Kentucky Club for Growth
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December 24, 2008

It Pays to Administer in Jefferson County

An interesting note on setting priorities in education:

While government administrations around the state are tightening budgets, Jefferson County Public Schools are no exception.  

Superintendent Sheldon Berman says the district is facing a $45 million shortfall and has proposed $35 million of reductions and using $10 million of reserve funding to make up the rest. 

One thing that he hasn't considered is reductions in administrative salaries.

Superintendent Sheldon Berman has opposed cutting administrative salaries unless they are part of a districtwide pay cut. Instead, he has proposed $35 million of spending reductions for the 2009-10 school year.

Earlier this year, Governor Beshear announced that he and a couple of other top staff would symbolically reduce their salaries by 10%.  It seems that most administrators in JCPS make as much as the Governor:

The district's 175 administrators represent a bit more than 1 percent of its 13,800 full-time employees, Hardin said.

Of those administrators, 124 make more than $100,000, 24 make $90,000 to $100,000 and 27 earn less than $90,000.

 Nearly 75% of the administrators are in the salary range of the Governor.  Perhaps they could show some symbolism too.

December 22, 2008

Some Perspective on Kentucky's Budget

Kentucky is projected to face a $456 million budget shortfall this year.  New York lost over a third of that in one moment.

From Best of the Web Today on Monday:

Easy Come, Easy Go
From the Associated Press:

Gov. David Paterson said Friday that the loss of tax revenue from just six Goldman Sachs' executives will cost New York $178 million.
The executives complied with the urging of New York Attorney General Andrew Cuomo and others who said in November that major Wall Street companies benefiting from federal bailouts shouldn't pay out the usual huge bonuses to executives.
Paterson says it is the right thing to do, but the result is a further hit to the fiscal crisis of state government.
"Things could go even more south in a big hurry," Paterson told reporters.
He said Wall Street firms receiving federal bailout did the right thing by forgoing bonuses to their executives, but that has had a devastating effect on New York's fiscal crisis because Wall Street taxes accounted for 30 percent of state revenue in the last fiscal quarter.
"I think it was the right urge," he said, but "the state lost $178 million in that moment."

That's the trouble with waging class war against the rich: The more decisively you defeat them, the less are the spoils.

 

"At Least She Doesn't Sleep on the Job"

Rep. Tom Burch is under fire from the newspapers for writing letters to judges and recommending ex-girlfriends for jobs.

Tom Burch is someone the Club rarely agrees with, but we will admit that there is a difficult line for a legislator to walk between working for his or her constituents and using one's office to influence others inappropriately, a line that it seems Burch doesn't pay due discretion.

But we have to make fun of the current case, where the Beshear administration created a position in the Health and Family Services Cabinet during a budget crisis for Burch's ex-girlfriend, and all Burch has to offer is:

“She’s more qualified than some of the people that have worked there,” he said on Thursday. “I walked in there 20 years ago and found one of the supervisors sleeping.”

If "more qualified than a sleeping supervisor" is the best compliment Burch can muster for his ex, then I guess we know why they're no longer together.

A Slightly Interesting Gambling Proposal

Former Attorney General and current House member Greg Stumbo has announced plans to file legislation to allow "Video Lottery Terminals" at racetracks.  As Attorney General, he issued one of his many opinions about how he would make up the law if it were up to him suggesting that this sort of expanded gambling would not require a constitutional amendment.  Consider us dubious.

Other shortcomings of his proposal include an unlikely assumption of generating $400 million annually, letting the Lottery Commission regulate them, justifying the expansion by saying it is necessary to make racehorses richer, and funding education last.

All of that said, he has put forward the first gambling proposal with an obvious good included: reducing an obligated tax burden on Kentuckians and shifting it to a descretionary activity. 

Unlike other gambling proponents who attempt to sell expansion of casinos simply as a means of expanding government spending, Stumbo's proposal includes a repeal of the state's property tax on motor vehicles and boats.  Stumbo has yet to release the details, and this detail is not nearly as compelling if he does not also prohibit local property taxes on motor vehicles, but this step in the direction of giving taxpayers some relief deserves mention.

December 17, 2008

"Not Me" Continues, is Beshear in Charge?

The Cabinet formerly known as Commerce weighs in on why they should be exempt from 4% cuts:

Sparrow and Wilder held a news briefing Tuesday to outline the impact on their budgets if the state received no new revenue and if their current budgets were cut by 4 percent. Briefings by other state officials are to continue this week.

