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Squeeze taxpayers’ dimes harder

By Joel Peyton

Frugal families on tight budgets who squeeze the dime hard throughout the year often accumulate surpluses at the end of their fiscal years. Some families will undoubtedly blow the money on frivolous items; thrifty ones will likely save or invest the leftover funds in case of an emergency next year.

The state of Kentucky squeezed the dime during fiscal year 2005, which resulted in surpluses of $67 million in the General Fund and $23 million that lapsed in the Road Fund.

A recent press release by Gov. Ernie Fletcher’s office listed the total General Fund cushion – including this year’s unspent dollars – at $214 million while the Road Fund grew to $29 million. These surplus monies comprise nearly 3 percent of all enacted appropriations for both funds.

In fact, fund lapses in fiscal 2005 were the largest since 1996 and represent perhaps the most meaningful accomplishment of the Fletcher administration to date. The savings also prove that government can live within its means while still meeting its obligations and providing essential services.

However, the positive impact of such fiscal restraint could be quickly lost if the right decisions are not made on how to spend the additional revenues.

Families who carelessly spend their extra savings may create for themselves undue hardships during the next year. The same circumstances could result if wise decisions are not made in Frankfort.

Fletcher and his cabinet should ignore the incessant prattling of special-interest groups to spend additional funds on greasy pork-barrel projects. These big spenders’ insatiable appetite for spending taxpayers’ dollars during the revenue-rich 1990s left Kentucky without so much as an umbrella when the economic storms blew in at the end of the decade.

Unfortunately, some of the officials responsible for lapsed funds will conclude their far-sighted policies to be a failure because of unspent money in their department’s coffers. This response is largely a result of Frankfort’s addiction to spending taxpayers’ dollars, characterized more often by press releases praising unnecessary spending rather than encouraging more savings.

While the recent announcement about lapsed funds is a good start, a great deal more savings is needed, as indicated by the record spending bill produced during the 2005 session of the Kentucky General Assembly.

Instead of building new arenas and shrimp farms, lawmakers should strive to follow the example of those cabinet officials who were careful with taxpayers’ money, even with little incentive or recognition for doing so. For example, State Corrections Commissioner John Rees instituted spending policies that saved taxpayers more than $4 million in his department alone.

With his attempts at privatization, Rees is doing his part to get the most out of every dollar of tax revenue for which he is responsible.

While his proposal to privatize the new Elliott County prison did not make it through Frankfort’s political minefield, Rees did succeed in getting a contract signed with Corrections Corp. of America in July to house 400 female inmates in Floyd County. The company also owns and operates two prisons in Kentucky for male inmates and now is responsible for 12 percent – 1,616 felons – of the state inmate population.

Other states are incorporating privatization as part of innovative savings plans. For example, only eight months after being hired by Indiana Gov. Mitch Daniels to run the Hoosier State’s prisons, J. David Donahue privatized prison food services, medical staffing and the operation of a central Indiana medium-security prison.

“It wasn’t rocket science,” Donahue, a former assistant commissioner in Kentucky’s Department of Corrections, told reporters.

While Kentucky saved a few dollars during fiscal 2005, it doesn’t require rocket science to figure out that the state could save a great deal more if innovative public-private partnerships were allowed and if policymakers squeezed the dime a bit harder.

– Joel Peyton is a research analyst for the Bluegrass Institute, Kentucky’s free-market think tank.

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