The upcoming Federal "bail out" will sap up all Federal funds hertofore used to help out states whose tax base has been falling short for years, like Kentucky. If state's like Kentucky do not immediately implement draconian cuts reducing their appropriations to match their tax resources, they will be in for some very distasteful economic disaster; i.e, becoming
a 3rd World economy!
New Jersey is giving a chilling lesson on how hard it is for elected officials to pay down a recklessly incurred debt in timely fashion.
Thanks to an unexpected increase in tax revenues, the Legislature was able to set aside $650 million to pay down the debt. But that’s a pittance and will reduce annual interest and principal payments by a mere $130 million.
Legislators also turned a deaf ear to Mr. Corzine’s imaginative plan to cut the debt in half by drastically raising tolls on the New Jersey Turnpike and other highways. Mr. Corzine could not even sell members of his own party on this scheme because they feared retaliation by the voters.
For New York, California and other states staggering under out-of-control debt, New Jersey’s warning may have come too late. But it is not too late for other states and thousands of cities, towns and counties to learn that politicians who have little trouble running up a big tab have a terrible time paying it off when the bill, as it must, finally comes due.
Let's look at what Kentucky has already done?
Prodded by Gov. Steve Brashear, the Kentucky Legislature recently approved a state budget that started out to be a "bare bones" budget but once Legislature got hold of it turned out to be more pork passed---$1,508,494,000---as usual.
Education and other state agencies took some painful cuts. However, North Carolina, which is twice size of Kentucky adopted a true bare bones budget to attack their deficit but Kentucky's pork was larger than what North Carolina passed.
The more significant story is that the budget will do almost nothing to reduce the crushing billions of dollars of debt that previous KENTUCKY legislators and governors ran up by borrowing money for operating expenses and forgoing payments to the state’s pension fund.
No matter how much Frankfort slashes spending for hospitals and other essential services, this debt continues to rise at a disturbing rate.
Prior to passage of Kentucky's budget there was $4.2 billion bond indebtedness, estimated $750 million of fast rising state tax expenditures, Corporate tax loopholes being incorporated by Corporations as tax exemptions costing state's budget an estimated $400 million annually, uncollected taxes with some going back to 1985 going uncollected in 2008.
For starters they had a chance to:
Eliminate $100 million of administrative personnel cuts starting with 70 PVA's and legialative and judicial personnel costs?
Eliminate $300 million of Corporate Tax Shelters?
Collect all owed state & local taxes?
But Kentucky's Governor is evidently placing all his hopes on addressing Kentucky's deficit by passing gaming legislation, since after it was turned down by legislators once he feels the pressure to find more tax resources will motivate legislature to pass gaming legislation! With such a cowardly financial plan which does nothing to address an obsolete tax base, legislative and administative agencies continuing to haphazardly increase appropriations over tax resources, Kentucky's is skyrocketing to a 3rd World economy!
Sincerely,
Bill Huff
319 Dixie Manor Ct
Harrodsburg, Ky. 40330-1923
859.734.2228
dash@copper.net