Kentucky is now surrounded on three sides by neighbor states that are making dynamic conservative changes to their economic policy and experiencing dynamic results.
Recently we learned that the conservative leadership of Indiana has led to a $1.2 billion dollar surplus in that state’s coffers. By cutting spending, finding prudent efficiencies and without raising any taxes, Indiana Gov. Mitch Daniels has put Indiana on a path to financial prosperity. By assuring businesses that the state won’t come around with its tax collecting hands out any time soon, they’ve vastly improved their business climate. Already, businesses and entrepreneurs are flooding across the border from Illinois and other high-tax states seeking refuge.
Ohio and specifically cited their conservative leadership and fiscal prudence. Ohio is experiencing renewed economic growth and is on pace to bounce back.
To our south, Tennessee has no income tax and remains one of the lowest tax burden states in America. Last year, the average Kentuckian paid almost $1,000 more in taxes than the average Tennessean who made the same salary.
Keep in mind these three states surrounding Kentucky have been able to maintain economic stability and even grow during one of the deepest recessions in memory. And they have positioned themselves to take advantage of the inevitable migration of tax refugees from high tax states like New York, Illinois, Michigan and California.
What has Kentucky done to keep up? Well, Forbes Magazine named us the worst-run state in America, and we’ve borrowed more money against our future to plug the gaps created by our outrageous spending, seeing our own credit rating downgraded as a result.
Gov. Steve Beshear brags about balancing the budget eight times during his three and a half years as governor. That’s no accomplishment, because he’s had to borrow money almost every time to do it. If you have to borrow and balance a budget twice a year, it means you are spending too much.
The governor could have used the financial crisis as a chance to position Kentucky for the future. Instead, he’s missed one of the greatest opportunities to come our way in a generation.
At a Farm Bureau forum last week, Beshear steadfastly refused to talk about tax reform, calling it a tax increase. He couldn’t be further from the truth about a proposal that sits before him.
We could put an average of $2,500 per year back in the pockets of working Kentuckians by eliminating the income tax and instituting a lower, but broader based sales tax (5.5 percent).
Some industries wrongly fear such a proposal, thinking that it will lead to an increased cost of doing business. But the payroll and corporate income taxes would be gone, more than making up for the sales tax assessed, creating room for healthy competition and growth.
The result, as has been proven before, would be an increase in the number of businesses choosing to locate their companies in Kentucky, an increase in jobs, and more cash in hand for every Kentuckian to spend.
But instead of looking at this innovative idea that could have put us in the lead of other states that are now making these changes, Kentucky is now authoritatively pulling up the rear.
During the recent conflict in Libya, when confronted about America refusing to take the lead in the NATO action, a member of Obama’s administration famously said that “America is leading from behind.” It is fitting that Beshear heartily endorsed Barack Obama for president in 2008. Sadly, this statement is just as appropriate to describe Beshear’s economic leadership of Kentucky. While other states are taking the necessary steps to position themselves for prosperity, the governor and his hapless administration are blissfully “leading from behind.”
Leland Conway is co-founder and executive editor of www.conservativeedge.com and host of the Pulse of Lexington on News Radio 630 WLAP. Comment at Leland@conservativeedge.com.