Sparrow, whose cabinet has a $51 million General Fund budget with about 2,400 employees, said she didn’t know how many parks would have to close if there were no new revenue but said the number could be “rather significant.” Kentucky has 52 state parks, of which 17 are resorts.

She also said the 300 or so layoffs in her cabinet would involve full-time as well as seasonal employees.

Under a 4 percent – or $875,000 — cut, she said, the eight welcome centers across the state on interstate highways may close two days a week but their rest rooms will remain open.

Which sounds like alot of people to layoff to find $2 million (4% of $51 million).

Today, the Justice Cabinet will present:

Justice and Public Safety Secretary J. Michael Brown and Energy and Environment Secretary Len Peters are to hold briefings about their budgets at 9 a.m. Wednesday.

The Governor proposed 4% cuts on top of a impossible to pass tax increase, and is now lining up his agencies to explain why he shouldn't have the cuts, PR against his own proposal.

Beshear may recognize that cutting spending is what Kentuckians expect when the economy is poor, but someone should tell the rest of his government.

First he toured the state saying he didn't have any answers.  When Beshear took a pay cut, he didn't ask the rest of his government to join him.  Now his agencies are making his plan more difficult to enact.  Maybe he isn't running the government...

 

December 16, 2008

Self-Fulfilling Unemployment Tax

David Adams caught this New York Times article on states' unemployment insurance funds:

"It is something that we are concerned about," said Kim Brannock, a spokeswoman for the Office of Employment and Training in Kentucky, where the unemployment trust fund balance now sits at $133 million, compared with $250 million a year ago. The fund has not borrowed money from the federal government since the 1980s. "At this point we are solvent," she said, "but we are monitoring the situation."

David notes:

Borrowing from the federal government is the first option when these funds run out. Raising taxes is the second.

In October, we noted that:

We're #34 according to the Tax Foundation's 2009 State Business Tax Climate Index.  Kentucky receives low marks across the board with the exception of sales tax.  Kentucky is indexed at a particularly high unemployment insurance rate.

We're the third-worst unemployment insurance rate, to be exact.  From the report:

The states with the worst UI taxes are Rhode Island, Massachusetts, Kentucky, Alaska and Michigan. These states tend to have rate structures with high minimum and maximum rates and wage bases above the federal level. Moreover, they have more complicated experience formulas and charging methods, and they have added benefits and surtaxes to their systems.

In other words, our unemployment tax structure is one of the most self-fulfilling.  It especially punishes employers in trouble, increases the burden in tough times, and is generally unattractive to new employers.

We don't hear much about the unemployment insurance tax, but we should pay more attention.  We can have a better system.

Let's Tax Ourselves Competitive

We've been following the Horse Racing Commission's expansion plans for months now.  Their plans have evolved from doubling their staff to doubling their budget to a 150% budget increase.

The authors of the final report seem to really have Christmas on their minds.

Their ambitions have relaxed in some ways in the final report, asking for "only" a 67% budget increase, and proposing a variety of taxes and fees on racing and betting so that the $2 million dollar increase would "only" require a 37% increase in appropriated general funds. (41% if you count the current 4% cuts all agencies are facing.)

Oh, and they recommend building an equine testing and research lab that costs $5 million to construct and $3.5 million annually to operate, too.

From the Herald-Leader:

Instead, the task force recommended dedicating more revenue to the Kentucky Horse Racing Commission through increased fees and taxes, such as:

  • Increasing “takeout” – the money retained from bettors – on exotic and win-place-show bets;
  • Requiring the owners of the top three finishers in races with purses over $10,000 to help pay for drug testing;
  • Increasing the pari-mutuel tax on racetracks with an average daily handle of $1 million or more – traditionally Keeneland and Churchill Downs;
  • Licensing “tote” companies and advance-deposit wagering companies;
  • And, if other sources of funding are not found, increasing the reimbursements from racetracks to pay racing commission employees and to continue to pay for drug testing.

I'm not familiar with racing fees and taxes in other states, but it seems to me that, if Kentucky is having problems competing with other states, increasing the taxes on the most successful will only exacerbate the problem.

