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June 2012
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DOA Dems' sales tax idea likely wishful thinking

It's budget year in Kentucky again and predictably, House Democrats are talking about raising taxes. On everyone.

Specifically, House Speaker Greg Stumbo says there is a move afoot in the Democrat-led chamber to increase the Kentucky sales tax by a penny to fund something that would be called the "Educational Excellence Trust Fund."

But this would not, under the Democrats' plan, be accomplished via a straight up or down vote by the Legislature. Rather, the proposal is to put the matter on the November ballot in the form of a constitutional amendment, which if ratified by voters would result in a one-cent sales tax increase.

"There seems to be a trend â ¦ legislators want to see people vote on things," Stumbo explained to the Associated Press.

Well, no actually it is supposed to be the other way around. People elect legislators to vote on things. Like taxes. If there is a case to be made for a tax increase, legislators are supposed to make the case to their constituents, and then vote their conscience. If their constituents agree, they get re-elected, and vice versa.

This whole discussion is probably academic. Even if such a proposal were to make it out of the Legislature and onto the ballot (and there is already opposition in the Republican-controlled Senate), it faces near-certain defeat. Case in point: The Graves County Board of Education just two months ago sought a property tax increase of 6.9 cents per $100 of property value to fund overdue facilities repairs and offset loss of state money from previous budget cuts. For the average Graves County taxpayer, it meant an average tax increase of $3.22 a month.

Even that modest increase was rejected by Graves County voters by a margin of almost 3 to 1. We don't think the message from those voters was that they don't care about their schools or their students; rather, the message was that the Kentucky economy is still in recession, and this is no time to be raising taxes.

Another problem with the sales tax idea is Kentucky voters have heard this education pitch before. In fact the last one-cent hike in the sales tax was supposed to fund education, in the form of the Kentucky Education Reform Act (KERA), which polls show most Kentuckians now consider a flop. Oh, and then there was the lottery - wasn't that supposed to fund education too?

But the reality is that once the legislature gets its hands on new "education" money, the shell game begins. Money freed up from education when newly designated taxes come in ends up being frittered away on things like fattened legislative pensions or a couple of new fire trucks for a legislator facing a tough re-election challenge. Soon, another budget "crisis" emerges, and somber legislators announce they have no choice but to cut education to make ends meet.

That, in fact, is precisely what is driving this newest legislative ploy. Education Commissioner Terry Holliday says Kentucky needs $336 million to restore education spending to pre-recession levels. Gov. Steve Beshear says he's determined to find the money, even if that means painful cuts elsewhere. With state revenues projected to grow $500 million over the next two years, that would mean election-year goodies for legislators to hand out will be sparse indeed.

The sales tax increase would provide an additional $500 million a year for legislators to dine on. But the fact they're afraid to actually vote on the idea directly and defend that vote in November speaks volumes about how legislators really think taxpayers feel about the idea.

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