Kentucky Club for Growth
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January 30, 2009

A Must Read

Here is a brief list on how to fight back against the left!

January 29, 2009

State-by-State "Stimulus" Spending

The Club for Growth pointed out this chart from the Wall Street Journal that shows state-by-state spending in the "stimulus" bill.  Kentucky falls in the middle, with considerable funding for job training and building university and school buildings, with relatively little for roads and infrastructure.  See it here.

Lexington Mayor Newberry Believes Hope Will Save Budget

Mayor Newberry gave his State of the Merged Government address Tuesday, opening with the famous Tale of Two Cities line "It was the best of times.  It was the worst of times."

Mayor Jim Newberry presented a grim picture of Lexington's finances Tuesday, yet remained optimistic about the city's short-term future during his State of the Merged Government address.

In the speech, he noted that the city faces a $27 million shortfall in FY 2010, then he listed ten proposals to move government forward:

  • Reducing the garbage tax
  • Creating a strategic plan
  • Conducting performance reviews
  • Improving the permitting process
  • Lobbying ethics reform
  • Creating new tax increment financing (TIF) districts
  • Creating neighborhood offices
  • Compiling a facilities management database
  • Expanding contracting opportunities for minority businesses
  • Encouraging job training

And in case that wasn't enough, he listed four proposals he would act on now from the city's Destination 2040, a collection of liberal ideas that edited out most pro-growth proposals provided by its board members:

  • Creating new bike trails
  • Funding the arts
  • Reducing the city's "carbon footprint"
  • Making existing office buildings more energy efficient

So his plan to address the $27 million shortfall is obvious, right?  What?  Not a single one of those proposals sound like $27 million saved to you?

Well, here's Newberry's plan to deal with the expected shortfall (I've added emphasis):

Beyond our financial challenges, we have both enormous opportunity and enormous challenges in 2009 as a result of President Obama’s American Recovery and Reinvestment Plan. If adopted in its current form by Congress, we will have access to unprecedented financial resources for improving our civic infrastructure. As we gather today, the precise contents of the legislation remain uncertain, but the general parameters of the bill are exciting. Substantial funding will be made available directly to cities through the Community Development Block Grant program, various public housing initiatives, and the Energy Efficiency and Conservation Block Grant program.

[snip]

While it is a complicated proposal, just remember this simple fact: the recovery plan is a once-in-a-lifetime opportunity to fix many of the infrastructure problems which have been neglected for far too long. We are fortunate to have a President and a Congress that understands the crying need to invest in our cities, and I thank them for their efforts to address these pressing needs.

No need to detail how you're going to maintain a fiscally responsible budget in the face of a shortfall if you can depend on the feds to bail you out.  (Or run your business responsibly, for that matter...)

"Stimulus" Bill Passes House, All Republicans and 11 Democrats Oppose

The Club for Growth reports:

Zero Republicans Vote for Stimulus

The House passed the trillion dollar stimulus package last night with ZERO Republicans voting for it. In fact, there was bipartisan opposition to the plan with 11 Democrats voting NO as well.

Much like the Clinton tax hike of 1993, the Democrats now "own" this massive spending bill.

Additionally, eleven Democrats voted against it.  From Politico:

Here's a list of the House Democrats who voted against the economic stimulus. The bill passed on a 244-188 vote.

Allen Boyd (FL),
Bobby Bright (Ala.)
Jim Cooper (Tenn),
Brad Ellsworth (Ind.)
Parker Griffith (Ala.)
Paul Kanjorski (Pa)
Frank Kratovil (Md)
Walt Minnick (Idaho)
Collin Peterson (Minn.)
Heath Shuler (N.C.)
Gene Taylor (Miss,)

(Neither of Kentucky's "fiscal hawk" blue-dog dems on this list...)

On Monday, the Club for Growth described the job-destroying effects of the stimulus package:

The billions of dollars in projects contained in the stimulus bill must come from someplace. It doesn’t grow on trees, and it won’t materialize out of thin air. This money comes straight out of the private sector where it would be spent far more efficiently than anything the government will attempt. Already we are seeing the inefficiency and waste that plagues the government spending process—with pork projects being slipped in by the thousands.

“After months of promising ‘change,’ the pork-filled stimulus bill looks like business-as-usual on steroids,” said Club for Growth President Pat Toomey. “Can anyone really argue that spending money on a water park in Miami and a beach in New Jersey will stimulate the economy?”

Read the rest here.

Want to know what else is in the bill?  The Wall Street Journal reports that it is a 40-year wish-list of pent up liberal favorites:

This is a political wonder that manages to spend money on just about every pent-up Democratic proposal of the last 40 years.

We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.

In selling the plan, President Obama has said this bill will make "dramatic investments to revive our flagging economy." Well, you be the judge. Some $30 billion, or less than 5% of the spending in the bill, is for fixing bridges or other highway projects. There's another $40 billion for broadband and electric grid development, airports and clean water projects that are arguably worthwhile priorities.

Add the roughly $20 billion for business tax cuts, and by our estimate only $90 billion out of $825 billion, or about 12 cents of every $1, is for something that can plausibly be considered a growth stimulus.

