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June 28, 2012

Increasing Regulation and a Lack of Tort Reform Costing Kentucky

Not only does Kentucky have a worsening regulatory environment, increasing regulations increase the incidence of litigiousness, which conspire together to make the state unfriendly to business and jobs.

Doug Alexander examined Kentucky's breaking systems in a recent article for kyforward.com.

The more abundant and specific are regulations governing any industry, the more opportunities there are to sue. That's why the American Association for Justice, which represents the interests of trial lawyers, constantly lobbies for more and more rules and regulations governing everything.

The long-term health care industry's reward for encouraging oversight and transparency is to invite lawsuits that drive up the cost of doing business and ultimately the cost of care to the very people the regulations are intended to benefit.

Many of these lawsuits have nothing to do seeking redress for real negligence or wrongdoing or even with improving conditions for residents. If they exist at all, the alleged abuses often cited in advertisements seeking clients are often based on nothing more than citations for minor or correctable deficiencies. Some may have occurred and been corrected years in the past. Some may never have occurred at all. But because all citations must be reported, even those that are later proved to be unfounded, the data is easily exploited to prey on the emotions of seniors and their families in order to seek clients for litigation.

It is one thing to seek redress when a facility has been negligent. Every industry can and should be held accountable for its shortcomings. However, it is another thing altogether to take information intended to benefit consumers, and exploit it simply as a means of trolling for clients.

One of Kentucky's largest providers of long-term care, Extendicare Health Services, has had enough. The company recently announced that it is leasing all of its nursing centers in Kentucky and leaving the state. In a May 14 news release, Tim Lukenda, president and CEO of Extendicare's parent company, said that "the combination of a worsening litigation environment and the lack of any likelihood of tort reform in the State of Kentucky has made this the prudent decision for our company and unit holders."

Read more here...

June 27, 2012

Tax Reform Commission Beginning to Look like the Farce We Expected

So far, Steve Beshear's Tax Reform Commission looks like an orchestrated effort to demand tax hikes to support a major spending increase.

We knew the Commission itself was stacked with liberal and big-government interests, and that tax hikes were practically written into the mission statement.

Now the Commission has held its first two meetings in a series of stops around the state. At each stop, liberal interests like the Kentuckians for the Commonwealth, the KEA and other members of the education establishment have lined up to beg for more tax dollars from Frankfort. In fact, only one presenter in four hours of presentations has really even suggested the creation of jobs as a criteria.

What is supposedly a Commission to discuss Kentucky's tax code spends most of its time discussing spending.

The rumors circulating around the Commission suggest that a recommendation for a $1 billion tax increase is in the works. The more cynical rumors suggest that the whole setup is just a bait and switch for another failed Beshear casino push, where he pits a fictitious need for a $1 billion tax hike against the fictitious need for casinos.

Jim Booth and the few pro-growth members on the Commission better be working on a plan to divorce themselves from this liberal commission and the disastrous track it seems to be taking.

Rep. Jim Wayne Does Not Like Speeders

In our review of the bills from the 2012 session, we noticed HB 439, a bill that would allow the Kentucky Transportation Cabinet to raise the speed limit on Interstate 69 to 70 miles per hour.

HB 439 passed overwhelmingly, with only one vote against it. That vote was Rep. Jim Wayne.

June 25, 2012

Jefferson Co. Schools Figure Out Parents Want School Choice

The Jefferson County Public School System is so intent on discrediting David Williams' efforts to end the ridiculous busing system in Jefferson County, that they have completely validated the supporters of school choice in Kentucky.

From a Courier-Journal report:

Although much of the debate and changes surrounding JCPS' emotionally charged student-assignment plan has been driven by a desire to shorten bus rides and make neighborhood schools more accessible, a recent district analysis shows that choice is arguably just as important to families as a school close to home.

Out of more than 8,100 incoming kindergarten applications for 2012-13, 53 percent selected as their top choice their "resides" school, which is often the school closest to their home.

But 47 percent -- more than 3,700 kids -- chose a different school, even if it meant a longer bus ride.

"People say everyone wants their closest school, but this tells me that choice is very important," said Jefferson County school board Chairman Steve Imhoff, who believes the data show that a push by some residents and politicians for neighborhood schools wouldn't be as popular as they contend.

Neighborhood schools aren't popular versus having a choice about where your child goes to school. In fact, nearly half of parents choose differently, especially if the 'neighborhood school' is a failing school.

By contrast, several elementary schools in more urban or economically depressed areas such as Shacklette, Semple, Hazelwood and Frayser had far less loyal followings, with just 15 percent to 31 percent of their "resides" students selecting them for kindergarten.

Shacklette principal Candace Sellars said although her school's poor selection rate can be blamed partly on its lack of a preschool program, she recognizes that low test scores also are a factor.

