Stop the digging: Confiscate Frankfort’s shovels
COLORADO SPRINGS – There’s a lot to “dig” about being a Kentuckian this time of the year. The bluegrass is blooming and the national spotlight soon will shine on the Kentucky Derby.
But there’s a whole lot of other “digging” that needs to stop – the kind that piles up debt higher than the Pikes Peak Mountain in Colorado Springs, which I’m looking at as I write this column at the annual Heritage Foundation Resource Bank meeting.
Freedom-minded people representing free-market think tanks from around the world have gathered here to advance policies that limit government, enhance individual liberty and promote capitalism.
Will Rogers, a freedom-loving American himself, gets credit for saying: “When you find yourself in a hole, stop digging.”
In other words, bluegrass should grow, Kentucky’s “debt hole” should not.
Of course, there’s often a gap between what’s actually happening versus what should occur.
The American Enterprise Institute reports that Kentucky’s debt hole – including the commonwealth’s outstanding bond debt, a nearly $1 billion deficit in 2011 and the looming unfunded pension liability – is $63 billion and counting. That represents nearly 40 percent of the productive income generated by Kentuckians each year.
Kentucky’s debt per capita is more than three times the individual debt burden in neighboring Tennessee, and more than five times that of Indiana.
As a share of its annual revenue, Kentucky sacrifices 13.2 percent – second-highest among all states – of our productive efforts to go toward paying the interest on our debt every year.
According to the nonpartisan State Budget Solutions, Kentucky’s debt hole is deeper than the abyss in 29 other states.
That same report provides solid evidence that – just as the Kentucky Derby and the first weekend in May are inseparable – so a state’s debt burden can negatively affect its ability to race with the thoroughbreds economically.
It’s no coincidence that Kentucky’s debt load is second heaviest in the nation while its economic outlook ranked lower than 39 other states.
This is not a situation that can be ignored without serious consequences. Yet the just-completed legislative session in Frankfort once again demonstrated how many – especially in the House Democratic majority – don’t understand the gravity of the situation.
Case in point: A moderate measure sponsored by Danville Rep. Mike Harmon would have capped the state’s debt at 6 percent of revenues. That’s only a bit lower than the current debt-to-revenue ratio, but it couldn’t get support from House leadership even after passing the Senate.
Owensboro Sen. Joe Bowen, who also led the charge for the debt cap, called the measure a “structural safeguard” He told reporters that the cap “builds in a discipline to address those issues where we fail to discipline ourselves.
Despite his efforts, even some senators who voted for the measure ended up caving in and voting for a spending plan with higher debt levels. This is just further evidence that too many in Frankfort don’t understand the gravity of such an enormous debt, which threatens to lower Kentucky’s credit rating, raise interest rates and cost the state dearly in terms of economic opportunity.
I believe Bowen and Harmon are on to something. An unwillingness to cap the debt – even at a tepid 6 percent – offers strong evidence that our state government is addicted to playing fast and loose with our tax dollars. And as often is the case with addicts, an intervention may be needed.
But it appears the only intervention that will work is confiscating all shovels – by ending the profligate spending – in Kentucky’s capital city.