Before considering higher gas taxes in Ky, let’s audit the Transportation Cabinet
After 15 months of pandemic panic, life is returning to normal. Families and friends are back to backyard cookouts. Restaurants are seating as many patrons as they can handle. Masks are being discarded.
Unfortunately for taxpayers, “normal” in the nation’s capital has become a discussion about whether to spend hundreds of billions or multiple trillions of dollars on infrastructure.
Something that never gets mentioned: even without a new infrastructure bill, the federal government would spend around $450 billion on highways and bridges over the next ten years. As usual, the stagecraft in Washington isn’t about whether we invest in infrastructure but how much more the political class has at its disposal to spend on earmarked projects and favored constituencies.
During the past five years a nearly identical debate has played out in Frankfort. A coalition coalesced by the Kentucky Chamber of Commerce has pushed the General Assembly to raise gas taxes by ten cents a gallon to send an additional $500 million a year to the Kentucky Transportation Cabinet. The coalition — poised to benefit from more government spending — ignores the fact that taxpayers already provide $1.5 billion a year to build and maintain Kentucky’s roads and bridges.
Organic revenue growth will increase total road fund appropriations by $259 million this biennium. In addition, Senate Transportation Committee chair Jimmy Higdon worked tirelessly with Sen. Chris McDaniel, head of the Appropriations and Revenue Committee, to correct a misguided, decade-long sweep of Road Fund dollars to the General Fund. As a result, $55 million will be rededicated to its intended purpose.
You might expect the pro-infrastructure crowd to celebrate an additional $314 million for their priorities. Instead, higher gas taxes have become a hill the Chamber and their allies are ready to die on.
A statement issued by the Chamber during the last legislative session said, “There is no better way to work towards economic recovery and getting our people back to work than properly investing in Kentucky’s future by raising the gas tax by at least 10 cents.” That’s quite a Keynesian approach.
The Bluegrass Institute responded, “Leaving money in the pockets of those who earned it is the right strategy to get Kentucky’s economy back up and running.”
Enough legislators agreed that raising taxes during a pandemic was a bad idea. The economy is recovering just fine without more government spending deemed essential by the organization representing Kentucky’s big businesses.
Then there is this. In the first five months of the year, the Transportation Cabinet awarded $57 million in single-bid contracts (that exceeded their own internal cost estimates) to Kentucky’s road contractors. Single-bid abuse by certain paving and asphalt companies is well-known and mostly ignored by the cabinet. Sadly, it’s almost certainly the tip of the iceberg of a variety of bidding practices by the industry to limit competition.
Proving the truism that there’s never enough spending to satisfy special interests whose missions depend on the growth of government, the gas-tax crowd will find a new rationale to justify its agenda. Here’s a suggested response for legislators, especially those who have joined the General Assembly in recent years: Demand a full audit of the Road Fund before sending a penny more to the Transportation Cabinet.
Andrew McNeill is a Visiting Policy Fellow with the Bluegrass Institute for Public Policy Solutions.
