to its guests since it taxed sales generated versus its profits. Thus, businesses doing more sales (because of popularity over lower prices than their competitors and receiving less profit margin actually paid more in taxes than businesses overcharging guests in favor of a higher profit margin.
Please give me the opportunity to explain how one state's Recycling Act is one of worst pieces of legislation ever passed in the history of this country (businesses are mandated to use and pay certain haulers thousands of dollars per location per year and, the result when we investigated was that b/c of the dramatic increase in recycling material, the haulers were just dumping it in the regular landfills). Now a recycling compliance form is required in order to receive your annual liquor license renewal.
I was just informed today that the State of TN nearly tripled its unemployment tax on business irrespective of the employers employment record or retention rate. Thus, they're trying to pump up their depleted unemployment benefits fund by penalizing employers thus leading to more unemployment thus leading to a bigger unemployment fund deficit. Obviously that will warrant another 300% unemployment tax increase. I also just found out today that a building inspector in one town in TN will not give us our our Certificate of Occupancy (we open in 3 days to the public) unless we pay a "road impact fee" of $26,032.90. I thought that is what the high local business taxes were for in TN. Last year we had to pay over $100,000 in one Tennessee city just for the right to tap into the water. One might say it was a day of surprises but really it was just business as usual.
It's tiring watching many large, international corporations strangle our state for huge tax breaks and incentives while small businesses continue to fall through the cracks. After all, small businesses make up a majority of the employment base and retail dollars in the US. When the cookie jar is empty, these internationals again auction off their headquarters or plants (relocate) to the highest bidder with the promise of bringing thousands of new jobs. I don't blame them one bit. Truthfully, they shouldn't have to bribe state governments for special incentives that should be available to all businesses.
Why not incentivize all employers with a dollar for dollar tax deduction on equity invested in new buildings, infrastructure, and anything else that creates jobs? Depreciation schedules aren't cutting the cake. Let's reward companies that actually boost total tax revenue, not just the ones that talk a good game.
Mr. President, I believe that if you understand the monumental hurdles facing small and medium size businesses such as ours, you can lead us not only into a long-lasting recovery but continuing prosperity. All I want to do is effectively run our organization.
I cannot remember the last time I was able to focus on the simple things that made our small company great, like focusing on our people, food, service and value. Unfortunately over the last several years our officers and myself have spent all of our time appeasing confusing legislative and administrative agency requirements and lobbying against proposed bills and amendments detrimental to business, employees, customers, and citizens of this great nation.
I have so much more to tell you. Please give me the opportunity. I would greatly appreciate any time you are able to give me, and I believe, so would the American people.
An Overtaxed Small Business Owner
We'll let you know if he hears anything.
Here Comes the Next Tax Hike To Rush Through the General Assembly
The General Assembly plans to introduce the 6-year road plan Friday with provisions to raise the gas tax four cents a gallon.
In theory the gas tax is indexed to the wholesale price of gasoline, so that if the price of gasoline goes up, then the tax rises a percentage as well, and if the price goes down, so does the tax.
In practice, the legislature locks in every increase and the tax never goes down.
So it goes. Another week of legislating, another tax hike.
What are you going to do about it? We'll have comments up soon enough, but for now email me.
What was it Reagan said? "The nearest thing to eternal life we will ever see on this earth is a government program."
Louisiania Governor Jindal Notes How Stimulus Creates Permanent Problems for States
Last night, Louisiana Governor Bobby Jindal responded to the President's address to a joint session of Congress. Last Sunday, he explained to David Gregory and, indirectly, Senator Landrieu, about the importance of reading legislation before you vote on it, (or after you vote on it. Or sometime.) and how Obama's stimulus contains unfunded mandates for states.
Lexington Increased Revenue Mystery
The city collected $16 million in total revenue in January, up $229,000, or 1.5 percent, over January 2008. Through the first seven months of the fiscal year, the city has collected $150.4 million in total revenue, up $5.3 million, or 3.6 percent, over this time last year.
So, are payroll taxes still going strong?
The biggest drop last month came in the payroll tax category, Fister said.
The payroll tax brought in $2.1 million less in January than it did in January 2008, Fister said.
About $1.3 million of that decline is due to timing issues, but that leaves a decline of about $850,000 from January of this year to January 2008, Fister said.
Ok, what about licenses and permits?
In January, $8.9 million was collected in the licenses and permits category, a decrease of $3.1 million, or 26 percent, over the same time period last year.
Collections in the licenses and permits category -- the city's largest area, which includes payroll tax, business net profit tax, insurance premium fees and franchise fees -- is down $1.2 million year-to-date for the fiscal year, which ends June 30, said Mary Fister, the city's director of accounting.
Payroll taxes are down $2.1 million. Licenses and permits are down $3.1 million. The category including these $5.2 million in decreases is only down $1.2 million, and overall revenues are up $229,000.
There's no other information. If you look at the html address for the article http://bluegrasspolitics.bloginky.com/2009/02/24/lexingtons-january-revenues-decline/, it apparently was once titled "Lexington's January Revenues Decline". It seems our reporter was disappointed.
February 23, 2009
It's Slowly Dawning on Obama
The President is slowly figuring out that most of the spending bill commonly referred to as the stimulus is waste.
Now at a meeting with the Governors of almost all of the states, he's upped the percentage:
Obama told the group this morning that there are "some very legitimate concerns" about the unemployment insurance provisions, but noted that they were only a small part, less than 10 percent, of the overall package.
We hope this signals a change, and that he will start to listen to the very legitimate concerns being expressed about the way the Democratic majority is wrecking the American economy.