December 15, 2008

Cigarette Tax Proposal a Likely Failure

You may not know it from headlines like:

Big guns back tobacco tax plan in midst of Ky. budget crunch

or

Survey: Cigarette-tax hike backed, Majority of senators in Ky. open to idea

but a $0.70 cigarette tax increase is very unlikely to pass even the Kentucky House.  While Courier-Journal headline writers seem to have their heads in the clouds, the reporter includes this quote from the House A&R Chairman:

They have their work cut out for them. Even a powerful supporter of the 70-cent increase said it could be a long shot.

"I tend to think 70 cents would not pass the House, but I'm not sure of that," said Rep. Harry Moberly, the Richmond Democrat who is chairman of the House budget committee and supports the tax increase.

This mirrors earlier comments by Representative Jimmie Lee:

“I don’t think realistically you could pass a 70-cent tax increase,” said Rep. Jimmie Lee, D-Elizabethtown, noting that he would vote for it.

“Those legislators that live close to a border state may find 25 cents more palatable because it would keep Kentucky cigarette taxes lower than most states,” Lee said. “I think he has a lot of selling to do.”

Where it seems unlikely in the House, it seems likely dead in the Senate, where 20+ legislators expressed their disinclination towards the tax increase.

In 2008, Beshear pushed casinos and failed, then half-heartedly talked about a cigarette tax increase which went nowhere.  He campaigned for some legislators in special elections and general elections, and he lost those races.  He's setting himself up for a just-as-successful 2009.

The Crisis is Want of Economic Growth

There are plenty of ways to criticize Governor Beshear's budget proposal, but the one with the most resonance seems to be its myopia. 

Where the immediate needs of the budget present an opportunity to put forward a bold proposal that would help make Kentucky an attractive place for business growth and entrepreneurship, Beshear has proposed a stopgap that may not even address the spending crisis in FY 2010.

I mentioned this shortcoming in my appearance on Kentucky Tonight a few weeks ago.  Since Beshear's proposal, it has been echoed by

Representative Bill Farmer, who has boldly proposed a repeal of income taxes in Kentucky:

"The Governor's proposal is horrible policy. It fails to address the underlying problem and if things don't get better immediately he will have used all of the tricks in the bag."

Secretarty of State Trey Grayson:

“I am not sure that there are any other ways to articulate that we are going to experience severe pain due to these proposed cuts. This pain should send a clear message to the Governor and Legislature that we must find a bi-partisan, long-term solution to this problem, not just a quick fix. Comprehensive tax reform that will reduce the tax burden on productivity, and thus allow our economy to grow, is the only real answer to this crisis. Until we face this fact, our Commonwealth will continue to bear these difficult decisions.”

Liberal columnist Larry Dale Keeling:

After Beshear made his plan public, Secretary of State Trey Grayson called it a "quick fix," adding that Kentucky needs comprehensive tax reform. Although we may not agree on what that tax reform should entail, Grayson is right about the need for it.

Speaking at a recent Kentucky Association of Counties conference, Beshear told a gathering of local officials, "The bottom line is that I have absolutely no intention, no intention whatsoever, of surrendering or retreating from the mission of government ... to improve the quality of life for each and every Kentuckian in each and every one of our counties."

He has delivered variations on those comments often during his first year in office, a year marked by budgetary woes. It's a recurring theme that suggests Beshear doesn't want to settle for being a caretaker governor. Frankly, though, what he offered Thursday in response to the current shortfall was the plan of a caretaker governor.

And Radio Host Leland Conway (from bipps.org):

"We need to make clear that this budget shortfall does not mean that the state is out of money. If you sat down and worked out a budget as though you earned $150K per year, while actually earning $75K per year, you would have a budget shortfall too. You’d have a budget that includes too much spending."

-snip-

"While many other states are begging for bailouts and raising taxes on everything under the sun, Kentucky could be building its future."

Earlier, we called this a Too-Much-Spending Crisis, and it is.  But the real crisis is that Kentucky is unfriendly to entrepreneurship and isn't competitive with our southern neighbors because our tax and regulatory systems are too discouraging. 

Now is the time to propose and champion real change, and instead our business organizations line up to increase taxes.  This is Kentucky's dysfunction: the entire political system, outside and inside government, is overwhelmed with folks who prefer getting along with each other to challenging a system that everyone recognizes hasn't gotten us where we want to be.

 

Bunning in Detroit UPDATE

Page One has the update from our earlier post about Bunning signing autographs in Detroit after voting against the bailout:

Woops.