So in fact, the bill is a massive reapportionment of federal outlays (graphs) over five years that is more likely to crowd out entrepreneurship than create immediate commerce. 

January 28, 2009

Reporter Bad at Identifying Spending

One of the difficulties fiscal conservatives face is that many in the media who cover legislation don't even know what spending is.  For example, in today's Herald-Leader, Beth Musgrave writes a story about social service legislation.  Here's an excerpt:

Still, youth advocates are pushing three key pieces of legislation that call for no additional money — increasing the high school drop-out age to 18, putting caps on the interest rates for payday loans, and decreasing the number of children locked up in state juvenile detention facilities for skipping class or other unruly behavior.

Of the three proposals, the second may be anti-personal responsibility but it doesn't cost the general fund, and the third probably saves money.

But the first, raising the dropout age, requires significantly more spending.  Without entering into a discussion about whether it is a good or bad proposal, if the legislature acts in a way that would keep more students in the school system than would otherwise be there, then the state is going to have to spend more for more students.  It is not something that calls "for no additional money."  In fact, it calls for over $11,500 for every three students that are kept in school who would otherwise have opted out.

Again, I'm not commenting on the worthiness of the proposal, just that something that costs over $100,000 for every 26 students affected shouldn't be reported as having no cost to the budget and the taxpayer.

More Indications that the Cigarette Tax is Dead

Yesterday we wrote that Governor Beshear's increased attention to spending cuts may indicate he has given up on a cigarette tax increase:

Where he earlier asked for agencies to plan for a 4% reduction, he's now asked for them to plan for bigger reductions.  One agency says that they're planning for 6.7%....

Does this mean he's given up on increasing cigarette taxes?  $246 million more than covers the shortfall the would result from flat revenue ($215 million), and is $200 million more than the $45 million shortfall that would result from the current 2% increase.

Now we learn that in three hours of meetings between the Governor and House and Senate leadership, the cigarette tax wasn't even discussed:

Beshear said yesterday that he did not discuss the cigarette tax with legislators.

Later in the afternoon, House and Senate leaders met without the governor for about two hours.

House Speaker Greg Stumbo, D-Prestonsburg, said legislators did not discuss the cigarette tax.

Finally, advocates are working on building support for the cigarette tax increase now, indicating that it needs support to be resurrected in the conversation.  If the tax were already part of the discussion, the time for advocacy would be when the vote came to the House floor.  Instead the Kentucky Council of Churches tells us in an email alert:

Legislators are receiving numerous contacts from an organized opposition against a tax increase. This is the time when the "closed door" meetings are occurring which will likely significantly influence whatever proposed amount makes it into the House bill that will move to the Senate.

If tax-increasing advocates are afraid of cigarette tax discussions in closed-door meetings, and we know there aren't any tax discussions in those closed-door meetings, then I think that's a pretty good indication of where the cigarette tax increase stands.

Americans Worried About Too Much Government Spending

From the Club for Growth:

59% Fear Too Much Government Spending Is Coming

A new Rasmussen Reports poll warns that "Fifty-nine percent (59%) of U.S. voters worry that Congress and President Obama will increase government spending too much in the next year or two."

On taxes, they're not worried. "Only 17% . . . are more worried that Congress and the president will cut taxes too much."

I'm with the 59%.

 

January 27, 2009

More Scary Revenue Fictions

We've written about Frankfort's spending problem and how state revenues are likely to grow in FY 2009.  In our last post on state revenues we noted that "the state must average a 7.5% reduction in revenues over the last half of the year" to meet the projection of a $456 million shortfall, yet Governor Beshear continues to use the $456 million number. He's not the only one.  In a recent meeting, Senate President David Williams said:

the projected $456 million shortfall is “an accepted figure” that lawmakers are trying to address.

State revenues are currently growing at more than 2%, and

State General Fund revenues look like they'll end up somewhere between 1% and 2% growth, not the forecasted 2% decline.  The fact that 1%-2% revenue growth would leave the budget with a $45 million to $130 million shortfall still points to a spending problem in Frankfort.

Nonetheless, it's probably time for the Governor to stop trying to scare people into tax increases and casinos.

Beshear hasn't stopped pedaling this worst-case fiction, but he's expanded on it. Where he earlier asked for agencies to plan for a 4% reduction, he's now asked for them to plan for bigger reductions.  One agency says that they're planning for 6.7%.  If that were across-the-board (it's not), that would represent $578 million in cuts.  If a 4% cut represented $147 million in cuts, 6.7% would mean a $246 million reduction.

Does this mean he's given up on increasing cigarette taxes?  $246 million more than covers the shortfall the would result from flat revenue ($215 million), and is $200 million more than the $45 million shortfall that would result from the current 2% increase.

And there's reason to believe revenues are not about to disappear.  Here in Lexington, revenues are up 4.1% so far, including a 2% increase in payroll taxes.

So there's still reason to believe general fund revenues are going to be fine.  Let's hope President Williams keeps his word and uses this opportunity to address the spending problem, creating a more stable budgeting foundation for the future.


