Bluegrass Beacon: Government can calm inflation fears with meaningful policies

By JIM WATERS
Bluegrass Institute for Public Policy Solutions

Thursday, July 7, 2022 — Welcome to the scary return of inflation, which Ronald Reagan famously described “as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.”

While Transportation Secretary Jim Gray isn’t quite as intense in portraying the impacts of the current burst of inflation on Kentuckians, his concern, nevertheless, is obvious.

“Yes, inflation is affecting the cabinet’s operations, and especially the Department of Highways – as it is everything else,” Gray told legislators in recent committee testimony. “Inflation makes it hard to plan and occasionally hard to budget, or harder to budget.”

In his role, the Secretary is focused on the commonwealth’s roads and bridges.

But the scariness applies to groceries and gas for Kentucky families, too.

It’s all enough to make politicians desperate to do something – anything – to show they care, even if their actions don’t really have much actual impact.

Democratic Gov. Andy Beshear’s response to these “tough times” defined by “rising prices and inflation” includes issuing an executive order freezing for six months a scheduled 2-cent increase per gallon in the state’s gas tax.

Republicans, who fill most of the committee seats with their legislative supermajority, called it a feel-good political move, hammering on the fact that the help will be minimal – only about $1 a month for the average Kentucky driver.

Gray understands the difference in perspectives, but added his support for giving “families struggling, all the real – and yes, even the symbolic – help that we can provide.”

While noting there’s not much that can be done by state policymakers about soaring gas prices, Rep. James Tipton, R-Taylorsville, interjected that the Biden Administration needs to open oil-drilling leases to help America become more “energy independent,” which, of course, is a longer-term solution for dealing with rising costs at the pump.

Tipton urged Washington to “develop policies that have real meaningful benefits to our citizens.”

But such an approach isn’t just needed in Washington.

State policymakers also should seek to develop and advance policies that offer “real meaningful benefits,” or – on the flip side – stop and eliminate those that are harmful.

For example, Gray indicated he’s working to make the cabinet more efficient by “working to ensure that we get more than a single bid” on road construction projects.

Single-bid projects – even in non-inflationary times – have proved costly to taxpayers by needlessly consuming resources that should be freed up to build and repair more roads and bridges.

Getting multiple bids on road projects offers “real meaningful benefits” to all Kentuckians.

Rising costs of labor and supplies – the price of a liquid ton of asphalt jumped nearly 50% in the first seven months of this year – adds a dimension of urgency to the need for the transportation cabinet’s policies regarding bidding, particularly on highway projects, to diligently seek the best possible deal for the commonwealth.

Lawmakers also heard testimony in support of expanding electric vehicle (EV) charging stations while dumping federal EPA requirements forcing Kentucky vehicle owners in Louisville and some of the surrounding areas to use reformulated gas.

The reformulated version costs may be made to burn “cleaner,” but it’s costing drivers more while yielding less mileage for their money.

Regarding EVs, lawmakers were told that while it takes up to 30 minutes – some say more like an hour is needed – to charge these vehicles at one of those specialized stations, chances are drivers will see paying $120 a year in taxes and just pennies for every kilowatt hour charged more favorably than forking $4 or more a gallon for a tankful of fossil fuel.

The state plans to spend $85 million – $70 million of which is from Washington – to provide more EV charging stations throughout Kentucky.

More such facilities could address “charging fatigue” EV drivers complain about while helping more Kentuckians deal with inflation fears as the demand increases for electric vehicles.

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.

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