Bunning had been scheduled to sign baseballs at the Gibraltar Trade Center in Taylor, Mich. on Sunday at $35 apiece, but hours after the Senate derailed the auto bailout plan, “the trade center posted a terse notice” saying that Bunning’s appearance had been canceled, the paper reports.

-SNIP-

“Being a business owner in Michigan for over 30 years, I simply cannot support anyone who, in my opinion, votes against the economic well-being of our great state,” the paper quoted Koester saying in a statement.

 

December 12, 2008

Revenue Numbers

The OSBD has put the November revenue numbers online.

If you recall, we explained back in October and again in November that General Fund receipts are up in Fiscal Year 2009, which began in July.

For the first three months of FY 2009 (July-September), General Fund receipts were up $17 million versus FY 2008, and were up another $17 million in October for a total increase of $34 million.

In November, they're up another $38.7 million.  So far this fiscal year, receipts are up $72.7 million, or 2.2%.

The budget office explains that, of this $72.7 million, $48 million is accelerated collection of property taxes, in other words, taxes that would normally be collected later in the year.  

Removing the $48 million accelerated collections, state revenues are growing at 0.75%.

How are state revenues continuing to grow if the economy is so bad?

We're going to generalize a little.

State tax revenues are about 90% dependent on sales taxes and income taxes, which generally split around 45-55 in the direction of income taxes.

So far this year, sales taxes have grown 0.8%.

Corporate income taxes, which in normal times might account for about 25% of the income tax total, are very negative.  They are down over 50% versus last year, and in November "Corporation income tax receipts were negative for the month; Corporate tax refunds paid out exceeded cash payments into that account."

Individual income taxes, however, are up.  In November we wrote:

Looking at the last CFG report and the revenue report for October, we find that income tax receipts were up 6.6% in the first quarter and 8% in October, this despite rising unemployment in the state.  Yet the forecast for income taxes for the year says:

The interim forecast for the individual income tax calls for a decline of 4.7 percent for the remainder of FY09... The individual income tax grew by 6.6 percent in the first quarter of FY09, and is expected to decline by 4.7 percent during the remainder of the fiscal year. Further weakness in employment, wages and salaries, and weak aggregate demand all contribute to the lower forecasts. For the entire fiscal year, individual income tax revenues are projected to decline by 2.1 percent.

I can't dispute the expected "weakness in employment, wages and salaries," etc., but the fact remains that they are already weak and revenues are up anyway.  I'd like the discrepancy of the first four months personal income tax receipts explained more thoroughly...

Here we are looking at November, and individual income tax receipts are way up:

Individual income tax collections rose by 13.7 percent. Receipts from withholding were up 7.9 percent and refunds were down from last year.

I mentioned I'd like an explanation for this counter-intuitive data:

Individual income tax collections were surprisingly higher and are contrary to the underlying economic data on employment and earnings.

Great.  But this isn't an isolated surprise.  Lexington experienced it as well:

In the payroll tax category, the city has collected $2.1 million more for the year, a 3.5 percent increase over this time last year.

So a small increase in sales taxes and significant increases in individual income taxes are keeping state revenues growing.

Amusement From Detroit

From the Detroit Free Press:

Ex-Tiger Jim Bunning a shoo-in for chutzpah hall of fame

After all, most of the GOP senators conspiring to kill a House rescue package for Detroit's auto companies wouldn't have the guts to set foot in Michigan this week, much less hawk their autographs to beleaguered Michiganders at $55 a pop.

He'll sign baseballs ($35), posters ($45) and jerseys or gloves ($55) from noon to 2 p.m. at the Gibraltar Trade Center in Taylor, then head over to Solidarity House to knock back a few cold ones with UAW President Ron Gettelfinger.

(Hat Tip: BBTF)

December 11, 2008

Reaction to Beshear's Proposal

David Adams has collected a number of reactions to the Governor's budget proposal over at Kentucky Progress, which I'll blatantly repost here:

Rep. Bill Farmer knows taxes. In addition to his legislative duties, he is a tax accountant in Lexington. Farmer isn't impressed with Gov. Steve Beshear's plan to raise the cigarette tax and empty out the Rainy Day Fund rather than cut spending enough to match projected revenues:

"The Governor's proposal is horrible policy. It fails to address the underlying problem and if things don't get better immediately he will have used all of the tricks in the bag."

Further "tricks" at that point, of course, would be further tax increases.

House Minority Whip Stan Lee says Beshear's plan is "hypocritical."