January 26, 2009

The Races: Hughes v. Reynolds, Senate 32, Ad Update

Republican candidate for the 32nd Senate district, J. Marshal Hughes, says he will hold the line on taxes in his first ad.  We look forward to holding him to it.  Here's the ad:

 

Hat Tip: Page One Kentucky

More Curious Rulings of the Franklin Circuit

The Franklin Circuit has been ruling that that the General Assembly does not operate in its own time zone.  More specifically, it has ruled that bills not delivered to the Governor before midnight April 15th are invalid according to the Constitution.

The Constitution clearly states that April 15th is the last day the legislature is allowed to meet, but there is plenty of room to argue over other details, and the ruling that April 15th is the deadline to deliver bills to the Governor's office raises plenty of questions.

Is April 15th really the time limit to enroll legislation to the Governor's office, or just to vote on legislation, or to enroll it in both chambers?  The LRC operates year-round, so which of these actions are actions of the Session, and which are actions of the year-round staff?  If the Governor is not in the office to receive enrolled bills, does that mean the Governor can determine the last moment available for legislative action on a bill?  Can a Governor scuttle legislation by not having his office open to receive legislation passed on the 15th?  If the legislature has jurisdiction over setting time zones, can't they just trump the clock?

The Franklin Circuit most recently ruled that the legislatively-passed six-year road plan (which authorizes which roads to build over the next two years) was invalid.  Interestingly, the Circuit ruled that while the Governor is bound not to make changes to the plan, he is bound to the plan he submitted to the legislature at the beginning of session, not the last legislatively-passed road plan.  Which raises other questions: Is the Circuit saying that the General Assembly is required to approve or disapprove the Governor's submission?  Does not inaction on the Governor's submission equate with disapproval?  Can the Governor now forever game the system by submitting his plan late in the session where the legislature doesn't have time to act?

The Franklin Circuit has shown a bias towards Governor Beshear in other opportunities in his term (and perhaps a bias against Governors of the other party in previous administrations).  While the deadline for validity of midnight, April 15th makes some sense, very little else does.  It will be interesting to see if this ruling suffers the same fate as the last.

Monday Last Week Catch-up

President Obama, in between swearings-in, made a fine speech about a new era of responsibility and no longer putting off difficult decisions.  For five minutes, however, he proclaimed conservative ideas dead, saying those who cared about the size of government were cynics who were putting forth stale political arguments and failing to notice the ground moving beneath their feet, and that it is a common good if the government extends the prosperity of the prospering to the non-prospering.

The former leadership of the Bluegrass Airport is now officially under criminal investigation. Some employees working in departments managed by relatives, in violation of airport nepotism policies, resigned.

Kentucky's colleges are only now trying to help establish statewide standards, for high schools at least, in an effort to reduce remediation, and Governor Patton is now the chair of CPE, still trying to implement the changes he put through the legislature in 1997.

Sen. Jack Westwood has put forward legislation to allow home-schooled children to participate in public scool sports, a la Tim Tebow.

Some businesses in downtown Lexington are fighting modern parking meters.  One the one hand, they take credit cards, making it easier to pay (and easier to jack-up prices).  On the other, it's farther from your car and a little more confusing.  See what you think.


January 23, 2009

The Discarding of Tired Ideas

The Wall Street Journal takes President Obama up on his inaugural rhetoric and proposes a repeal of the federal prevailing wage law.  David Adams posts:

Using Obama's rhetoric against Beshear

The Wall Street Journal's idea for saving $40 billion in the Obama bailout of states is Kentucky's idea for saving the Commonwealth $130 million a year.

It's as simple as eliminating the requirement of prevailing (union) wages for public construction projects.

In his Inaugural Address yesterday, as WSJ notes, Obama urged setting aside "worn-out dogmas" and the paper encouraged him to follow his own advice with regard to union-enforced waste.

Beshear should be told that same dogma won't hunt in Kentucky.

 

January 22, 2009

Beshear Casino Love/Hate

Not content with being told by the appeals court that he has no jurisdiction, Governor Beshear has chosen to continue his case to regulate the internet (see below).

Beshear de la Manchia
(from the C-J's Dan Fitzgerald)

January 21, 2009

Appeals Court Rules Out Internet Domain Seizure & Franklin Circuit Judge Wingate

We have been following Governor Beshear's ridiculous plan to control the Internet for some time now.

At our last update, the Kentucky Court of Appeals had stepped in to remove the case from the jurisdiction of the Franklin Circuit Court.  Now the Court of Appeals has amusingly ruled both on the case and on Judge Wingate.

First, the Court of Appeals ruled that the state lacked jurisdiction to seize the domain names.  We have yet to see the ruling, but the report notes disappointingly that the lack of jurisdiction is due to the lack of legislation declaring a domain name to be a gambling device.  We would prefer to see an acknowledgment that the state of Kentucky lacks jurisdiction to censor domain names.

Secondly, the court ruled that "a Franklin Circuit Court judge cannot hold further hearings on the issue."  To have the case removed from his hands and then a ruling that he is not to dally in the case again has to be somewhat embarrassing for Judge Wingate.

 

January 20, 2009

Inauguration Day

Inauguration day reflects the freedom that is the core of what is right and good about our country.  Whatever ideas come with a new president, good and bad, today is a day that reminds us our system works.  Good luck to President Obama.

January 16, 2009

Creating Unemployment With Kentucky's Unemployment Tax

A few weeks ago, we noted that Kentucky's unemployment tax is burdensomely self-fulfilling.

