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JIM WATERS: New Year’s wish for the ’24 legislature: Yield not to spending temptations

Democratic Gov. Andy Beshear and his political ilk are pushing hard to make their dreams of record government spending a reality as the General Assembly gathers to debate and deliver a new two-year budget.


Proponents of big government at all levels always have a strategy for spending more of your hard-earned tax dollars.

If times are tight – like during the Great Recession – they push for stimulus checks and bailouts to artificially prop up the economy. The nation’s entire economy will implode without the intervention, they dramatically claim. 

At a national level, Democrats and Republicans are both guilty. While big-spending proposals by the national Democratic party have been an everyday occurrence in modern times, a GOP president during that recession of the mid-2000s claimed he had to “abandon free market principles in order to save the free market system.”

Those principles include limiting government spending only to essential services and leaving more in taxpayers’ pockets and the private sector. Why, after all, should government rescue big banks and behemoth mortgage operations whose irresponsible practices land them in financial quicksand?

But the temptations don’t subside in times of overflowing state budget surpluses and Washington’s Covid-relief dollars. In fact, the itch to increase spending may be even more pronounced during seasons of plenty than in times of austerity.

Add to the Christmas season of miracles any politician who can look at Kentucky’s plump Budget Reserve Trust Fund and another year of expected large budget surpluses and not at least dream of creating new government programs and rewarding politically friendly entities.

Democratic Gov. Andy Beshear and his political ilk are pushing hard to make their dreams of record government spending a reality as the General Assembly gathers to debate and deliver a new two-year budget.

The governor wants to spend more than $33 billion from the state’s General Fund – and a record total of $136.6 billion – during the next two years, including forking over large spending increases for universal pre-Kindergarten and public education, as well as $395 million to replace expiring federal dollars and continue funding Medicaid at record COVID-19 levels.

Beshear claims his budget dreams can become a reality without dipping into the state’s reserves, which now stand at a record $3.7 billion – more than 20% of last year’s General Fund revenues.

Indeed, this budget could probably be funded with currently available resources, especially considering the state’s expected to have another year of surplus dollars.

Such surpluses, however, aren’t guaranteed for future years, whereas employee raises, new government programs and large spending increases for current ones will, if funded in the new budget, be considered recurring expenditures ad infinitum. During economic downturns that must be expected to occur at some point, future legislatures will be pressured to find the money for them even when surpluses aren’t available.

Beshear’s budget seeks to add $2.5 billion in public education spending to what – by far – is already the largest single portion of the state’s General Fund budget. It also would dwarf even the $1.4 billion budget surplus forecasted for this year, and would be on top of the $2 billion increase approved by legislators in the current budget passed in 2022.

Fortunately, Kentucky’s Republican legislative leaders are promising continued frugality in terms of additional recurring expenditures,  but are considering using one-time surplus dollars for non-recurring ones. 

Both Beshear and his legislative counterparts, for example, have shown support for a ”13th pension check” this year for state retirees, who haven’t had a cost-of-living increase for more than a decade. Beshear wants to fund this “bonus” from the General Fund, but lawmakers should consider using only one-time dollars.

And, recalling the disruptive “a pension is a promise” protests of a few years ago, it must be clear as crystal that such an expenditure, which last December was estimated to cost $326 million, is a one-time occurrence not promised for future budgets. Whatever lawmakers do related to pensions, they must not promise or offer benefits that aren’t fully pre-funded or which add costs to a state government retirement system that remains woefully underfunded.

With such robust reserves and ensuing temptations, legislators should also create policies that direct – and restrict – future spending of these one-time, non-recurring and non-promised dollars.

As former Secretary of State Trey Grayson told me in a recent interview previewing the 2024 legislative session on Lexington’s WVLK radio: “Rainy day funds should be used for … rainy days!” Or, at the very least, one-time dollars should be spent on one-time items, not recurring ones.

The Republican legislature has opposed attempts to allow the state’s reserves to be used as a slush fund for politicians – primarily this governor – to reward politically friendly supporters and entities. But with increasingly more dollars in the pot, the temptation to go on an ill-advised spending spree will be stronger than ever.

My New Year’s wish is that legislators continue to resist the temptation to consider only the short-term political benefits gained from large spending increases for recurring government programs and, instead, take the long view of maintaining one of the nation’s strongest rainy-day funds so that sufficient resources remain available for the next downturn, pandemic, flood or storm.

No more should ever be taken from Kentucky’s hardworking taxpayers than is absolutely needed to fund essential services and provide an umbrella. And, when at all possible, those who earned those dollars should be able to keep more of them – or get them back. They will steward these precious resources better than politicians, bureaucrats or union bosses, too many of whom never tire of scheming for spending more of them.


Jim Waters is president of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at Reach him at [email protected] and @bipps on Twitter.


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