"They say that it's about getting people to stop smoking, but it's really just about the money. If they wanted people to stop smoking, they would try to make smoking illegal," Lee said.

Speaker Jody Richards said:

 

"The House has a record of strong leadership in these matters. Last session, we expressed our support for additional revenue by passing a cigarette tax to avoid disastrous cuts in education and human services. We in the House have not shied away from the tough decisions when it means doing what is best for Kentucky."

 

PageOne posts the reaction from Secretary of State Trey Grayson:

Secretary of State Trey Grayson just released a statement on Steve Beshear’s budget plan:

 

“I am not sure that there are any other ways to articulate that we are going to experience severe pain due to these proposed cuts. This pain should send a clear message to the Governor and Legislature that we must find a bi-partisan, long-term solution to this problem, not just a quick fix. Comprehensive tax reform that will reduce the tax burden on productivity, and thus allow our economy to grow, is the only real answer to this crisis. Until we face this fact, our Commonwealth will continue to bear these difficult decisions.”

 

(PageOne also has a link to an online survey that currently has the Governor at a 36% good job rating.)

The Governor's Budget Proposal

This is a reposting of the first article of email update sent out earlier today.  If you don't receive them, you may want to sign up.

Here's the Governor's proposal:

  • $147.1 million in spending cuts
  • $81.5 million from a 70-cent cigarette tax increase this fiscal year, which ends June 30, 2009.
  • $8 million by furloughing state workers three days, during which they won't get paid.
  • $40.6 million in money transfers from various "restricted" funds throughout state government.
  • $178.9 million by tapping the state's "rainy day fund."

Spending Cuts

The $147 million in spending cuts plus the $8 million from the three-day furlough of state workers is considerably less than the original proposal of 4% across-the-board cuts.  A 4% cut would have netted $373 million in less spending.  The Governor's new proposal does not affect the P-12 education SEEK funding formula, Medicaid or corrections, and only asks for a 2% cut from the rest of the education budget.  These exemptions mean that he only looking for savings in about half the state's budget, which is why he achieves less than half of the original savings projection. 

Tax Increase

The Governor proposed a $0.70 cigarette tax increase, which stands no chance of passing the legislature.  Earlier the Courier-Journal reported that 20+ state senators were uninterested in raising the tax, a sentiment repeated this week by Senate President David Williams:

"If he is truly empathetic with Kentuckians' financial situation, perhaps a more appropriate response would be to join me in holding the line on taxes."

While we're listing good quotes, this one from Senator Damon Thayer is good too:

"I just ran a campaign where I got 61.7 percent of the vote, and I told my constituents that I'm not for raising taxes."

Even if a tax increase had the votes in the Senate, even the House won't palate one that would put Kentucky's rate higher than our neighbors.  A lower increase might pass, but not this rate, and the Governor knows it. 

UPDATE: State Rep. Jimmie Lee seconds our opinion:

“I don’t think realistically you could pass a 70-cent tax increase,” said Rep. Jimmie Lee, D-Elizabethtown, noting that he would vote for it.

“Those legislators that live close to a border state may find 25 cents more palatable because it would keep Kentucky cigarette taxes lower than most states,” Lee said. “I think he has a lot of selling to do.”

This legislative opposition is likely why just days ago he didn't know if it was time for a tax increase.  From PageOne KY:

His answer to the question about a cigarette tax was so typical Beshear-ian.

"We may get there (to the point we need it), and if we get to that point, it's an option to look at."

Seriously. After spending 45 minutes bemoaning the state's economy, he's wondering if we're going to get to the point of desperation in which we'll need money from a cigarette tax. This from a man who campaigned on a soapbox about leadership. We don't know about you, but waiting to see if we're going to need it, a point at which it will be too late to do it, isn't the kind of leadership we need.

The Rainy-Day Fund

Governor Beshear proposes spending money that's already spent.  As we have pointed out, the "Rainy Day Fund" is scheduled to be practically bankrupted in FY 2010, with $191 million of the $226 million scheduled to be spent next year.  The Governor would spend next year's money this year, planning to replace it with cigarette tax money.

Overall, he probably won't get his tax increase, but it is a fairly bold proposal to furlough state workers for three days.  A tax increase would have to pass the legislature, and Beshear thinks a furlough would as well, although there are provisions already in state law that allow for it.  

He probably won't get the full $456 million he's proposed, but he probably won't need it...