Representative Mike Pence is calling our attention to the next burp of frenzied spending from the Congress:
The House is taking up this week the omnibus spending bill that will fund the federal government through the end of September, and Republicans are requesting that funding not increase from its 2008 level.
Pelosi has also called for fiscal responsibility in government spending, requesting last week that House committee chairmen conduct hearings to examine the budgets of federal agencies. However, Republicans are reacting to media reports that place the price tag of the bill at $410 billion, with thousands of earmarks -- from both Democrats and Republicans -- included in that total.
"After a spending spree that included the rest of the banking bailout, a massive stimulus bill, a call for a housing and mortgage bailout -- now the federal government is poised for the largest increase in discretionary spending since the Carter administration, with the exception of 9/11," Republican Conference Chairman Mike Pence (Ind.) said this morning during a pen-and-pad session with reporters. "We think that is inconsistent with the times in which we live and the expectation of the American people."
Owensboro: The city of Owensboro has long been searching for a solution for what to do with the jail-looking Executive Inn. Recent proposals have included doubling insurance taxes on everyone in the county, with ridiculous carve-out exceptions for nurses, teachers, city employees and other groups who obviously shouldn't be considered part of the community. It seems that the city has settled on the tax increases, and will purchase and raze the site for $7.5 million.
SCHIP: In these tough economic times, who would be against better health care for children? Apparently Congress and Governor Beshear, who have pushed an unaffordable expansion of SCHIP, an expensive program that fails to improve health for children. SCHIP (Kentucky's system is called KCHIP) is the state health insurance fund for children. While the program does provide expensive health insurance for children, it frequently enrolls children who would otherwise hold private insurance, there's no "evidence that SCHIP actually improves health outcomes, or that the program addresses the systemic quality problems that confront even insured children." Additionally, there is evidence that SCHIP creates more uninsured children than would exist if SCHIP were limited. Why is a financial crisis such an excuse to expand bad programs? Or, why is the state expanding bad programs while it so obviously can't afford the programs that exist?
Stumbo's Goons:As Attorney General, Greg Stumbo created a farce called the KBI which he used to bring down Governor Ernie Fletcher, and was promptly dismantled by succeeding AG Jack Conway. Now he wants to create a similar agency for the legislature, designed to block and stall the release of public information. One of these days, there will be a public realization that Greg Stumbo should run for statewide office in Illinois.
February 22, 2009
Williams Jumping in Backwards?
The buzz out there is about State Senate President David Williams' interest in a primary challenge to Kentucky's US Senator Jim Bunning.
Earlier today, Capitol Hill newspaper The Hill reported that Williams was in DC meeting with "officials at the National Republican Senatorial Committee" to explore the possibility. Page One is reporting that it's not just a possibility, but an actuality.
If there is a primary developing, recent history would suggest the lines of a potentially devastating fight.
One has just pushed through the largest tax increase on Kentuckians since KERA, which is in contrast to his earlier approach to hold the line on taxes and aggressively examine spending. The other has taken strong votes against the free-spending stimulus legislation and giant bailouts, which are simple executions of his long-held beliefs.
If we were going to start a campaign, we'd work to strengthen our record, not weaken it.
February 19, 2009
Revolt in Chicago
An Avalanche of Taxes
Now, it's reported that they're planning on raising the gas tax, despite an expected $421 million for roads from the federal spending bill.
Folks, you've got to make some noise
A Frankfort Pro-Taxpayer Hat Trick
Only eleven members of the Kentucky House of Representatives last week voted against tax increases, raiding the health insurance trust fund, and allowing counties to underfund the same fund. They are:
Rep. Ron Crimm
Rep. Jim DeCesare
Rep. Myron Dossett
Rep. Bill Farmer
Rep. Joe Fischer
Rep. David Floyd
Rep. Brent Housman
Rep. Stan Lee
Rep. David Osborne
Rep. Marie Rader
Rep. Addia Wuchner
David says just one Senator might make the list...[click]
What's in the Stimulus?
A line-by-line breakdown from the Wall Street Journal.
Pat Toomey on the Stimulus
National Club for Growth President Pat Toomey discussed the stimulus yesterday on Fox News:
Bunning Scores a Pro-Growth Hat Trick
From the Club for Growth:
I just did a quick vote query. There were only 12 brave Senators who voted against the TARP, the auto bailout, and the stimulus. Here they are:
February 18, 2009
Mayor Newberry Fails Fox News
How many jobs, Jim? Just make up a number already!
Chandler a Lapdog, Not a Bluedog
From the Club for Growth:
Lapdogs, Not Blue Dogs
The so-called Blue Dog Democrats love to talk about how they are fiscally conservative. Their website states that their top priority is "to refocus Congress on balancing the budget and ridding taxpayers of the burden the debt places on them." They even show a National Debt counter on their website to emphasis their point.
So you'd think that if they were true fiscal conservatives, they would have voted against the stimulus because it spent over $1 trillion, ballooning the national debt which they profess to hate. But instead, 41 of their 44 members decided to lock arms with Obama, Pelosi, and Reid
Click here to find your central Kentucky Congressman on the list!
Government Picking Winners While You Lose
So apparently HB 347 creating new taxes on IT services passed A&R yesterday with hardly a dissenting vote.
Yesterday we also read about the PSC applying new taxes to your cell phone.
We're fairly sure you remember the earlier flap about making Kentucky's taxes on alcohol the highest in the nation.
This is the worst bout of the government picking winners and losers we remember and, guess what, you're the loser!
February 17, 2009
HB 347: More New Taxes To Run Businesses Out of Kentucky
HB 347 is on the agenda in House Appropriations and Revenue today. Apparently not content with the recent tax hikes on Kentucky's hospitality industries, HB 347 creates a new sales tax on IT services.