According to the Tax Foundation's 2009 State Business Tax Climate Index, Kentucky has the third-worst unemployment insurance system in the country.  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.

We noted:

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.

Now we get to see the unemployment-creating tax in action.  The state's reserve has dwindled to a mere two weeks of payouts, a situation that automatically triggers rate increases.  Jack Brammer buries the lede:

The fund's low balance will also trigger automatic increases in contributions made by employers. Mountjoy said the increase kicked in for the first three months of this year due to a 1982 state law that was triggered when the unemployment fund fell below $150 million. It will bring in an additional $36 million to the fund this year, Mountjoy said.

Though Mountjoy maintained it's difficult to say how much a business' contributions will increase, she offered some general examples.

A business that employs several thousand might have to pay an extra $5,000 a year, while a business with about 300 employees might have to pay an extra $1,250. A business with two employees might have to pay about $45 more.

Unemployment is high because businesses are struggling to make ends meet.  The result of this tough situation is automatic higher taxes, an increase to what are already some of the highest rates in the country.  Businesses are laying off employees because it is tough to afford them and the state is making it even harder.

Beshearo is once again showing his love for more government by creating a task force, but the legislature is in session now.  Kentucky needs a new system, and there are 47 models of better ones.

January 15, 2009

State Pension System Still a Crisis

Last year, the legislature met to shuffle the deck chairs on the state's $27 billion unfunded pension obligation.  Instead of enacting serious reform, all they ended up with was a committment to make adequate contributions to the system. 

Since then, the funding shortfall has grown $3 billion to a $30 billion total, which only accounts for the bad economy through June.

So the liability's grown, the legislature has taken action without significant reform, and the funding commitment is probably inadequate to the new, larger, liability.

To top it all off, Governor Beshear is supporting legislation to back off the commitment to funding.

Bluegrass Beacon columnist Jim Waters calls Governor Beshear out:

Now that the election's over, Beshear — who took preelection political credit for arm-twisting legislators into agreeing to lukewarm pension-reform measures — now backpedals faster than a bicycle-riding clown under a circus big top.

County governments only paying one-third of the money needed and getting twice as long to start paying full freight significantly impacts Kentucky's retirement systems, which already face a combined $29-billion shortfall. Allowing counties to delay full payment gives the state's retirement systems less money to invest and less interest to gain.

Beshear justified his "lost interest" in pension reform by expressing hope that the economy would recover enough in the years ahead to save the pension system.

Can you imagine if corporate chief executive officers ran businesses on hope?

"That's crazy," said Warren Rogers, president of W. Rogers Company, a general contracting firm in Lexington. "That's no reform at all. Uncertainty like that would run my company out of business."

Which is why smart companies in the private sector have addressed pensions.

January 14, 2009

Moving Away From Unions, Literally

From Dr. Mark J. Perry via the Club for Growth:

People are migrating to right-to-work states and leaving those that aren't.  From Dr. Perry:

The eight states enjoying the greatest net in-migration of people from other states between 2000-2008 all have Right to Work laws. But of the eight states suffering the worst out-migration, only Katrina-hit Louisiana has such a law (see chart below).

 

The Final Days of CATS as We Know It

When the CATS testing system was introduced, it was a new approach to identify failing schools and create some accountability in the system.  Since then, it has not evolved with the times. 

While CATS can serve as an evaluation of schools, it does not provide data that would enable individual student tracking, information that would be valuable to help identify kids that need help before they fall too far behind.

But CATS doesn't even serve as a good measuring stick for schools in Kentucky, as scores have been inflated, once purposely. It doesn't even serve as a standard anymore.

If it's not a standard, then "teaching to the test" really is a diversion.

Senate President David Williams has boldly called for an end to the CATS testing system, to replace it with an existing testing system that would allow individually meaningful scores for students.  He combines this call with a demand to review the curriculum, especially for math, to make sure that the fundamentals are being taught "deeply" and we are not spreading ourselves thin with a broad but shallow survey.

Education takes up 43% of general fund appropriations.  If we want to budget responsibly, the largest portion of the budget can not be "held harmless."

Williams suggests CATS costs at least $35 million a year.  This week, State Auditor Crit LuAllen released an assessment that it costs at least $18 million, but she really doesn't know because our education finance accounting system is so bad that she really can't assess what local governments spend.

The State Auditor can't even tell us what the state is spending in the largest part of the budget.  It's time for some reform.

January 13, 2009

Beaten to the Coldiron Punchline

As soon as we had written this post, we see the following story on Kentucky.com:

Coldiron quits Homeland Security post

The article reports that his raise was probably a violation of state law:

Beshear named Coldiron in November as executive director of the Office of 911 Coordinator and administrator for the Commercial Mobile Radio Services Board, which is attached to Homeland Security.

The CMRS Board advertised the job with a salary range of $60,000 to $80,000 a year, in line with what past directors were paid. But after Beshear gave the job to Coldiron — who was a friend and business partner of Beshear’s chief of staff, Adam Edelen — the governor immediately raised the pay to $100,000.