A Too Much Spending Crisis

No, we're not talking about bailouts.  We're talking about government revenues in the first five months of this fiscal year.

In Lexington, the city has a 2.5% increase in license and permit fees, and a 3.8% increase in payroll tax receipts versus last year.

For the state:

Meanwhile, tax receipts for November released by the state budget office yesterday showed that revenues for the month were up by 5.8 percent compared to November 2007. Through the first five months of this fiscal year, General Fund revenue has grown by 2.2 percent.

The state is facing a 2.2% revenue increashortfall!

What kind of crisis is it when appropriations are down and revenues are up and you still don't expect to come out even?  A too-much-spending crisis. 

December 10, 2008

Entire State Government Running for Senate in 2010

Trey Pollard reports that State Auditor Crit Luallen strongly resists being ruled out of the US Senate race in 2010, and that Attorney General Jack Conway might announce his candidacy before Christmas.

Most observers expect Governor-Lt. Daniel Mongiardo to run in a rematch of 2004.  Many also expect Secretary of State Trey Grayson to be interested if Senator Bunning is not serious about reelection.

Governor Beshear and Ag Commissioner Richie Farmer seem to be the only statewide-elected officals not interested.  Someone better ask.

A Nice (If Unconstitutional and Half-Hearted) Gesture

As Governor Beshear readies his plan to deal with much of the projected $456 million shortfall, he announces that he will take a 10% reduction in his salary, along with Governor-Lite Mongiardo and five of his top staff.

Whether or not it is a political stunt, it is a good symbol of tough financial times and he deserves that small credit. 

It is a trifle, and one that few will hold against him, that he doesn't seem to have the authority to change his or the Governor-Lt.'s salary.  Section 74 of the Kentucky Constitution states that those salaries are set by law:

The Governor and Lieutenant Governor shall at stated times receive for the performance of the duties of their respective offices compensation to be fixed by law.

And therefore his salary is entirely in the purview of the Legislature.  Elsewhere, the Constitution forbids public officials to change their salary while in office.  But we digress.

What is disappointing is the limitation of the symbolic stunt:

Beshear, who makes $124,000 a year, said Monday that the salary cuts are not a publicity stunt but a symbolic way to show he is "willing to share the pain" in pending state budget cuts.

Still, the governor said he will not ask other political appointees in his administration to volunteer for pay cuts.

If this is a symbol for the tough times when everyone will have to take a cut, why not back up the sentiment by including more of "everyone".

Just one example would be to include a reduction in the $20,000 raise he gave his political buddy Ralph Coldiron in the Department of Homeland Security.  But according to Governor Beshear, since it's federal tax dollars, it's not real money:

Q: You talk about cuts but news stories have accounted questionable spending in your administration, such as additional dollars for some hires in homeland security.

Don’t you think that gives a bad perception of how state dollars are being handled?

Beshear: I don’t apologize for hiring qualified people that you need.

The jobs in homeland security are all federally funded so they don’t affect our budget crisis one way or another.

So it remains to be seem if Beshear really believes in the sentiment he's expressing.  He still has a chance to show us he really means it.  As Senate President David Williams put it:

"If he is truly empathetic with Kentuckians' financial situation, perhaps a more appropriate response would be to join me in holding the line on taxes."

December 8, 2008

The No-Solutions Tour

Governor Beshear has been traveling the state to talk about the projected $456 million shortfall the state is facing in the second half of this fiscal year. 

Solutions-wise, so far he's asked every state agency to plan for a 4% budget cut (which would address 82% of the projected shortfall), and he has appropriately recognized that the state can't borrow its way out of the shortfall. 

Other than that, he's got nothin'.  Expanded gambling is on the "back-burner."  He's not sure if he'll call for a cigarette tax increase (if you can believe that).

Page One comments on the governor's leadership:

Seriously. After spending 45 minutes bemoaning the state’s economy, he’s wondering if we’re going to get to the point of desperation in which we’ll need money from a cigarette tax. This from a man who campaigned on a soapbox about leadership. We don’t know about you, but waiting to see if we’re going to need it, a point at which it will be too late to do it, isn’t the kind of leadership we need.

While Page One and the Club may differ on exactly what kind of leadership we need, we can agree that his no-solutions tour seems like a waste of time and tax dollars.

