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COVID-19: Is Kentucky reopening at the right pace? How will we pay for the damage?

Lexington Power Poll members discuss priorities during this pandemic.

Lexington, KY  |  May 22, 2020 12:00pm  |  By Tom Eblen

COVID-19: Is Kentucky reopening at the right pace? How will we pay for the damage? article image

More than two-thirds of Lexington Power Poll members think Gov. Andy Beshear is moving at about the right speed to reopen the state from the shutdown caused by the coronavirus pandemic. But almost the same number think metro Lexington will see more shutdowns in the future as new waves of infection emerge.

Power Poll members this month also had strong opinions about the pandemic’s economic toll — and how city and federal officials must eventually pay for it.

This is the third month in a row the Power Poll has surveyed Lexington leaders about the pandemic. But is there any more pressing topic? COVID-19 is this country’s biggest emergency since World War II. Of the poll’s 257 members, 105 (41 percent) responded this month.

Beshear continued to get high marks from most Power Poll members. Seventy-eight members (74 percent) thought he was moving at about the right speed in reopening the state.

The Democrat has been more cautious in reopening than the Republican governors of other conservative states. But only 13 Power Poll members (12 percent) thought Beshear was moving too slowly, while 13 members (11 percent) thought he was moving too fast. Two members (2 percent) didn’t know or had no opinion.

Public health experts have said to expect new waves of coronavirus infections as things reopen. That has been the case in other countries hit earlier by the virus, such as China, where it started, Iran and parts of Europe. 

Seventy-six poll members (72 percent) said they expect more full or partial shutdowns in metro Lexington as infections re-emerge. Sixteen people (15 percent) thought more shutdowns were unlikely, while 13 people (12 percent) didn’t know or had no opinion.

The economic toll — and paying for it.

The shutdown and associated job losses and furloughs have hit Lexington’s budget hard, with a revenue shortfall now estimated at $40 million. That prompted Mayor Linda Gorton to propose that the Urban County Council make cuts to city government and forego more than $2 million in annual payments to non-profit social service agencies that provide vital safety net services, as well as to local arts organizations.

Council members must now decide whether to accept Gorton’s proposal. They also could decide to provide additional funding by either dipping into the city’s reserve funds, which total about $46 million, or raising taxes.

Private philanthropists have stepped forward to make up some of the difference for social service and arts non-profits, but there is still a big gap. The largest number of Power Poll members — 45 (43 percent) — think the Council should make up some of the budget shortfall with a combination of tapping into city reserves and raising taxes.

“The last time we seriously raised revenue was in 2013 to fix a chronic underfunding of the streetlight program,” said Richard Young, executive director of CivicLex, a non-profit organization that promotes local civic engagement.

“If supporting crisis social services, homelessness initiatives, and affordable housing in the middle of the most significant public health crisis of our lifetimes does not warrant the same conversation, I am not sure what could,” Young said. “There are a number of ways that are available to us without going to Frankfort, and I think it is past time for action on that front.”

Tom Prather, the mayor of Georgetown, agreed. “Eventually, additional revenue will be necessary unless we are willing to accept fewer police officers, firefighters and sanitation employees,” he said.

Kentucky law severely restricts local government taxing options, and Don Blevins, the Fayette County Clerk, said it’s past time the General Assembly provided more options.

“One option, long considered but not allowed, is a local-option sales tax,” Blevins said “This concept has been very successful elsewhere and would be perfect for our situation right now. Otherwise, the status quo is full of poor options for Lexington. We had a revenue issue before COVID, and now the pandemic has further exposed the imbalanced sources we rely on for revenue.”

The next largest group of Power Poll members — 35 (33 percent) — think the city should mainly tap into reserve funds. 

“Use a majority of Lexington's rainy day funds now,” said Mark Green, editorial director of Lane Communications Group and editor of The Lane Report business magazine. “It is possible, even likely, that very good economic times are ahead for Kentucky over the next several years as globalized supply chains and manufacturing shift back to the U.S.”

Nineteen people (18 percent) think Council members should stick with Gorton’s proposed cuts. Only four people (4 percent) thought the sole solution was raising taxes. Two people (2 percent) didn’t know or had no opinion.

David Adkins, executive director of the Lexington-based Council of State Governments and a former Republican state senator in Kansas, said local government budgets now have little, if any, fat to cut. He said Lexington would be prudent to reserve all options to maintain the social safety net and provide essential services during a crisis of this magnitude.

“No one on the city council should start a discussion of the budget by saying ‘raising taxes is off the table,’” Adkins said. “And it is not the purpose of philanthropy to supplant tax revenues that support essential human services. Now is the time to make no small plans. Let’s reimagine health care access, public transportation, elder care, safety net programs, correctional facilities, elections, education, housing and let’s address the myriad pernicious inequities that are the stains of slavery, segregation and Jim Crow. Be bold.”

Congress has approved trillions of dollars in aid to individuals and businesses since the pandemic began, and is considering more aid to make up for shortfalls in city and state government budgets.

But even before the pandemic tanked a strong national economy, the federal debt had exploded because of huge Republican tax cuts and continued federal spending, with additional funds going to the military and President Donald Trump’s wall on the Mexico border.

Federal deficits and debt will soon approach levels not seen since World War II. The Federal Reserve can’t just keep printing new money and issuing more debt. At some point, the debt must be paid — by raising taxes, cutting a lot of federal spending and services or both. The partisan politics behind these choices could not be more difficult.

So what’s the solution? Only seven Power Poll members (7 percent) didn’t think the national debt was a big problem, and nine (9 percent) didn’t have an opinion.

The least popular solution was raising taxes on everyone — 10 members (10 percent). Twenty four members (23 percent) thought the answer was to bring down the federal debt mainly by cutting federal spending and government services.

The most popular option was to bring down the debt mainly by raising taxes on wealthy people and/or corporations — those who benefitted most from the recent Republican tax cuts. With Trump’s re-election and the Republicans’ Senate majority up in the air in November, this whole question may become the next huge national story once the coronavirus has been tamed.

“As one of the younger members here, I'd like to see solutions that not only provide a swift response to today's needs — this is probably the rainy day we've been saving for — but also keep an eye toward the future, especially on the federal level,” said Nick Such, a technology entrepreneur. “It's hard to dislike a $1,200 check in the mail or 2.5 months of payroll costs covered by someone else, but I'm wondering if the 'someone else' will be my generation or my children's generation. If we can, I'd rather endure a couple tough years than a couple tough decades.”

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