HB 249: Slimy fat in a slippery pot

Published 3:05 pm Thursday, March 18, 2021

By Jim Waters

Imagine the uproar if, during the final days of a Kentucky General Assembly session, political leaders attempted to dishonestly and without full debate sneak through legislation like House Bill 563, which offers tax credits for businesses and individuals who contribute to nonprofit organizations.

Suppose they tried to hide the fact that those revenues would fund a controversial school choice program.

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COVID-19 notwithstanding, picture, in response, the howling protests and fervent and fiery speeches – missing only the pitchforks – which would occur at the capitol declaring taxpayers have a right to know what’s happening with their dollars and affirming the unethical, even immoral, deceitfulness of it all.

Envision how lawmakers kept in the dark would respond to such a scenario, considering we’ve been reminded ad nauseum in countless speeches during this year’s legislative session that the state has failed to fund textbooks, social workers and full-day kindergarten.

“And now,” the irate uninformed lawmakers would charge, “you fund a $25 million program without even telling us those dollars are for scholarships allowing students to attend private schools?!”

When a school choice bill is involved, there’s zero tolerance for anything less than maximum disclosure and full debate parsing every word and addressing each minute detail of the legislation.

Such a debate regarding HB 563 occurred recently in Frankfort as the end of the legislative session approaches.

No legislator and few watching could come away from that discussion unaware of what’s in the bill or confused about its intentions: provide opportunities for parents to enroll their children at a public school in a district other than the one in which they reside, and create education opportunity accounts funded by donations from businesses and individuals who, in return, receive a credit against their tax liability.

No one was left oblivious to the fact that these accounts would assist Kentucky’s neediest families with various educational services, including covering private school tuition costs for students in the state’s eight largest counties.

Such zero-tolerance policy, however, was nowhere to be found in debates on some other bills with potentially much-higher price tags.

Had it been, it’s unlikely the legislative grease pot known as House Bill 249, for example, would have received the 62 votes it got in the House – two more than the 60-vote threshold needed to pass spending bills this year.

WDRB’s Chris Otts reports the bill’s hidden and loathsome corporate pork is designed to provide special treatment to Rockbridge Capital, an out-of-state multi-billion-dollar hedge fund seeking refundable tax credits to remodel the Seelbach Hilton hotel it purchased in downtown Louisville.

Otts reports this provision of HB 249 “was never publicly debated” by lawmakers.

“The Seelbach’s lobbyists couldn’t get the legislation done in the light of day and resorted to having this corporate welfare passed in the closing hours of the session,” said Andrew McNeill, my colleague at the Bluegrass Institute who previously served as state deputy budget director.

It’s bad enough that HB 249 increases the historic preservation tax-credit pool from a conservative $5 million to a slathering $100 million to cover the Rockbridge ruse.

It’s even worse that the bill, which locks the gate so no other applicant can dip in this pool until June 30, 2022, allows – again without any debate – Rockbridge to step right up to the state’s tax-credit counter while all others must socially distance at least a full year behind.

But the biggest piece of slimy fat in this slippery pot is what will likely be a direct payment of millions to the hedge fund, courtesy of Kentucky taxpayers, given the “refundable” nature of the tax-credit scheme.

While HB 563 provides a modest $25 million worth of scholarships to help educate needy children in a handful of Kentucky counties and leaves no possibility that donors can collect millions from taxpayers, HB 249 goes to great lengths to ensure that at least one corporate crony does.

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 jwaters@freedomkentucky.com and @bipps on Twitter.