Land of Opportunity

Saturday's election in Louisiana saw the defeat of indicted Congressman William Jefferson and the election of Republican Anh "Joseph" Cao to Louisiana's 2nd District.  A friend of mine in the Big Easy pointed out that this means the citizens of New Orleans now have

-a Vietnamese-American Congressman,

-an Indian-American Governor, and soon

-the country's first black President.

December 6, 2008

Election Day Again

Today is Louisiana.

December 5, 2008

Interest Groups in Force: "No Belt Tightening for Us"

The entire nation is facing fiscal hardship and, if you're not the federal government, you're probably reducing spending.  Kentucky is no exception as Governor Beshear has asked state agencies to plan for 4% cuts in an effort to address 82% of a projected $456 million shortfall.

Even when circumstances are so obvious, there is often a strong sentiment in and around government that "of course, I am the exception."

Just like state workers fight against provisions that would change health and pension benefits for future workers so that they resemble modern benefit packages in the private workforce, interests rally to exempt themselves from the cuts citizens must make in their own spending in tough times.

UK President Lee Todd was out quickly with his (wrong) numbers:

President Lee T. Todd Jr., in an interview Wednesday, said that if the 4 percent reduction is ordered by the state, it would be the eighth state funding cut since he took the helm of UK in 2001.

"At the end of my ninth year, our state funding will be $1.3 million more than when I started here," he said. "We've increased by 2,000 students since then ... and so it's just tough."

 (In reality, UK base funding was $296 million in FY2001, which was a high year, $5 million higher than FY2000 and $6 million higher than FY2002.  The Herald-Leader's Ryan Alessi reported earlier that a 4% cut represents a $13 million reduction from a base of $317 million.  Even with the 4% cut, UK base funding is up $8 million from FY2001.)

Next up, prosecutors want to exempt themselves:

Kentucky prosecutors warned yesterday that further state budget cuts could significantly disrupt prosecution of crimes and leave the state's court system in shambles.

"It's going to be chaos," said Christian County Attorney Mike Foster, a member of the Prosecutors Advisory Council, which held an emergency meeting in Frankfort yesterday. "It is the entire prosecutorial system for the state of Kentucky."

And Mothers Against Drunk Driving chime in:

Angela Crisman, state director of Mothers Against Drunk Driving, said yesterday that her organization would oppose any measures that could weaken DUI or other prosecutions.

"When DUI prosecutions are hindered, DUI crashes go up," she said. "MADD stands firmly behind prosecutors and law enforcement and the vital role they play."

This is just the beginning.  Everyone recognizes that times are tough and that everyone will have to tighten their belts.  Everyone, that is, except "me". 

December 4, 2008

An Odd Shortfall Solution: Expand Red Ink

One of Louisville Mayor Jerry Abramson's proposals to address what he claims will be a $20 million shortfall for the city is to close Otter Creek Park. 

His justification is that the park loses the city a half-million dollars annually. 

Where Mayor Abramson is looking to save that money, the state is apparently looking to spend it by bringing the money-losing park into the money-losing parks system.

Meanwhile, Governor Beshear says the state is facing a $456 million shortfall, and requesting $373 million in budget cuts from state government.

Louisville's Shortfall

Louisville's Mayor, Jerry Abramson, is searching for ways to deal with the city's projected $20 million shortfall

According to the mayor, the answer is not to use some of the city's $60 million rainy-day fund.

Also apparently not the answer: responsible financial decisions. Back in October, we discussed the $31 million giveaway by the City of Louisville, which was at a time we certainly knew the financial picture.

Talk about creating your own crisis.

Louisville Councilman Doug Hawkins asks some other questions of the Mayor in a recent e-mail:

Mayor Snubs Council

Mayor refuses to have Finance Department at Budget Committee.  None of the council’s questions were addressed.

Council given no evidence to substantiate $20,000,000 budget shortfall.

As of June 30, 2007, the city has $97,232,552 in Rainy Day Fund! (Mayor will NOT furnish current figure)

Also, Mayor has $10,000,000 in an adjustment account that should be used before cutting public safety.

 

December 3, 2008

Kentucky Tonight

On November 24th, I participated on the panel on Kentucky Tonight on KET.  We discussed the state budget and the projected shortfall.  I made the case that Kentucky's problems won't be solved by increasing the state's reliance on people smoking.

The other panelists are:

Sheila Schuster, executive director of the Advocacy Action Network
Terry Brooks, executive director of Kentucky Youth Advocates
Rand Paul, chair of Kentucky Taxpayers United

You can watch the show here.