Under state law, only the CMRS Board can set the director’s salary. CMRS Board Chairman David Lucas on Tuesday confirmed the law and said that nobody on his board realized Coldiron was making $100,000 until they read it in the Herald-Leader in December. The governor’s office did not consult the CMRS Board, Lucas said.

After the Herald-Leader asked Coldiron and Beshear’s office about the law, Coldiron submitted his resignation, effective Jan. 30.

From our last post:

"To say that my salary had anything to do with my real-estate investment is ridiculous and absurd," Coldiron said. 

Ridiculous and absurd.

Don't forget that, with the hiring freeze in place, all hires have to come through the Governor's office, so said Governor Beshear last night on Kentucky Tonight. 

Leaning across Greg Stumbo, Senate President David Williams half-jokingly replied that Governors have been indicted for less...

 

Smoking Taxes, Smoking Bans

A subplot to the fake $456 million shortfall is Beshear's off-again, on-again proposal for a $0.70 cigarette tax increase.

We've pointed out how unlikely a $0.70 cigarette tax increase is to pass, and we've noted our approval of Senate President David Williams' rhetoric that he won't entertain a tax increase until he can convincingly show a serious commitment to reducing spending in all elements of the state budget.

The likelihood of its passage seems to continue to diminish as legislators like State Rep. CB Embry, Jr. point out their opposition, and Speaker Stumbo is afraid to even call it a tax

However unlikely a cigarette tax increase is, there are few honest arguments for it.  Increasing the tax to plug a revenue hole means the government revenues are increasingly dependent on people doing something they ought not be doing, or so says the original assumption.

Senate President David Williams, recognizing this contradiction, has suggested that he would support a statewide ban on indoor smoking.  His suggestion certainly threw advocates, Beshear and Stumbo for a loop as they attempted to continue to justify their attempt to expand taxing and spending.

The spenders are now more exposed than ever.  State revenues are growing, not declining.  We aren't advocates of a ban, but if smoking is bad, why depend on people doing it?

What excuse will they find next to raise taxes on Kentuckians?

Burying the Lede on the Edelen-Babbage-Coldiron Story

John Cheves has been busy over at the Herald-Leader, digging into the finances of the Lexington airport and attempting to find intrigue in the relationship between Adam Edelen, who is Governor Beshear's chief of staff, and Bob Babbage, Frankfort's most well-paid lobbyist.

Edelen and Babbage are business partners, but I can assure you that Babbage is one of the most powerful lobbyists in Frankfort regardless of whether his business partner is the governor's chief of staff.

The real intrigue is between Edelen and the third business partner, Ralph Coldiron.  You probably remember Coldiron from his $20,000 raise after being appointed into a position in Kentucky's Office of Homeland Security.

Cheves buries the juicy details he dug up at the bottom of his story:

Even as Babbage lobbied the Beshear administration last year, he and Edelen sent a stream of unhappy e-mails to each other — and to another man, Ralph Coldiron — about a large house the men built in Bourbon County for which they could not find a buyer. They finally sold it in December for $530,000, far less than they wanted.

Coldiron in particular complained in e-mails throughout the fall that he was hurting financially and lacked a steady source of income. "I need to keep cash coming in the door," Coldiron wrote to Edelen on Oct. 6.

Weeks later, Beshear appointed Coldiron to a political job in the state Office of Homeland Security and arranged for an immediate pay raise from $80,000 to $100,000 a year.

"Thank you very much!!!!" Coldiron wrote to Edelen on Oct. 22, after Edelen confirmed that he had signed the hiring paperwork.

But Edelen's friendship and business ties with Coldiron were not the reason he was hired or given the $20,000 raise, Blanton said Monday. Coldiron said the same thing, adding that his e-mails to Edelen were only to hurry the paperwork along.

"To say that my salary had anything to do with my real-estate investment is ridiculous and absurd," Coldiron said. 

Ridiculous and absurd.

Don't forget that, with the hiring freeze in place, all hires have to come through the Governor's office, so said Governor Beshear last night on Kentucky Tonight. 

Leaning across Greg Stumbo, Senate President David Williams half-jokingly replied that Governors have been indicted for less...

The Races: Hughes v. Reynolds, Senate 32 Special

In the special election to replace State Senator-turned Congressman Brett Guthrie (R), Republican J. Marshall Hughes will face Democrat Mike Reynolds.

Hughes is an attorney and longtime friend of Senate President David Williams and Republican Party activist.  He places "being fiscally conservative" at the top of his list.  Being so closely aligned with the Senate President, Hughes is not likely to make the very top of the Kentucky Club for Growth's scorecard, but it's very likely he won't disappoint fiscal conservatives either, especially with President Williams' current "we need to spend responsibly first" rhetoric.

Reynolds is also an attorney.  He has not yet put forward strong positions on the issues, but seems to have few reservations about spending taxpayer money:

“Look at any headline ... and the unemployment numbers are depressing,” he said.

Reynolds said he is working with his cousin, Christina Reynolds - who was a member of Barack Obama’s campaign team - about how states can create jobs with the proposed federal economic stimulus package.

Instead of suggesting how to create jobs in Kentucky by providing leadership to make the commonwealth a more attractive place to do business, his first instinct is to rely on the federal government to spend future taxpayer dollars.  That instinct does not suggest a commitment to fiscal responsibility.

