No tax reform without government contract reform Part I | Heleringer

43 to 28.

No, that’s not an early prediction of the final score in U of L’s opening football game this season, nor are they the over/under numbers of how many weeks are left in the imploding presidency of Donald J. Trump.

In 1968, there were 43 Republican members Kentucky’s House of Representatives. After voting for GOP Gov. Louie Nunn’s sales tax increase (from 3 percent to 5 percent; “Nunn’s Nickel” it was called), 15 of these intrepid gentlemen were defeated in the next election, almost all as a direct result of that vote, leaving 28 survivors standing for the 1970 session.

Chances are, Republican state representatives that now constitute a 64-member supermajority are going to get a similar opportunity to walk that same plank when a special legislative session is convened later this year to consider an ambitious “tax reform” plan proposed by governor Matt Bevin.

“It will be a very difficult, controversial, and ... unpopular plan,” GOP Sen. C.B. Embry of Morgantown said recently at a meeting in his district.

“Unpopular” is politician-speak for a tough vote on a bill that could get somebody defeated for re-election, the bête noire of incumbent officeholders everywhere. 

The governor has already telegraphed that he is thinking big and bold:

“ ... It will not be a tax neutral plan,” he promised in his January State of the Commonwealth address.

It’s unknown if Republican Senate Majority Leader Damon Thayer was a history major in college, but perhaps reflecting on how votes in favor of tax increases have historically affected the political futures of people he has actually known, the Georgetown lawmaker recently remarked on behalf of his caucus, “We’re not for tax increases.”

That’s not quite “dead-on-arrival,” but great significance should be attached to the pronoun “we” in that statement.

With apologies to Gov. Nunn, no legislator should consider raising a nickel of new taxes without first taking dead aim at the profligate spending, year in and year out, on government contracts, formerly known as personal service contracts.

With a little more than one month left in the current fiscal year, more than $2.3 billion dollars have already been approved for contracts and their not-so-poor cousin, the “Memoranda of Agreement” (MOA) that, let me hasten to say, are mostly legitimate endeavors fully vetted by the legislative and executive branches.

But included in this vast ocean of money are tens of millions of dollars that enrich a swarm of consultants, “experts,” vendors, “trainers” and assorted other well-connected recipients that year after year after year drain our state’s coffers of badly needed funds to address our worst-in-the-nation pension shortfall among a host of other far more important causes or, perish the thought, could be returned to the citizens from whom they were extracted in the first place. 

Then there are the hundreds of thousands of dollars that go to “outside” law firms to represent the commonwealth’s vast and varied interests, despite the fact that nearly every state cabinet, agency and department employs hundreds of licensed attorneys working in general counsels’ offices that, unless there is a direct conflict of interest, could and should be doing all this legal work.

In the last 10 years or so, a new mutation has appeared: the state now pays a small fortune every year for contracts to retain outside consultants to train the regular consultants that have umbilically attached themselves to the state treasury; without a hint of embarrassment, it’s called what it is: “training the trainers.” 

Presiding over this torrent of spending is the Government Contracts Review Committee, comprised of legislators and a small staff that meets every month with the same daunting task that confronted Captain Ahab and his men on the Pequod, slaying the great white whale of tens of millions of dollars of government contracts and MOAs that are unaffordable and unnecessary extravagances.

The problem is that even if the committee votes to reject a contract, that vote has no force of law, as legislative oversight committees have zero power when the legislature is not in session. All the committee can do is cast a symbolic vote to disapprove an expenditure and hope the Finance Cabinet, the process’ last stop, agrees. In the last five years, this has happened exactly one time ($124,061.76 was saved.) 

As a former member of this committee (1986-2002), I can vouch for the fact that at least 10 percent of this year’s total outlay for contracts, or some $230 million, could easily be cut without the loss of a single vital service to the taxpayers. Another 10 percent could be saved by eliminating another category of contracts that, if the state was awash in money, might possibly be of some benefit but, with a $35 billion dollar pension deficit, these too are frivolous luxuries.

In my next column, we’ll see who the biggest spenders are, highlight some of the more outrageous boondoggles and cast aspersions on a sampling of contracts that are wasteful and unnecessary; proof positive that the rallying cry in the Capitol should be “No tax reform without government contract reform!”

Bob Heleringer is a Louisville attorney who served in Kentucky's House from the 33rd District from 1980 to 2002. He can be reached at helringr@bellsouth.net.

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