Prevailing Wage Compromise?

Monday, we pointed out Pat Crowley's article about the tax increases on the Northern Kentucky Chamber of Commerce's legislative agenda.

Today, a much better idea is discussed: a three-year moratorium on prevailing wages for public constriction projects.  Various analysis have shown that reverting to the pre-Patton rule that prevailing wages are not applicable to public construction would save the state 17-25%.  

For the record, 12% of the capital projects portion of the current budget is $532 million.

The debt service saved from a $532 million reduction in bonding would be a significant chunk of the projected shortfall.

December 2, 2008

Update on Kentucky's 26th District

Mark Hebert reports that, in the 26th House District, the judge ordered a recount of the disputed precinct and ruled "that the election should be certified with Moore declared the winner."

Hebert notes that there is still potential for mischief:

Weaver and House democratic leaders have talked about challenging the results of the House race. That would move the decision on the winner into the full House of Representatives in Frankfort, where democrats have a nearly 2:1 advantage and could, presumably, declare the democrat Weaver the winner and seat him.

The judge's ruling should resolve any questions about who received the most votes.

Taxpayer Funded Trips

Governor Beshear isn't the only politican who likes the taxpayers to fly him around.  The Courier-Journal reports on State Legislator trips since January 2006, totaling $1.3 million.  Senator Tom Buford tops the list with 29 trips in that time, followed by Representative Bob Damron with 24, Senator David Williams with 21 and Representative Tom Burch with 19.  Here's the list

Today's Election Day

In Georgia.  Sen. Saxby Chambliss must find an extra 0.2% of the vote from the general election.  Polling has him up about 5%.  Polls are open until 7PM.  The Journal-Constitution's election page is here.

December 1, 2008

In Liberal Mind, Liberal Agenda Excuses Lack of Political Courtesy

Apparently if you’re a politician advancing a liberal agenda, you are above the need to provide common courtesy, at least according to David Hawpe. 

Recently, Governor Beshear and some other Kentucky politicians wrote a letter to President Bush regarging some federal rules about where mining companies can dump fill dirt.  David Hawpe ridicules some state legislators for wanting to represent their constituents:

First, unless I am mistaken about the way state government operates, two of those who signed those letters were elected by all the people of Kentucky, and are supposed to act on behalf of all the people of Kentucky. Beshear is not Lexington's governor, just because he was a Lexington lawyer before becoming the state's chief executive….

…Even more absurd is the notion that Yarmuth and Chandler should be required to have coalfield legislators sign off on their views about mining and the damage it continues to cause.

[State Representative Keith] Hall grumped, "I have great respect for these gentlemen, but was surprised and disappointed that they would speak on behalf of Kentucky's coal-producing counties about a subject so critical to our economic future and quality of life without contacting one legislator for input."

But it's not as if there hasn't been a big, continuing debate, in Kentucky and nationally, about mountaintop removal mining. It's not as if the industry's views, and the concerns of coal-producing counties, are a mystery.

Common tact and general good public relations would expect a governor to share with elected representatives if he were taking action that would affect their constituencies.  Mr. Hawpe however seems to fall in the common liberal trap of assuming everyone must share your worldview and scolds the legislators for wanting to be included in discussions affecting the people they were elected to represent.

It is this mindset that creates ill-will and a lack of cooperation that is a barrier to creating real change in Kentucky.

Governor Beshear has repeatedly stumbled by hard-headedly attempting to implement policy and politics without including local representatives in discussions.  The current budget shortfall is an evolving example and Senate Democratic Leader Ed Worley calls the governor out:

Worley, the Democratic leader in the Senate, said he expected the governor would have to work with lawmakers to solve the problem. Worley said he was "surprised" that talks between the Beshear administration and lawmakers had not already started.

"The executive branch cannot drive the train alone," Worley said. "This train is rolling too fast, and it's too big for them to handle just out of the governor's office."

This is counterproductive behavior, and Kentucky’s liberal editorialists are the greatest instigators.

Who is for Tax Increases?

The Northern Kentucky Chamber of Commerce.

The Governor's Budget Proposal
This is a reposting of the first article of email update sent out earlier today.  If you don't receive them, you may want to sign up.Here's the Governor's proposal:$147.1 million in spending cuts $81.5 million from a 70-cent cigarette tax...

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