Other issues in this race will center around expanded gambling, which Hughes opposes, and Hughes' indictment by Greg Stumbo for conspiring to hire inappropriately in the Fletcher administration even though he was never part of the administration.

The election is February 10.

There's Too Much

There's just too much to blog about with a new session and a new year.  We'll try to throw a bunch of overdue coverage out here today, and then get going on what's going on in Frankfort...

January 12, 2009

December Revenues Not Down

Contrary to our earlier post based on a statement by President David Williams on Kentucky Tonight, the state's December General Fund revenues were up 1.3%, or $11.3 million. 

In December, sales and use tax receipts grew at a strong 5% clip, yanking the year-to-date figure up from 0.8% to 1.5%.

In order to reach the $456 million shortfall projection:

"receipts must decline 7 percent over the last six months of fiscal year 2009."

That's if you round down.  Really, the state must average a 7.5% reduction in revenues over the last half of the year to meet that projection.  Yet on Thursday night, speaking to the Kentucky Chamber of Commerce, Governor Beshear was still using the $456 million figure.  

State General Fund revenues look like they'll end up somewhere between 1% and 2% growth, not the forecasted 2% decline.  The fact that 1%-2% revenue growth would leave the budget with a $45 million to $130 million shortfall still points to a spending problem in Frankfort.

Nonetheless, it's probably time for the Governor to stop trying to scare people into tax increases and casinos.

January 9, 2009

House Committee Chair Comments

Starting from the top:

Agriculture and Small Business: Rep. Tom McKee (2008 Ranking: #49) retains his chairmanship.

Appropriations and Revenue: Rep. Rick Rand (#71) takes over the most powerful gavel in the House from Rep. Harry Moberly (#92), who retains only the mostly meaningless title of Vice-Chair.  Rep. Robin Webb (#69) leap-frogs Moberly to remain the position of "First Vice-Chair".  The position was mainly established to create a bit of a succession plan due to the health problems of Rep. Moberly, so it remains to be seen what exactly the title means now.  Presumably, Rep. Webb will have a significant degree of influence, having been more heavily immersed in the budget process than the new Chairman.

Rumors have suggested that the Chairmanship was offered to Rep. Tommy Thompson (#49) of Owensboro and he declined, which, if true, would be a strong suggestion that he intends to contest the 8th Senate District when Sen. Boswell retires.

It is also worth noting that the Republicans on this committee are generally the lowest-ranked Republicans on our scorecard.  Reps. Rader (#20), Higdon (#21), Ford (#24) and Turner (#26) are in the bottom half of Republicans and Reps. DeWeese (#32 of 36 R's) Brinkman (33/36), Butler (34/36), Napier (35/36), Siler (36/36) make up the bottom of the Republican list.  Rep. Jamie Comer (#9) is the only member of the committee who received a satisfactory grade over 70 in 2008.

Banking & Insurance: Rep. Jeff Greer (#44) replaces Rep. Tommy Thompson (#49).

Economic Development: Rep. Ruth Ann Palumbo (# 76) retains her chairmanship.

Education: Rep. Carl Rollins (#78) replaces Rep. Frank Rasche (#76) who retired to join the Department of Education.

Elections, Constitutional Amendments & Government Affairs:  Rep. Darryl Owens (#86) retains his chairmanship.

Health & Welfare: Rep. Tom Burch (#96) retains his chairmanship.

Judiciary: Rep. John Tilley (#62) becomes chair, replacing now-Senator Kathy Stein (#70).  Rep. Tilley was not formerly a member of the Judiciary Committee, leading us to wonder exactly what legislation Speaker Stumbo needs to run through this committee.  Judiciary would not seem to be the proper venue for his expanded gambling legislation.

Labor & Industry: Rep. Rick Nelson (#48) becomes chairman of the committee known to conservatives as "Labor & Labor".  He replaces Rep. Mary Lou Marzian (#96), who was a strong ally of Rep. Joni Jenkins (#98) in her failed bid to oust Speaker Pro Tem Larry Clark (#62).  As with past chairmen, Rep. Nelson is a strong ally of organized labor with a pro-union voting record who has lead in efforts to organize state employees.

Licensing & Occupations: Rep. Dennis Keene (#40) replaces Rep. Jenkins (#98), who, as we mentioned, failed in her bid to unseat the House Speaker Pro Tem.  Rep. Jenkins received the second-lowest ranking on our scorecard, and is replaced by one of the highest-ranking Democrats in Rep. Keene.

Local Government: Rep. Steve Riggs (#43) retains his chairmanship.

Natural Resources & Environment: Rep. Jim Gooch (#36) retains his chairmanship.

Seniors, Military Affairs & Public Safety: Rep. Tanya Pullin (#49) retains her chairmanship.

State Government: Rep. Mike Cherry (#78) retains his chairmanship.

Tourism Development & Energy: Rep. Eddie Ballard (#42) retains his chairmanship.

Transportation: Rep. Hubie Collins (#78) retains his chairmaship.

