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Politicos’ plan fuels new round of overspending

(Bowling Green, Kentucky) – Frankfort lawmakers’ previously stated concern about soaring gasoline prices now appears to have only been a political smokescreen.

Following Hurricanes Katrina and Rita, Gov. Fletcher proposed suspending Kentucky’s fuel tax in order to ease the strain Kentuckians were experiencing at the gas pump. Now, legislators are proposing a policy that would lock in an otherwise variable tax on fuel.

“This sleight of hand should be a wake-up call for all taxpayers,” said Chris Derry, president of the Bluegrass Institute, Kentucky’s free-market think tank. “By setting a new minimum gas tax, Frankfort politicians can borrow and spend like never before.”

In the past, Kentucky’s wholesale fuel tax has closely tracked the wholesale price of gasoline. The General Assembly now wants to terminate the slightest possibility that drivers will see lower fuel taxes, all in the name of increasing the state’s “bonding capacity,” a term for the state’s credit limit.

This change will enable legislators to put even more spending on the state’s “credit card” at the direct expense of Kentucky’s future fiscal health.

Borrowing money to finance projects today means that those debts must be repaid in the future. Paying these debts requires expanding tax revenues or cutting spending. Frankfort’s politicians simply refuse to consider the latter.

“The addiction to over-spending blinds legislators into concluding the only way to solve budget problems is either to tax or borrow.” Derry said. “Kentucky’s taxpayers deserve prioritized spending according to overall state needs, not schemes to borrow and spend at the expense of the future. Kentucky simply can’t borrow or tax its way to prosperity.”

– For interview information, contact Jim Waters, Director of Policy and Communications for the Bluegrass Institute. He can be reached at (270) 782-2140 or jwaters@bipps.org.

The Bluegrass Institute is an independent research and educational institution offering free-market solutions to Kentucky's most pressing problems.

Permission to reprint Perspective commentaries, in whole or in part, is hereby granted, provided the author and his affiliations are cited. Authors are available for interviews by contacting the Institute.

Bluegrass Institute for Public Policy Solutions
400 East Main Avenue, Bowling Green, KY 42101

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