Covington, Kentucky enjoys a multitude of IT businesses have relocated from Cincinnati because Ohio taxes IT services and Kentucky does not. HB 347 is just one more way the taxers in Frankfort are conspiring to drive out jobs and keep Kentucky a poor state.
Will these pledge-breakers vote for this tax too?
Tuesday Catch Up
We're a day late on our catch up list. Here it is:
Columbus, OH: Anti-business columnist Tom Eblen wrote about something we've been meaning to investigate for a while now: Columbus, OH. Columbus has an innovative approach to downtown reinvestment, creating neighborhood commissions that threw out complicated zoning restrictions and approval processes and are a one-stop shop of zoning approval. Columbus's downtown is a good example of better development through greater economic freedom, and we're glad Tom and Lexington have looked into it.
Lexington Pensions: While we're on Lexington, the city is making an attempt to reform the pension system for future public safety officers. While there's alot of foot-dragging apparent in the article, it is a more serious attempt at reform than the state enacted.
Stimulus Pork: Here's one list of dubious spending in the federal stimulus bill.
The Free Market: If you haven't read it, you should click here to read Ed Lane's great column on keeping the free market free.
February 16, 2009
Higher Taxes, Like the Chambers of Commerce Wanted
Just thought we'd remind everyone that one of the first groups in front of the effort to raise taxes on Kentuckians was the Chamber of Commerce. From page 18 of the Kentucky Chamber of Commerce's 2009 Legislative Agenda:
Second, the General Assembly should increase Kentucky's excise tax on cigarettes to a level competitive with our surrounding states as a meaningful step to improve the overall public health of Kentucky's citizens.
February 13, 2009
Senate Appropriations and Revenue Chairman Charlie Borders (Carter 33, 2008 rank #11) is speaking in favor of the tax hikes in HB 144, claiming both that the tax increases are 'user fees' and that the 'few cents' increase will not affect commerce.
Of all the arguements one can make about these tax increases, one can not hide the fact that they are tax increases, and one should not pretend that any tax increase will not affect the budgeting choices people make. To argue on the one hand that raising the cigarette tax will affect health by discouraging smoking, then on the other that raising the alcohol tax would not affect purchasing of alcohol, is utter nonsense.
You can't hide from a tax increase by calling it a user fee, and you can't pretend people don't care about tax increases, however meager. I hope the debate becomes more serious.
UPDATE: Now Senator Ernie Harris (Oldham 26, 2008 rank #11) says he 'wishes there could be a sunset on the alcohol tax.' That idea was proposed by Rep. Brinkman in the House and there is no reason it could not have been proposed in the Senate. There is no reason for him to be wishful when he has been elected to act.
Fighting to Improve Bad Legislation
There were a couple of amendments attempted on HB 144, the alcohol and cigarette tax increase bill, that are worthy of mention and praise.
HFA5 and HFA7 from Representatives Sal Santoro (Boone 60, 2008 rank #11) and Addia Wuchner (Boone 66, 2008 rank #1) would:eliminate prevailing wage requirements on K-12 and postsecondary education projects from April 1, 2009 to March 30, 2011.
We have long maintained thatIf growing the economy was the focus of the plan, we would be having a serious discussion of a prevailing wage moratorium. Eliminating this artificial wage requirement would mean more jobs building more projects for the same money. Jobs should be our focus in these economic circumstances.
A gold star for Representatives Wuchner and Santoro.
February 12, 2009
KEY VOTE ALERT: HB 117 - Pension UnreformKEY VOTE ALERT"NO" to HB 117 - Delaying the reforms of HB 1
The Kentucky Club for Growth urges all Representatives to vote "NO" on HB 117, which delays the responsible deadlines set forth in ES08 HB 1. This key vote will be part of our 2009 Congressional Scorecard.
ES08 HB 1 was a small step forward in dealing with the overwhelming pension liability facing the state. Of the main reforms, one was a commitment to responsible funding of pension plans. What was a small step forward in the first place is now slowly unraveling.
Instead of addressing the future liability by creating a new plan for future employees that would more greatly resemble retirement benefits in the private sector, the General Assembly chose to require adequate payments to support the plan as it is. HB 143, just passed, borrows significant sums from the retirement system. Now HB 117 would delay payments into the system. How much will the next bill take from the system?
Tax Increases Fail Senate Committe, Then Passed
From the Herald-Leader, the tax increase failed the Senate Appropriations and Revenue Committee, then Sen. Elizabeth Tori (Hardin 11, 2008 rank #3) pulled the old "I'm not for it but I'll vote for it to keep it moving," which always bothers me. The article:
Tax increases squeak out of Senate budget committee
FRANKFORT -- The Senate budget committee narrowly approved a bill Thursday that would raise taxes on cigarettes and alcohol to help address a projected $456 million budget shortfall.
The committee voted 9-7 to send House Bill 144 to the full Senate after hearing from Gov. Steve Beshear, who said he fully supports the bill, and alcohol industry officials, who oppose the measure.
The initial vote was 8-8, which would have killed the proposal. But Sen. Elizabeth Tori, R-Radcliff, changed her vote to keep the bill moving.
The measure would generate about $180 million in a full year, but lawmakers expect to collect only $52 million in the remainder of this fiscal year, which ends June 30. The state's 6 percent sales tax would be added to packaged wine, liquor and beer while the tax on all tobacco products would double.