House Shakes Up Committee Chairs

Following the shakeup in House leadership, many House committees have new Chairmen.  Here's the list, analysis to follow:

  • Rick Rand D-Bedford, Appropriations and Revenue Committee
  • John Tilley, D-Hopkinsville, Judiciary Committee
  • Carl Rollins, D-Midway, Education Committee
  • Rick Nelson, D-Middlesboro, Labor and Industry Committee
  • Jeff Greer, D-Brandenburg, Banking and Insurance Committee
  • Dennis Keene, D-Wilder, Licensing and Occupations Committee
  • Tom McKee, D-Cynthiana, Agriculture and Small Business Committee
  • Tom Burch, D-Louisville, Health and Welfare Committee
  • Ruth Ann Palumbo, D-Lexington Economic Development Committee
  • Darryl Owens, D-Louisville, Elections, Constitutional Amendments and Intergovernmental Affairs Committee
  • Steve Riggs, D-Louisville, Local Government Committee
  • Jim Gooch, D-Providence, Natural Resources Committee
  • Tonya Pullin, D-South Shore, Seniors, Military Affairs and Public Safety Committee
  • Mike Cherry, D-Princeton, State Government Committee
  • Eddie Ballard, D-Madisonville, Tourism, Development and Energy Committee
  • Hubert Collins, D-Whitinsville, Transportation Committee


Two Attorneys to Contest Kentucky's 32nd Senate Seat

The GOP has selected its candidate to replace US Representative Brett Guthrie in the Kentucky Senate's 32nd district.

J. Marshall Hughes, a Bowling Green attorney will contest the race for the GOP.

The Democrats meet tomorrow to select their candidate, most likely attorney Mike Reynolds

The election will be held February 10.  This should not be a difficult seat for the GOP to keep, but both candidates are capable of and likely to self-fund, which could make the race somewhat expensive.

January 8, 2009

Sources: Beshear's All-In on Big Government

I'll try to find out more details, but I'm hearing reports that Beshear isn't content with advocating a cigarette-tax hike but is also looking to raise the sales tax.   Stay tuned...

UPDATE: Well, I'm not sure it disproves the headline, but there is no serious discussion about raising the sales tax.

At an event in Lexington this morning, the governor's Chief of Staff Adam Edelen recited a speech that I've heard before.  In it he explains that state government needs to spend more and that expanding government is more important than "cheap smokes."  Elaborating on the need to raise the cigarette tax and "grow this thing,"  he mentioned that it is his desire, longer-term, to raise the sales tax in Kentucky. 

Beshear may not get much right, but I bet he'll get his Chief of Staff to stop saying that.

Lexington's Airport Soap Opera

You really have to read the whole thing to appreciate it.  But I'll attempt to highlight the most ridiculous aspects.

It all started when airport executive director Michael Gobb charged inappropriate things like $4500 at a Texas strip club to the airport's credit card, and was found to be falsely approving expenditures.  He resigned.

Now airport board chairman Bernard Lovely is under fire for lax oversight in the matter.  The city council got fired up and unanimously voted for him to step down. 

Lovely refused to step down, ignoring the council's wishes!  The Nerve!  Huffy Vice-Mayor Jim Gray is in a huff:

Vice Mayor Jim Gray called Lovely's decision to continue his involvement with the airport "an act of defiance toward the elected representatives of the people."

"It's very unfortunate, and it's harmful to both the investigation and the institution," Gray said. "... This board was responsible for the airport's oversight and there's clearly enough evidence today to point to a lack of effective oversight. To pretend otherwise is insulting to the collective intelligence of this community."

The punchline?  Lovely's term ends Tuesday.  In five days, he will step down anyway.

In the meantime though, the board isn't sitting idle.  They've gone and "hired a Washington D.C. public relations firm that often specializes in crisis management to speak for Lovely and the airport, which already has two spokespeople on staff."

Here's what the new spinmeister had to say on the five-more-day chairman's behalf:

Lovely "feels like he's the one conducting a lot of oversight now," said David Wescott, a vice president of APCO Worldwide and the new spokesman for Blue Grass Airport. "It's unfortunate that when he steps up in oversight to reveal the details he did, he is now asked to step aside."

Lexington is such a hard town.

January 7, 2009

Taxpayer Champion Stan Lee Replaced as Republican Whip

Representative Stan Lee, the only two-time recipient of the Club's Defender of Economic Freedom Award, was replaced in the roll of Republican Whip by Representative David Floyd.

Mark Hebert reports:

Lee is an outspoken conservative, unsuccessful candidate for Attorney General and frequent target of newspaper editorial writers, tells me his fellow GOP House members thought Floyd was more "even tempered" and added "when you stick your head up out of the gopher hole, people shoot at you."

The Club for Growth greatly appreciates Representative Lee's leadership, "sticking his head up out of the gopher hole" on behalf of the Kentucky taxpayer.

While Representative Lee has the highest lifetime score with the Kentucky Club for Growth, ranking 1st in 2007 and 2nd in 2008 with a score over 90 both years, Representative Floyd has received good marks as well.  Representative Floyd ranked 5th in 2007 and 4th in 2008 with a score of 83. 

We congratulate Representative Floyd, and expect that he'll continue to be a champion of the taxpayer.