"We understand that student achievement is one of our most important priorities. The arrows (test scores) must go up if we want to increase our student population at Shacklette," she said.

Additionally, we note that this information does not actually support the hypothesis JCPS desires. Just because parents prefer choice over short bus rides, it in no way means that they prefer mandated long bus rides to short bus rides. That decision just isn't examined by the information they provide.

June 11, 2012

Moffett Keeps Door Open on 2015 Governor Run

In a recent interview with Ryan Alessi, former Republican gubernatorial candidate Phil Moffett declined to close the door on a 2015 bid for the Governors office.

Moffett discussed that win (0:20 and again at 9:30 of the video). And he answered questions about his own future after supporters chanted "2015, 2015" when Moffett took the stage last Tuesday to introduce Massie at the primary victory party. Moffett said he's looking at another bid for governor.

"That's a long way away. I'm still considering it. And I'm open to the idea," Moffett said. "But 2015 seems 10 years from now ... I'm not ready to commit that I'm getting in the race. There's a lot of things that has to happen between now and then."

Many in the liberty movement and Tea Party scold Republicans for not rallying around Moffett in 2011, dreaming that he would have been a better chance to beat Steve Beshear than the Williams-Farmer ticket. While it is possible to argue that the Moffett-Harmon ticket would have been "better", such a ticket would not have been able to even match the $1.1 million Williams raised, which was dwarfed by the Beshear-Abramson pot that exceeded $7 million.

For his part, Mr. Moffett has learned from the experience.

"I faced that same issue when I ran last year. And that is they had never run for office before. Getting to understand that process and raise money and become a formidable candidate, that's something you have to learn over time," he said.

2015 is a long way off, and we should also remember that he filed for the Kentucky House of Representatives while the unconstitutional redistricting maps existed. Moffett's next opportunity to run will come before the Governor's race in 2014 for the General Assembly.

Sen. Carroll All Over the Map

Apparently, Sen. Julian Carroll wants to hike cigarette taxes again in Kentucky.

In a recent interview with Ryan Alessi, he suggests that the tax should increase more than 50% to $1 a pack.

Former Democratic governor Julian Carroll, who is running for a third term in the state Senate this fall, said Gov. Steve Beshear should push for another increase in Kentucky's taxes on cigarettes....

Kentucky raised tobacco taxes twice since 2005 when the per-pack rate was 3 cents. Carroll said he'd like to see the rate raised to around $1.

In 2009, when Senate President David Williams pushed a cigarette and alcohol tax hike through the Senate, Sen. Carroll was one of the strongest voices and votes against it.

Of course, he objected to the new tax on alcohol; he had already been on record in favor of a cigarette tax increase.

Next, he scolds the governor's lack of leadership:

The other advice he offered to Beshear was to not "step forward and make claims up front without knowing what your votes are" -- a reference to Beshear's push earlier this year to allow expanded gambling in Kentucky. The constitutional amendment fell seven votes shy of the 23 needed for approval in the 38-member state Senate.

Finally, he makes foolish claims about his party's political prospects this year...

He said Democrats have a chance to make a run at "several" Republican held-seats. That includes a challenge to Republican Floor Leader Robert Stivers of Manchester..."

...before admitting to reality.

"...even though Carroll said Stivers "has been very helpful to me."

June 8, 2012

Nesler Resigns to Join Ag Dept, Seat Likely to Remain Empty

Rep. Fred Nesler* of Kentucky's Second District has resigned his seat to become a "deputy executive director of strategic planning and administration" in the Kentucky Department of Agriculture.

It's a nice boost to his pension.

Meanwhile, the citizens of Graves and McCracken Counties stand to be disenfranchised for any special session discussions of redistricting or tax reform.

Terry Sebastian, spokesman for Gov. Steve Beshear, said the governor has no plans to call a special election to replace Nesler considering both parties have nominees for the November election in the race to succeed Nesler.

Democrat Kelly Whitaker will face Republican Richard Heath in the November election to replace Nesler in January.

Correction - Originally published post noted Nesler was in the Kentucky Senate. Corrected to House of Representatives. Apologies to Sen. Bob Leeper.

Some NKY Businessmen Duped into Entertaining Tax Increases

From Northern Kentucky Politics:

Improving Northern Kentucky's workforce through more skilled laborers with degrees or training of some sort is the no. 1 priority for many businesses looking to relocate here, said Brent Cooper, owns Covington-based information technology firm C-Forward and serves as chairman of the Northern Kentucky Chamber of Commerce board.

"We cannot keep increasing tuition rates for our students both at NKU and Gateway," Cooper said. "We've got businesses that tell us they will not stay in Kentucky if we don't improve the quality of the workforce. That is the no. 1 concern."

Cooper said he could support a tax hike if it leads to a better educated workforce...."The devil's in the details," Cooper said. "I was opposed to raising those revenues in the past, but I'm coming more around to it as long as it is used for education."