February 11, 2009
Representative Koenig Has the Right Perspective on HB 144
In advance of his "No" vote on the tax hikes today, Representative Adam Koenig (Kenton 69, 2008 Rank #12) made some good points:
Rep. Adam Koenig, R-Erlanger, plans to vote against the bill. Koenig said that before raising taxes other cuts should be contemplated, including the prevailing wage paid on public-funded projects such as roads and schools.
Kentucky's prevailing-wage law requires contractors on state-funded construction projects to pay workers the prevailing wage in the region. Labor unions say prevailing-wage laws ensure that contractors on state projects don't exploit workers by paying low wages to win state contracts.
"Getting rid of prevailing wage will save money," Koenig said. "We need to look further. We have over 400 boards and commissions in this state. Can some of those be eliminated or consolidated? State parks aren't allowed to be touched in this deal. That does not make any sense to me."
Kentucky's problem is not that it's government does not have enough revenue. It's that that our leadership is far more interested in creating government than figuring out how government can get out of the way of economic growth. Prevailing wage is a case in point.
The legislatiors supporting HB 144 may be serious about the state's welfare, but they are not serious about making Kentucky more prospersous. If they were, we wouldn't be talking about raising Kentucky's alcohol tax to the highest level in the country. We'd be talking about repealing prevailing wage.
Repealing the artifical wage the government requires itself to pay for projects would allow the same amount of money to pay for more, meaning more construction and more jobs.
Jobs should be the focus, not how much money the government can raise.
Demonstrating a ContrastHere is a copy of the remarks I opened the press conference with:We are here today to illustrate a contrast.It is a contrast between those who place a priority on growing Kentucky's economy by protecting economic freedom, and those who place priority on maintaining power through government spending.In a few minutes, we will present awards and recognize legislators who keep Kentucky's taxpayers first in mind when making their policy decisions. Just a few minutes after that, the House Appropriations and Revenue Committee will begin considering legislation to raise taxes in Kentucky.This tax plan only perpetuates a chronic problem with Kentucky's General Assembly: when Kentucky needs economic growth, our legislature and our Governor are focused on government growth.Frankfort has averaged a 5.1% increase in General Fund spending each year over the last five years, and that's including this year's decrease. We should not be so alarmed that the government's belt should be tightened, just like every Kentucky business and every Kentucky citizen. Our economy is hurting, and these tax hikes will only cause further hardship for businesses all along Kentucky's border and for locally owned restaurants and bars throughout the state, only leading to more layoffs.Despite the tough economic times, state revenues have continued to grow. Just about the only sector of the economy that has yet to betray economic difficulty is Kentucky's state government, where revenues are up 1.1% and yet some are clamoring for a permanent tax hike to deal with temporary difficulties.Times are tough in Kentucky, but raising these taxes will just make them tougher. The people standing here today all recognize that we need to be growing jobs, not sustaining the government's 5% annual growth rate.
We Do What We CanYesterday, the Kentucky Club for Growth held a press conference in an attempt to pull the emergency break on these tax hikes rushing through the General Assembly. Here's our press release:For Immediate ReleaseFebruary 10, 2009525 W. Fifth Street • Suite 319 • Covington, KY 41011Kentucky Club for Growth Criticizes Tax Plan, Recognizes Defenders of Economic FreedomFRANKFORT, Ky. - The Kentucky Club for Growth (KyCFG) held a press conference today in Kentucky's Capitol to kick off a day of protesting tax hikes and to recognize the 2008 winners of the Defender of Economic Freedom award."We are here today to illustrate a contrast," said KyCFG Executive Director Andy Hightower. "It is a contrast between those who place a priority on growing Kentucky's economy by protecting economic freedom, and those who place priority on maintaining power through government spending."The tax plan proposed today only perpetuates a chronic problem with Kentucky's General Assembly: when Kentucky needs economic growth, our legislature and our Governor are focused on government growth."Frankfort has averaged a 5.1% increase in General Fund spending each year over the last five years, and that includes this year's decrease. We should not be so alarmed that the government's belt should be tightened, just like every Kentucky business and every Kentucky citizen. Our economy is hurting, and these tax hikes will only cause further hardship."The Kentucky Club for Growth was joined by Jim Waters, Director of Policy and Communications for the Bluegrass Institute for Public Policy Solutions. Waters pointed out that the tax proposal will cost jobs in Kentucky."Kentucky has some of the lowest incomes and the highest tax burden in the country," said Waters. "A 70-cent increase in the cigarette tax will cost Kentucky at least 2,500 jobs and will - based on the experience of other states - fail to produce the promised revenue.""If growing the economy was the focus of the plan, we would be having a serious discussion of a prevailing wage moratorium," said KyCFG President Brian Richmond. "Eliminating this artificial wage requirement would mean more jobs building more projects for the same money. Jobs should be our focus in these economic circumstances."Becky Baker, owner of the Discount Tobacco Mart in Florence, also spoke. She described how her customers com from Indiana, Ohio, even Michigan, and the proposed tax increases will drive her out of business. These increases cost Kentucky jobs at a time we need to create them.In contrast to the government-first concerns of many of our leaders, the Kentucky Club for Growth took the opportunity to recognize leaders who put the Kentucky taxpayer first.Every year the Kentucky Club for Growth publishes a Legislative Scorecard to help Kentucky citizens know which legislators have been the most careful with their tax dollars. Lawmakers receiving a score of 85 or more have been protectors of the taxpayer and receive the Defender of Economic Freedom award.In 2008, many legislators voted with the impact on Kentucky taxpayers foremost in their mind, and three lawmakers scored high enough to receive the Kentucky Defender of Economic Freedom Award: Addia Wuchner, Stan Lee and Joe Fischer. Stan Lee was also recognized as a Defender of Economic Freedom in 2007 along with Representative Jim DeCesare.Representative Stan Lee, the only two-time award recipient, commented on the questions facing the General Assembly: "We're considering doing the exact wrong thing if we want to promote jobs. Not one time in history has government taxed the economy into prosperity."Representative Wuchner, who was the top-ranked legislator in 2008, said "When individuals succeed and small businesses succeed, the commonwealth is successful. I am very honored to be recognized, and will continue to review legislation on its merits, effectiveness and accountability. I will keep the commitments I have made to the people who sent me here to serve."Additionally, the Kentucky Club for Growth recognized Senators Katie Stine and Damon Thayer who received top scores in the Senate. Senator Damon Thayer said "I am honored to be recognized by the Kentucky Club for Growth. I admire their devotion to free-market principles, something we need more of in Kentucky."- - -To review the 2008 Legislative Scorecard, and for further explanation of how it was compiled, please visit www.kyclubforgrowth.org.The Kentucky Club for Growth is a non-partisan advocacy organization dedicated to protecting economic freedom, entrepreneurship, and the system of free enterprise that allows individuals the opportunity to bring growth and jobs to the commonwealth. It is an affiliate of the national Club for Growth.
