Misuse of funds — 04/09/08

Sat, May 17 2008

— When does a “fee” become a “tax”? Our answer: When the revenue from that fee goes to support government programs not related to the reason the fee is paid.
While the biennium budget approved last week by the Kentucky General Assembly includes no tax increases, it does turn some “fees” into “taxes” by transferring at least some of the revenue generated by those fees over to the general fund. That’s a disservice not only to those who pay the fees, but also to the programs and entities that fees support. Indeed, the only purpose most of those fees were imposed in the first place was to support those services, not general fund programs.
Under the two-year budget that goes into effect July 1, millions of dollars that professionals pay in licensing fees will be used for other government expenses.
Doctors, nurses, dentists and other professionals annually pay the fees for their licenses that help to fund about 35 regulatory boards and commissions. But now some of those funds are being moved from the regulatory boards to the general fund.
Charlotte Beason, executive director of the Kentucky Nursing Board, said her agency would lose $2 million over the next two fiscal years because of the transfers to the general funds. “We’re going to have to make some serious cost-cutting decisions,” she said.
The new budget calls for the transfer of $5.5 million in licensing fees during the current fiscal year that ends June 30, $4.9 million during the fiscal year beginning July 1, and about $760,000 during the year beginning July 1, 2009.
One of the tasks of the agencies that are having their funds cut is to serve as a watchdog over the professionals they regulate. These include everything from physicians to optometrists to podiatrists.
As a result, critics of the plan say the transfer of funds from those agencies could threaten public safety. The agencies that rely on the revenue from the fees to operate are assigned the task of investigating complaints regarding alleged misconduct by professionals.
“Our job is to protect the public,” said Abby Shapiro, a psychologist and chairman of the Board of Psychology Examiners. Shapiro’s agency would lose about $90,000 this year and more than $100,000 the following year.
Transferring revenue collected for one purpose into the general fund is an old game in Frankfort. But that doesn’t make it right. The professionals who pay those fees are no longer paying a fee to operate the agencies that regulate them. They are being “taxed” so our elected officials can boast that they made no tax increases.