Let's set Mr. Cooper straight:

Tax hikes will never be directed to education.

As the Kentucky Chamber's "Leaky Bucket" report details, state employee healthcare and pensions, Medicaid and corrections spending growth dominate education-related spending increases.

When the state receives greater revenues, they go to these parts of the budget first. The demands from Medicaid will only become greater as Obamacare's mandated Medicaid expansion is implemented.

Greater revenues to fund education are not needed. If Kentucky's leaders really place a priority on education funding, they will reform these other policies and reduce their demand on the General Fund.

In the end, Mr. Cooper seems to realize that the government has a long list of wasteful spending to eliminate before any new revenues are entertained.

The state, however, should also look at ways to save money, he said. The elimination of prevailing wage requirements for state construction projects that require workers make a certain wage could save more than $200 million for the state, he said...."But it is hard to talk about raising revenues when things like prevailing wage haven't been addressed."

Amen to that!

June 7, 2012

Wisconsin and Public Pensions

Columnist Michael Gerson takes a look at the national crisis of underfunded public pensions and how public sector workers are creating a wedge in the Democratic coalition.

In Wisconsin -- which has not voted for a Republican presidential candidate since Ronald Reagan -- a simple ideological choice would have been more favorable to Walker's Democratic challenger, Tom Barrett. The voters of the Badger State do not object to the idea of an activist, generous state government. The problem for Democrats in Wisconsin and elsewhere is that state and local budget debates unite conservatives while dividing voters who believe in active government.

One portion of the progressive coalition -- public-sector unions -- used the good economic times of the 1990s and 2000s to lock in generous health and pension benefits at the state and local level through collective bargaining. Politicians favorable to those unions enjoyed reliable political support. But the Great Recession dried up revenues, making health and pension commitments unsustainable, forcing some states into fiscal crisis and some cities toward bankruptcy, and threatening the provision of public services.

Other members of the progressive coalition value public services highly -- parks, libraries, public safety, education, support for the homeless and such. They are joined by civic-minded independents and non-libertarian conservatives. These voters have seen the commitments made to public-sector unions devouring state and local budgets, leaving little room for any initiatives in the public good.

The Pew Center on the States has quantified the problem. In 2008, states had set aside $2.35 trillion to pay for public employees' retirement benefits while owing $3.35 trillion in promises -- a difference of $1 trillion. A year later, the gap had grown by 26 percent. This massive, expanding obligation cuts into the provision of government services.

The zero-sum choice between public pensions and public services is even more evident on the local level.

There is no public sector union in Kentucky, and it seems like Kentucky's $34 billion public pension deficit is an issue that will concern fiscal conservatives of all stripes.

June 5, 2012

Kentucky Spends Inefficiently

As spending has inserted itself into the discussion of Kentucky's tax structure, it begs the question: how can we best gauge the appropriate amount of state spending?

One way to evaluate this question is to compare our state spending to our neighboring states. Since each state has a different size population to support, we'll examine per capita state spending. From the Kaiser Family Foundation:

State Per Capita
Spending
Rank
West Virginia$10,9853
Kentucky$5,98720
Virginia$5,09632
Ohio$4,99633
Illinois$4,72737
Tennessee$4,48339
Missouri$4,26243
Indiana$4,11246

As you can see, Kentucky spends $1000 more per person than any of our neighbors (save West Virginia, which must funnel a greater portion of education funding through the state treasury). In fact, Kentucky is 8% higher than the average of our neighboring states ($5,523) and 14% higher than the national average ($5,251).

If anything, Kentucky's spending is too high. Other states are able to provide services at significantly less cost per capita.

Just another example of Kentucky's spending problem.

June 4, 2012

Jerry Abramson Has a Histroy of Giving Millions of Taxpayer Dollars to Friends

This is old news, but it is relevant to our discussion of tax reform in that Jerry Abramson, the chairman of the Tax Reform Commission, has a long history of giving away taxpayer dollars to his political allies. Here's a sampling:

And finally, our Mayor has made business deals with outside corporations that are bad for Louisville and almost inexplicable in nature. For example, when dealing with the Maryland-based Cordish Company, the Mayor continuingly stuck it to the taxpayer.

We gave this out-of-town company a $1.8 million forgivable loan, originally intended for the Starks Building to expand 4th Street Live. When Cordish stopped paying their lease payment on that location, the money was allowed to be used towards what is now The Sports & Social Club and as long as Cordish operates a business in that space for 5 of the next 10 years, they never have to pay back that loan.

Additionally, we gave Cordish $2.5 million to plan the Center City project. While this money was officially intended to be used for marketing purposes, the parameters are so loose that the taxpayers of Louisville may be expensing Cordish plane flights between Maryland and Louisville and expensive client dinners. And worst of all, Cordish has the right to pull the plug on the project at any time and not be obligated to pay back a single dime.