Tax Hikes Pass House 66-34HB 144, raising taxes on Kentuckians in only 49 counties, passed the House 66-34 with bipartisan opposition. Standing up speaking against the tax were Reps. Stan Lee (Fayette 2008 Rank #2), Arnold Simpson (Kenton #59), Scott Brinkman (Jefferson #33), Brad Montell (Shelby #5) and others. When the vote is posted you can see it here.At 8:00 AM tomorrow morning, Governor Beshear will implore the Senate Appropriations and Revenue committee to pass the legislation.
KEY VOTE ALERT: HB 144, "Riggs Amendment", HFA1, HFA2, HFA4KEY VOTE ALERT"NO" to HB 144 - Alcohol, Cigarette and Other Tax IncreasesThe Kentucky Club for Growth urges all Representatives to vote "NO" on HB 144 and any related pieces of legislation that raise taxes and create new taxes on Kentuckians. These key votes will be part of our 2009 Congressional Scorecard.These proposals compound tough economic times for Kentuckians by raising taxes and imposing brand-new taxes like a sales tax on alcohol purchases. Frankfort has averaged a 5.1% increase in General Fund spending each year over the last five years, and that's including this year's decrease. Our economy is hurting, and these tax hikes will only cause further hardship and negatively impact economic growth.Alcoholic beverages are one of the most heavily taxed products in Kentucky. More than half - 53 percent - of the retail cost of a typical bottle goes to taxes of some sort. Kentucky already ranks HIGHEST in comparative spirit taxes to most neighboring states. The idea of raising those taxes even higher will cost jobs in businesses related to our signature bourbon, tourism, hospitality and agricultural industries, which are already experiencing tough economic times.Kentucky currently has one of the highest tax rates on alcohol in the country. This tax increase would make Kentucky's THE highest in the nation."YES" on the 'Riggs Amendment' to the Alcohol TaxThe Kentucky Club for Growth urges all Representatives to vote "YES" on the amendment that has been proposed by Representative Steven Riggs that would dedicate alcohol tax revenues to counties where the tax is generated. This key vote is likely to be part of our 2009 Congressional Scorecard.Higher alcohol taxes unfairly target the 30 wet counties that allow sales - even though ALL of Kentucky benefits from alcohol taxes. If more revenue is the desire, increase the freedom of Kentucky consumers to purchase alcohol. Kentucky's economy will grow as economic freedom is increased. Singling out certain populations to fund government is more of the same for a state that needs something new and different."YES" on Ballard and Brinkman Amendments to HB 144: HFA1 and HFA2The Kentucky Club for Growth urges all Representatives to vote "YES" on the amendments that have been proposed by Representatives Eddie Ballard and Scott Brinkman.Ballard's Amendment, HFA1, makes a statement against future tax increases. While it would be meaningless in effect, because it is simply ignored by passing another tax, it is a good statement against tax hikes in the future.Brinkman's Amendment HFA2, sunsets the new alcohol sales tax at the end of the budget cycle.These key votes are likely to be a part of our 2009 Congressional Scorecard."NO" on the 'Marzian Amendment' HB 144 HFA4The Kentucky Club for Growth urges all Representatives to vote "NO" on the amendment that has been proposed by Representative Mary Lou Marzian. While it would repeal the alcohol tax proposal, it would permanently raise the Kentucky sales and use taxes to 7%, a permanent 'fix' to a temporary and dubious 'problem'. This key vote will be part of our 2009 Congressional Scorecard.Even including this year's 1.5% decrease in appropriations, spending has grown on average at 5.1% a year over the last five years. Even if there is a budget shortfall this year it does not justify a permanent hike in the sales tax. Kentucky needs jobs, not an increased tax burden on its citizens.
Senate 32: Reynolds Wins, Let's Hold Him to His Words
Democrat Mike Reynolds won the special election contest to replace now-Congressman Brett Guthrie. We have questions about Reynold's committment to economic freedom, but he should be a vote against HB 144 raising taxes on Kentuckians.
Losing Candidate J. Marshal Hughes had noted strong opposition ot tax increases, but now-Senator Reynolds had put limits on what sort of new taxes he would accept:
6. An increase in the cigarette tax is being suggested as a way to produce new revenue. If, after further budget cuts, it is still apparent that more revenue is needed for the state, how much of a tax increase would you support and why?
Hughes: I do not support increasing the cigarette tax or any other tax.
Reynolds: I would only support a 25 cent increase on a package of cigarettes and only if it comes to a vote.
