The special legislative session was touted as dealing with the coronavirus.
Yet another virus has been lurking around much longer than COVID to which legislators and bureaucrats of various political stripes seem particularly susceptible.
It’s the virus of corporate welfare which infects even policymakers who claim fiscal conservatism and a belief in transparency yet fall all over themselves voting to spend hundreds of millions of hard-earned taxpayer dollars on unnamed projects for which there’s often insufficient return and even less accountability.
All some economic development bureaucrat seemingly must do is eagerly claim it’s necessary to offer large companies looking to expand or relocate large bags of taxpayer-funded — but non-disclosable — goodies up front or Kentucky will lose out in competition with other states. Politicians then line up like lottery-ticket buyers at the local convenience store, hoping to land “the big one” and its associated political payout.
Sometimes these projects do work out. Toyota, for example, received a Tundra-load of incentives to build in Georgetown nearly four decades ago and has inarguably produced a big return for that region and the commonwealth.
But the giveaways are often duds for the taxpayer forced to back them.
Remember how arms got twisted during the closing hours of the 2017 session of the General Assembly on a project lawmakers knew little-to-nothing about yet were asked to appropriate $15 million directly into the building of what turned out to be Braidy Industries, which was supposedly well on its way to raising the capital for an aluminum mill near Ashland?
More than four years later, the project, which promised a host of high-paying jobs and economic salvation for eastern Kentuckians thrown out of work by the coal-industry’s downturn, still hasn’t been built.
Lawmakers presently are barreling ahead with legislation touted as offering $410 million to lure companies to build large projects here yet also bails the state out of an incentives’ debacle going back to 2002 when the commonwealth purchased a colossal piece of land in Hardin County to lure a Hyundai plant.
Hyundai ended up building in Alabama and Kentuckians were left holding the bag on the 1,550-acre property as other attempts to entice companies to the Glendale site failed.
Former Gov. Steve Beshear announced in 2009 that a car battery manufacturing plant would locate there, create 2,000 high-paying jobs and have an impact on the region like Toyota.
The plant never got built and the state was left holding a loan on the property, which corporate-welfare legislation during this special session will pay off.
The lack of transparency makes it impossible to know how many offers involving this same location have been made and rejected during the last two decades.
While debates over the state’s approach to economic development and the role taxpayer-backed handouts play won’t end, there should be widespread concern that Frankfort’s political leadership plans on paying for this latest round of corporate welfare by raiding the state’s rainy day fund.
Since the conclusion of the regular legislative session earlier this year, Beshear and lawmakers have boasted about how the state now has the largest rainy day fund in its history.
However, the prevailing corporate-welfare mentality suggests political leaders view those savings as a slush fund for more government spending instead of vital resources to manage through future challenges.
Ironically, economic development bureaucrats insist Kentucky needs to spend these dollars now to compete with other states for large projects.
Yet one of the distinguishing characteristics setting our competitor states apart from Kentucky is they historically have built rainy day funds large enough to significantly cope with downturns, pandemics and disasters.
Let’s avoid corporate welfare’s unknowns and negative fallout with a booster shot of real fiscal conservatism and a commitment to open, transparent policies which have proven to give other states a competitive advantage and their people more opportunity to prosper.
Jim Waters is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free market think tank. Read previous columns at www.bipps.org. He can be reached at email@example.com and @bipps on Twitter.