Guest Blog: KentuckyWired Boondoggle

by Jim Waters

I revisited the broadband boondoggle that is KentuckyWired at a recent Louisville Tea Party meeting.

KentuckyWired was spearheaded by the Beshear administration in 2015 and came with a $320 million price tag – split between taxpayers and bonds sold to be repaid by the state.

I thought it would be interesting to revisit a column I wrote on the subject last year and see where we are today. 

The project is still under construction, but budget officials expect the state will annually fall $12 million short on making the bond payments for the state’s portion of KentuckyWired, likely forcing tax increases on Kentucky’s residents.  

A much-better approach would be to allow telecom reforms already passed and signed into law — including sweeping reforms during the current legislative session — the opportunity to do what they were designed to do: entice more private-sector investment, which would give even more Kentuckians access to better, faster Internet without taxpayers being on the hook.

Mismanagement and delays have already pushed back Kentucky Wired’s estimated completion date to 2019 — far behind the originally promised April 2016 completion for the entire project.

Now, payments on more than $270 million worth of bonds have started coming due, meaning Kentucky taxpayers are shelling out hard-earned dollars for a project that won’t bring in a single dime of revenue for nearly two more years, if then.

Due to the delays and the additional uncertainty about the overall cost of the system, Fitch recently downgraded the ratings of the bonds being used for this project from stable to negative.

It’s a shame that Gov. Bevin was saddled with this boondoggle by the previous — and irresponsible — administration. Still, the solution is not to double down and hope this problem works itself out. Rather, it’s to heed the advice of American humorist Will Rogers, who gets credit for advising: “If you find yourself in a hole, stop digging.”

We recognize that it most certainly would be costly to “stop digging,” which, in the case of KentuckyWired, would mean a substantial cost to free taxpayers from ill-advised contracts signed by the previous administration, which bears total blame for this pork-barrel project.

Continuing to dig this hole deeper still will have a negative, generations-long fiscal impact on this commonwealth. The governor should use his considerable communication skills to articulate the mess — and the right solutions — to taxpayers.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at [email protected]. Read previously published columns at www.bipps.org.