HB 144 contains a 30 cent increase in cigarette taxes and a new 6% sales tax on alcoholic beverages, making them double-taxed (at the wholesale and retail levels) and making Kentucky sport the highest alcohol taxes in the country (we're #1!). That would not seem to fit within Mr. Reynolds' criteria.
February 9, 2009
Budget Numbers on the Eve of Tax Hike WeekAccording to this report, the January revenue numbers are in, and they increase the likelihood that we will never reach a
$456$459 million shortfall.
As you may recall, Kentucky was frozen for a substantial portion of January. And that is reflected in the 4% year-on-year decline in general fund revenues for January. We saw the effect of the cold reflected, for example, in national numbers where inventories rose slightly in January after months of decline (which is the natural economic result of the deflation we have probably been feeling for months...).
This is not to say there would not have been a decline, only that the freeze froze commerce to a significant degree, which was reflected in revenue numbers. One only need look at the thaw this weekend when people were shopping like Christmas to have a sense of the truth here. But my superficial economic analysis digresses from the legitimate points to be made...
General fund revenues were down 4% in January, leaving revenues up 1.1% on the year. There are only five months left in the fiscal year. In order for Kentucky to meet the prediction of a $459 million shortfall, revenues must end up down 2.7%, not up 1.1%.
Last time we checked on the numbers, we noted that "the state must average a 7.5% reduction in revenues over the last half of the year." Now, the number required to meet the projection is to average 9.1% lower revenues over the last five months.
Let's say January is a precursor and state revenues remain down 4% for the next five months. That would leave the state with a $277 million shortfall, only 60% of the prediction.
Kentucky Club for Growth to Hold Press Conference 2/10
Will Recognize 'Defenders of Economic Freedom',
Describe How Tax Plan Will Harm Kentucky's Economy
WHAT: Press conference to express concerns with legislative budget proposal, award 2008 Defenders of Economic Freedom and recognize top-ranked Senators
WHEN: 9:30 AM, Tuesday February 10, 2009 (tomorrow)
WHERE: State Capitol Rotunda,
Club for Growth, Representatives Addia Wuchner, Stan Lee, Joe Fischer, Senators Katie Stine, Damon Thayer Kentucky
February 6, 2009
Tax Hikes to Rush Through AssemblyDespite no evidence of the dramatic projection of a $456 million shortfall materializing, despite new polling that shows Kentuckians are at best spilt on tax increases, and despite a promise of a majority of Senators to consider tax increases as a last resort, It seems that legislative leadership is ready to rush tax hikes through the General Assembly in the next week.Earlier this week, Senate President David Williams made an abrupt change in his rhetoric. His line had been that he knew Kentuckians wanted to see a commitment to reduced spending first before any new revenues were considered, and that "We're not inclined to raise any taxes." Tuesday, Williams apparently determined otherwise."It appears to me that there will be a need for some revenue," Williams said.Now we learn that the plan is that hikes are planned in the cigarette tax and the wholesale alcohol tax, and that they will do their best to rush it through the General Assembly in a week before anyone can react:The top two state legislative leaders said they hope their chambers present a budget bill that contains new tax revenue to Gov. Steve Beshear by Feb. 13.Senate President David Williams and House Speaker Greg Stumbo told reporters after meeting with Beshear Friday morning that they think legislative leaders will have a plan by Tuesday to tackle a projected $456 million budget shortfall.They hope to make it public by Tuesday morning and have the chambers act on the measure by week's end.Stumbo, D-Prestonsburg, said the House would like to see a blend of higher taxes on cigarettes and alcohol. Williams, R-Burkesville, said he thinks his chamber would go along with the additional revenue Beshear has requested, but he stopped short of saying how that should be accomplished.Check back here for more as this plan develops.
February 5, 2009
Actions > Words UPDATEDGovernor Steve Beshear gave this big speech last night about ice and tough times (full analysis later). Earlier he was busy hiring more cronies. The Herald-Leader's John Cheves reports:Last month, two new Beshear appointees took patronage jobs with combined salaries of about $90,000. One is Kevin Hollenbach Holtz, the aunt of Democratic state Treasurer L.J. "Todd" Hollenbach. The other is Travis Scott, 27, who coordinated "Get Out The Vote" activities for Beshear's 2007 campaign and has worked for the Kentucky Democratic Party and the Democratic National Committee.Scott is assigned the important job of doling out state money to build ATV trails. Holtz is made a division director in the Office of the Ombudsman. Jim Waters says it well:"We're talking about furloughs and wage freezes and possible layoffs for state workers, and yet the governor is still putting his cronies behind desks," said Jim Waters, spokesman for the Bluegrass Institute for Public Policy Solutions, a free-market think tank in Bowling Green.In response, the Governor's spokesperson throws a fit:
"It's way past time for us to rein in state spending," Waters said. "We need to examine every penny we're spending, and if we did, neither one of these hires would have been approved as a critical public need.""Are we not supposed to hire anybody in state government for the next two years?" Blanton said.Yes, Jay. Getting dinged for hiring political cronies means you're not allowed to hire anyone ever.
Despite the spokesperson's overreaction, these are dubious hires. It is hard to believe that there aren't already employees in these agencies capable of administering ATV grants and constituent services.
