The Leaky Bucket Report

In his August 1 column in Louisville’s Courier-Journal, David Adkisson shared a perspective from the Kentucky Chamber’s follow-up to their 2009 study, the Leaky Bucket, focusing on reforming state spending in Kentucky. The Chamber provides a valuable voice on the issue and certainly represents the business community with real power. Unfortunately, the Chamber’s report is missing the realities of what Kentucky children and families face, particularly in the wake of the recession.

While the report makes some excellent and necessary recommendations, like rebuilding the “state rainy day fund” and eliminating the structural deficit, it does so by calling for a state spending cap and ignores one of the root causes of the structural deficit — inadequate revenue. Just as only increasing revenue is not a real solution, neither is the lopsided argument of only cutting spending. The Commonwealth needs an even-handed approach that ensures efficiencies and accountability in spending, but also creates adequacy and sustainability on the revenue side of the equation.

In fact, a major factor in rising costs to the state are what economists would term “automatic stabilizers,” and they are doing exactly what they are intended to do.  While business leaders may argue that corporate tax breaks are stabilizers in a recession, we would argue that making investments in health insurance for children and unemployment supports are proven safeguards against the bad economic times becoming even worse for Kentucky’s families.

The Chamber rightly points out the importance of spending a greater portion of education funds on student performance. Reconfiguring funding streams to get resources to classrooms rather than letting them languish in Frankfort or a central office is a common sense way to increase education levels and makes Kentucky more competitive in the future. Also, the Chamber rightly commends the recent corrections systems reforms which will save the state money and reinvest the savings in treatment and prevention programs.

We would like to see these same goals for corrections reform expand into juvenile justice. Kentucky currently uses the most expensive and least effective approach, which is locking kids up in secure detention for misbehaviors that are not crimes, like skipping school and running away from home. By focusing on prevention and improving efficiency, similar reforms can be made to reduce the use of secure detention for children.

The Chamber’s report is ripe with good ideas, but its overriding premise is simply wrong. Now is not the time to focus solely on either capping or cutting spending. Now is the time to look towards a well-rounded approach to managing our state finances in a responsible manner, which must include increasing revenue. There is no question that economic development is a cornerstone for Kentucky’s future but so are children and families. Unless public investments in things like tuition aid, early learning, family preservation services and other proven tools that increase the success of kids and families are made in the immediate, the real leaking bucket in this state is the future of Kentucky’s children and families.

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