kysealKENTUCKY (7/13/14) — An economic study concluded Kentucky is among the nine most corrupt states in the United States in regard to spending by public officials.

The study, conducted by Cheol Liu, assistant professor in the Department of Public Policy at City University of Hong Kong, China and John L. Mikesell, Chancellor's Professor of Public and Environmental Affairs at Indiana University, was published in the May/June issue of the Public Administration Review. It utilized data from all 50 states spanning 11 years, 1997 to 2008.

The study determined the degree of corruption in each state based on the number of convictions of public officials for crimes including accepting bribes, awarding government contracts without competitive bidding, accepting kickbacks from private entities doing business with the government, using government credit cards for personal purchases, falsifying documents, smuggling illegal aliens and possession with intent to distribute narcotics.

According to the research, states with high rates of corruption tend to have high amounts of spending on capital, construction, highways, wages of public employees, corrections and police protection while spending less on social services such as education, welfare, health and hospitals.

Nationwide, the construction industry is consistently ranked among the most corrupt, due to multiple factors including domination of the industry by only a few firms, close ties with government officials and difficulty in accessing the scope and quality of construction work, the study found.

Past studies of the world economy suggest problems caused by corruption in developing nations could be echoed in the economic activities of corrupt states. These problems include lack of investment from outside the country, lack of trade opportunities and high debt. Further research suggests that underground and unofficial economies— largely those centered in illegal activities — represent a higher share of economic activity in corrupt nations.

Kentucky is among nine states that could have saved an average $1,308 per year per person by lowering corruption levels to equal the national average, the study concluded. The amount represents 5.2 percent of the total spending per capita. Multiplied by the state population in 2008, the final year of the study, the total amount lost to corrupt spending comes to over $5.5 billion.

Neighboring states also fared poorly in the ranking. Illinois and Tennessee both ranked along with Kentucky among the top 10 most corrupt states, according to the study. Missouri, Ohio, Virginia and West Virginia were all within the top 20. Indiana fared somewhat better, ranking the 16th least corrupt nationally. Six of the 10 most corrupt states are within the Southeast region of the U.S.

The study concluded that the key to keeping corruption away from the eyes of the public may lie in officials' creation of fiscal illusion, using debt financing to make the burden upon taxpayers seem less significant.

Prosecution of corruption cases tends to rise in election years.

Ami Clayton
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