UPDATE: Page One Kentucky points out that it's not just Scott that Beshear has hired, but just about the entire Kentucky Democratic Party staff, and we know this because the KDP Chair is bragging about it:We're reminded of a portion of an email that now-disgraced and outgoing Kentucky Democratic Party chairwoman Jennifer Moore sent out to State Central Executive Committee members on Friday, January 9, 2009:It's nice to know that Kentucky taxpayers can afford to find "Greener Pastures" for all of these individuals while we're trying to tighten the budget.Staffing
As we expected to happen, over the past month we've seen some of our great staffers move to "greener pastures" on their career path. Most all of our staff have been with the KDP since 2007, working 10 hour days through special elections, our Convention & Reorganization Process, many Fundraising events and the 2008 campaigns. I would like to thank the following great staff, and wish them well on their next endeavors:
* Nathan Dickerson- SPP Field Staff, now working in the Finance & Administration Cabinet
* Sara McGown- Regional Finance Director, now working in the Governor's Office of Board & Commissions
* Travis Scott- SPP County Coordinator, starting next week in the Department of Local Government
* Christina Smith- Communications Assistant, now working in the Governor's Office of Policy
In Other Interesting Procedural Changes
Below, we mentioned positive changes in the House Rules.
Speaker Stumbo and Senate President Williams have made two other announcements worth noting:
First, they have agreed, in principle, to drag the session out a week or two, shortening work weeks and giving themselves more time to deal with the budget. While we hope this means time for a thorough look at spending, it more likely means more time for more legislative mischief.
Second, Williams and Stumbo have announced the resumption of a joint Friday press conference. Former Speaker Richards never had any fun answering Williams at these, and called them off around 2004. The press conference was missed and we're glad they're back.
The press conferences will be held in Room 327 of the Capitol at 8:30 a.m. The first one will take place this Friday, according to Stumbo's office.
Early Win for DeCesare and the Kentucky TaxpayerRepresentative Jim DeCesare (R-Warren, 2008 Rank #7) received an early win, with one of his proposals incorporated into the house rules.HB 14 would have provided improved transparency to the budget process, for legislators and taxpayers alike, by requiring the bill to be available for 24 hours before it was voted on. That rule has been incorporated into the House Rules. Thumbs up to Rep. DeCesare and a point in favor of the new House leadership.
February 4, 2009
Today's Stimulus TidbitsDid you hear about the President's Stimulus-spending house parties? David Adams suggests a better alternative:
wouldn't we be doing more to generate an actual economic recovery if we were getting neighbors together to really generate economic activity, such as one might do in a real direct selling organization, rather than trying to "connect the recovery plan to their lives?"Meanwhile, Obama was all over TV last night claiming that only 1% of the stimulus was pork. Not only is it ridiculous for him to excuse 1% waste as appropriate, it is also a false assessment, as the Club for Growth points out.
Fortunately, this package is building strong negative momentum:
New Poll -- Stimulus Support Drops to 37%
The latest Rasmussen Reports poll "found that 37% favor the legislation, 43% are opposed, and 20% are not sure," the first time a plurality of voters opposed the bill.
Last week, support dropped like a rock among independents. This week Rasmussen reports that 64% of Democrats support the bill, but that's down from 74% last week.
Rasmussen also reported today that "Fifty percent (50%) of U.S. voters say the final economic recovery plan that emerges from Congress is at least somewhat likely to make things worse rather than better, but 39% say such an outcome is not likely."
The Races: Hughes Supports a Better Environment for Business, Reynolds Has "Connections"This weekend, the Bowling Green Daily News published a questionnaire and an interview with the candidates for the 32nd Senate District, Republican J. Marshal Hughes and Democrat Mike Reynolds.
Previously, we have noted that Reynolds may not be committed to serious efforts to improve Kentucky's economy:Instead of suggesting how to create jobs in Kentucky by providing leadership to make the commonwealth a more attractive place to do business, his first instinct is to rely on the federal government to spend future taxpayer dollars. That instinct does not suggest a commitment to fiscal responsibility.The new information supports this idea.
In the interview, Hughes says his priority is "creating an environment conducive to job creation."
All Reynolds has to offer is a commitment to reaching out to politicians, as if Kentucky will gain jobs simply because he and Obama have a connection, and requiring domestic and international investment, as if he will personally recruit companies to open in Kentucky. He makes no mention of the necessity of creating an environment that will foster entrepreneurship and truly create jobs in our state. From the article:Reynolds, meanwhile, says he has connections that will help bring jobs and get work done outside the normal government channels. He mentions his connection to former President Bill Clinton - having been a committee chairman for his fundraising in Kentucky - and his ties to President Barack Obama's administration through his niece Christina Reynolds, who headed up the Obama campaign's rapid response team and who now works in the White House communications office.When asked: "What do you hear from voters is their No. 1 concern and what plans do you have to assuage their concerns?" Reynolds recognized that the answer is "Jobs", but again thinks they are somehow created by connecting with other politicians:
Reynolds declined to give specifics on how he would create or retain jobs, other than to say it involved a combination of foreign and domestic investment.
"But I don't have a company sitting here ready to come in, if that's what you are asking," he said.Reynolds: Jobs and the continuing issue of job loss is by far the No. 1 issue facing the voters here as well as around the state and nation. Working with state and national leaders as well as local leaders and economic development personnel to keep companies in business and bring new ones to the area is my No. 1 plan.Hughes recognizes the key to job creation is making Kentucky attractive to businesses:Hughes: I hear over and over again the need to hold the line on new taxes while growing our local economy. The only way to attract new employers, and to keep the jobs we already have, is to create a competitive business environment with low taxes and an educated work force.So the question facing the 32nd is this:
Do you want a Senator committed to making Kentucky a better place for jobs and growth, or do you want a guy who's "got connections"?
HB 104: Singling Out MiningThe so-called 'stream-saver bill' is back, although the Herald-Leader reports that its supporters are less enthusiastic this year due to the fact that Representative Jim Gooch (D-Webster, 2008 Rank #36) still chairs the committee that wouldn't consider the bill last year.