We have also given Cordish $36 million in additional assets and loans towards the Center City project with no restrictions. While the original Center City claim was to make this a $435 million project, they have since cut that number in half and actually have no plan submitted as to what they intend to develop on this property, property they were given by Mayor Abramson for $1 a year over 149 years.

The parking lot at the Galleria was sold to Cordish for $2.7 million or $3,200 a space with no strings attached as to how they operated the garage. This is a garage we originally paid $6.8 million for and has been recently appraised at somewhere between $8 and $12 million. For those who would like to make the argument that we needed that money to help make up for a $20 million shortfall in the budget, they would have a point if the Mayor hadn't turned around and bought another garage for $8.2 million at an astonishing $18,000 a space. Even in a good economy with budget surpluses, these two transactions make little sense and are extremely suspect.

But this is nothing new for our Mayor. During the first years of merger, Mayor Abramson made a reminiscently shady deal with Titan development, a former client of his when practicing law between mayoral terms. Another Maryland-based company, he gave Titan the former Naval Ordinance Station for $1 a year over 99 years with Metro Government only receiving 3% of the annual rental revenue, revenue Louisville owned 100% of before the deal.

Mr. Abramson is an equal to Governor Beshear in the political directing of tax dollars, and now he's leading a Commission to devise how to put more tax dollars in his hands!

The Kentucky Club for Growth on KET Tonight

Kentucky Club for Growth Executive Director Andy Hightower will join the panel on Kentucky Tonight for a discussion on tax reform in Kentucky.

Joining him will be Terry Brooks of Kentucky Youth Advocates and State Representatives Bill Farmer (R-Lexington) and Jim Wayne (D-Louisville).

Mr. Hightower will discuss the need for tax reform, and how the integrity of the tax reform discussion is being compromised by Governor Beshear's approach.

"Kentucky's spending problem will never be addressed through the tax code," said Mr. Hightower. "No matter what percentage of our money the government takes, our elected leaders will find ways to spend it. Tax reform is a separate question from our government's desire to spend."

Kentucky Tonight is shown live at 8:00 PM Eastern on KET. You can find your local KET station and secondary showtimes here.

June 1, 2012

Beshear Begs for Tax Increases

Continuing to read through the Governor's Tax Reform op-ed, we find that Beshear disdains economic experts.

I could easily have put the task of modernizing Kentucky's tax code solely in the hands of economic experts. But this isn't an academic, esoteric exercise set up to posit theoretical arguments about ideal tax structures. It's an exercise that recognizes that the power of taxation is a living, breathing, mechanism with tangible impact on people's lives -- both those who are taxed, and those who use services funded by those taxes.

If you earn an income or own property, this will have an impact on you. Likewise, if you drive on roads, live in an area patrolled by state police, have a child or relative in the K-12 school system, a community college or a public university, want the air you breathe to be clean, use electricity, access health care through Medicaid or use any other of hundreds of government services -- then you have a vested interest in how our taxes work.

This is ridiculous, populist nonsense. Taxes are not a "living, breathing" thing (unless that thing is a parasite) but the price of government and a disincentive to economic production.

It is good to recognize that taxes impact people's lives, but it is a lie to suggest that they strongly, directly impact government spending decisions.

The federal government is the most obvious illustration, annually spending $1 trillion+ more than it receives in revenue, but the state is no different.

Despite the state's Constitutional requirement to balance the budget, spending continues to outpace revenues. Per capita Kentucky state debt has more than doubled from $975 in 2001 to $2,046 in 2011.

Kentucky state government has a spending problem that has nothing at all to do with the tax structure.

Beshear's populist empathy is an irrelevant diversion from the question of tax reform:

By listening to our citizens, we hope to understand not only their perceptions of how our tax revenue is raised but also whether they think those taxes are adequate to meet the needs of a state facing dynamic shifts in education, workforce training, early childhood development, aging and health care.

Tax revenues will never be adequate for spenders like Governor "Casino" Beshear and the liberal interests he has stacked on this commission. As long as he and the commissioners are begging for a discussion about spending, there will not be a serious conversation about tax reform.

As Kentucky Chamber President Dave Adkisson put it in a recent op-ed:

Here is the bottom line: Unless this spending is brought under control, it really doesn't matter how much tax revenue is raised.

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The KY Club for Growth seeks principled candidates who are committed to the following:

* Free market principles
* Lowering taxes
* Reducing spending
* Decreasing the size of government
* Judicial reform
* Protecting property rights
* Expanding school choice
* Reducing needless regulation

We will hold endorsed candidates accountable for these principles by monitoring each candidate on a vote-by-vote basis. As a Club member, you will receive candidate monitoring updates and scorecards on a regular basis. Join us today.