While supporters say the legislation prevents mining operations from filling up streams with mining waste, it really prevents relocating the rock removed from the mine and placing it anywhere that resembles a crevice that could accumulate water if it rained.
What supporters of the legislation conveniently ignore is that such fill operations are common practice in building roads, homes and offices, practices the bill says nothing about. The bill singles out mining only. The bill isn't about saving streams, it's about preventing mines from operating and shutting down one of the largest sectors of Kentucky's economy.
So far the bill has only one sponsor: Rep. Don Pasley (D-Clark, 2008 Rank #94). Cosponsorship was scored negatively on our 2008 Legislative Scorecard, and will likely be again in 2009.
February 3, 2009
Notes on the Economy and the StimulusThe Club For Growth points out a couple of interesting articles:
First, a column in Forbes from Brian Wesbury and Robert Stein describing the positive indicators overlooked in the negative economic news.
Next, a Washington Post editorial imploring President Obama to intervene with the Congress to create a more serious economic package.
From the Post:Instead of giving the economy a "targeted, timely and temporary" injection, the plan has been larded with spending on existing social programs or hastily designed new ones, much of it permanent or probably permanent -- and not enough of it likely to create new jobs. . .
What he needs to do now is take charge. Yes, the Republicans can try to spoil things with a filibuster in the Senate. And, yes, Democrats won the November election, so they are entitled to shape policy. But only Mr. Obama has a 67 percent Gallup Poll approval rating. Only he embodies this anxious nation's hopes for change. No one in Washington can match his clout. He should use it to make sure Congress gives him a stimulus plan that is not only big but coherent and, most of all, effective.
The Club For Growth comments:
The bill is so bad, a lot of true blue Obama supporters I know hate it and all it represents. They realize this is not change -- it's business as usual in Washington, but at a scale that is unprecedented.
Not only would it be the right thing to do for President Obama to step in and fix the bill, it would be enormously popular. Of course, even if he "fixes" it, it will still likely be horrible from a standpoint of economic conservatives. However, the bill as it now stands is horrible from any economic perspective.
If he can't take charge and turn back the worst instincts of congressional leaders now, then when? The answer would likely be never.
A "Who Can Spend the Most?" Speech Competition
Big speeches today and tomorrow create a bit of a competition about who can spend the most taxpayer dollars.
Today at 10:30, Representative Jim Wayne (D-Louisville, 2008 rank #90) will present his annual plan to hike taxes on the 'rich', here defined as those making over $75,000, and restore the estate tax so that more of Kentucky's farms will be broken up by the tax collector.
Who will win? We'll let you know!
Stumbo's Casino Propaganda
Last night on Kentucky Tonight, the group debated casinos in Kentucky.
Previously we have written about Greg Stumbo providing the first interesting casino proposal because he has included relief to the Kentucky taxpayer.
Stumbo has claimed that his legislation will repeal the car and boat tax. Such taxes are bad, double taxation, and should be revoked. But his proposal is more likely snake oil than tonic.
The majority of the car tax is a local tax; the state portion is only a small amount. Stumbo hasn't filed a bill yet (he may today) but odds are he only means to repeal the state portion, because repealing the local portion and holding local governments harmless would eat up almost all of the income he claims gambling will bring.
This is dangerous propaganda. If he does not mean to repeal the local tax as well, there will still be a car tax. And legislators voting for "a repeal of the car tax" will leave their constituents wondering why there is still a car tax. And we will be reminded of the Lottery's broken promise to fund education.
Another interesting conversation from last night's show revolved around the constitutionality of Stumbo's bill. Greg Stumbo, ever sure of himself, stated plainly that legislation has always been all that was necessary to put casinos in Kentucky, and any lawyer challenging that fact would be in serious danger of having his or her license revoked for the ethical violation of filing frivolous lawsuits. I kid you not, that is almost exactly what he said.
In other news, Stumbo's been meeting with his old legislative friends who were convicted of corruption in Kentucky's last gambling escapades (the Herald-Leader calls him a "BOPTROT felon"), to talk about
pushing the casino billold times.
February 2, 2009
Nostimulus.comIf you haven't already, you may be interested in checking out No Stimulus! from Human Events. Sign the petition and take action.
Monday Catch-up: Groundhog Day 2009Every Monday I have a fair list of news from the previous week that I didn't get to. Here's this week's:In true government-think, scandal apparently requires hiring extra PR people (instead of actually dealing with the ethical violation). First we saw the Bluegrass Airport hire a PR firm when it's officers were caught spending airport money on strip clubs in Texas. Now the state Department of Homeland Security has hired a PR man in the wake of the Beshear administration's illegal raise to Adam Edelen's business partner. Apparently, scandal doesn't just cost the taxpayer on the front-end; it requires the expansion of bureaucracy...Anti-business columnist Tom Eblen found an interesting report from 1949 that reminds us that Kentucky's political inertia is a long-recognized impediment to growth. Not only did the report recognize the allegiance of the political establishment to the status quo, it prescribed more of the same (spending and more spending).Sen. DeMint (R-SC) described the White House creating 'crisis' and 'panic' to push the little-stimulus-and-lots-of-growing-the-welfare-state bill. The second quarter revenue report for Kentucky predicts Kentucky state revenues shrinking at an incredible 7% over the next six-months, fully 10 percentage points lower than the last six months. I think we know what Sen. DeMint would say about that. Did you know that General Fund revenues have only declined once in the past 22 years? Did you know Governor Beshear is pushing tax increases and campaigned on opening casinos in Kentucky?