With Floyd replacing Lee, the Whip remains the only House Republican leadership position held by members with a satisfactory score above 70.  The scores of Floor Leader Jeff Hoover (57) and Caucus Chair Bob DeWeese (52) do not demonstrate a committment to protecting taxpayer dollars.  Rep. DeWeese's ranking of #32 is two spots ahead of new Democratic Caucus Chair Bob Damron (#34).

January 6, 2009

Stumbo New House Speaker; Most Liberal Member Out of Leadership

House Democrats shuffled leadership on Tuesday, electing former Floor Leader Rep. Greg Stumbo (2008 rank: #88, 2008 score: 23) as Speaker of the House.  Stumbo will replace Jody Richards (#78, 24).

Rep. John Will Stacy (#78, 24) was elected to fill the post of Whip, which was vacant after the retirement of Rep. Rob Wilkey (#38, 45).

Interestingly, in the Caucus Chair race, Democrats have replaced their most liberal member with their most conservative. Rep. Bob Damron was elected to his old position of Caucus Chair, over incumbent Rep. Charlie Hoffman.  In 2008, Rep. Hoffman ranked at the bottom of the House in our scorecard, #99, with a paltry score of 13.  Rep. Damron, on the other hand, was the highest ranking of any Democrat (#34, 46) ahead of three Republicans, and not too far off from Republican Floor Leader Jeff Hoover (#28, 57). 

Rep. Rocky Adkins (#78, 24) will remain as Democratic Floor Leader and Rep. Larry Clark (#62, 30) will remain Speaker Pro Tem.

Special thanks to Page One for keeping us posted.

House Leadership Vote Happening Now

Earlier, the Republicans met and elected Rep. David Floyd as R. Whip.  More on that later.

Right now the Democrats are voting, with results expected around 5:00 or so.

Pat Crowley reports that Rep. Arnold Simpson is no longer in the running for Dem. Whip.

One Change in Senate Leadership

The House has not yet met, but Senate caucuses met and kept leadership largely the same in both parties.

2009 Republican Leadership (2008 Ranking, score)

President - Sen. David Williams (19, 70)
President Pro Tem - Sen. Katie Stine (1, 82)
Floor Leader - Sen. Dan Kelly (11, 71)
Caucus Chair - Sen. Dan Seum (7, 74)
Whip - Sen. Carroll Gibson (11, 71)

2009 Democratic Leadership (2008 Ranking, score)

Floor Leader - Sen. Ed Worley (31, 48)
Caucus Chair - Sen. Johnny Ray Turner (24, 58)
Whip - Sen. Jerry Rhoads (31, 48)

Sen. Rhoads as the Democratic Whip is the only change from 2008.  He replaces Sen. Joey Pendleton in that position.  Sen. Pendleton ranked only slightly higher than Sen. Rhoads in 2008 (28, 52), so the change in personnel does not reflect any change in policy.

December Revenues Down

Last night on Kentucky Tonight, Senate President David Williams said that the state's December revenue report would show a year-on-year decrease of about 1%.  The report probably won't be out publicly until Friday or Monday, but December's decrease would lower the 2.2% growth in revenues we have see so far.

Even with the decrease, revenues will still be ahead this year, and the legislators on the show were in general agreement that the "shortfall" is likely to be over $100 million less than Governor Beshear's (and the CFC's) projected $456 million.

Addressing the budget shortfall is likely to consume most of the attention of the short 2009 session.

While President Williams would not rule out tax increases last night, he did repeat a mantra that he wouldn't even entertain the idea without first agressively pursuing efficient spending throughout the whole budget, specificaly mentioning Medicaid, education and corrections.  That's a good sentiment for the Kentucky taxpayer.

January 5, 2009

Flirting With Disaster

Much has been written about the race for the House Speakership between liberal Democrats Jody Richards and Greg Stumbo.  There isn't really any good guess about who will win tomorrow.  As Rep. Eddie Ballard put it:

"You talk to them, and one has 43 votes and the other has 40," said Rep. Eddie Ballard, a Madisonville Democrat who is supporting Richards. "Well, there ain't but 65 votes."

Generally, when Jody Richards says he has the votes and his opponent says they have the votes, bet on the opponent.  But there's no way to know until the votes are cast.

Surprisingly (to me anyway), Stumbo's campaign isn't just against Richards, it's also against House Appropriations and Revenue Chairman Harry Moberly.  

Additionally, [Stumbo] said Moberly would have to change his way of doing business as head of the Appropriations and Revenue Committee if he wants to keep the post he's held since 1995.

"I think Harry has too much control. He's had carte blanche veto power and he's a bit out of control in that respect," Stumbo said. "… A lot of people believe there's been an abuse of power, and if he's not willing to change we'll have to redistribute the wealth."

Moberly acknowledged Friday that there's a "good chance" he will be replaced if Stumbo wins.

Chariman Moberly holds considerable sway as chair of that committee due to his ability to dole out pork projects and command jurisdiction on almost any bill in the legislature because just about everything impacts the budget in some way. 

Back around December 2007, when Beshear came into office, Joe Gerth reported some quote from Moberly where he said he hadn't yet heard from the administration.  Moberly is the among the first legislators a governor should talk to.  That was the first sign Beshear's team didn't know what they were doing legislatively.

Challenging Richards for Speaker is one thing.  He's in that position as a bit of a compromise among the factions of the House Democratic caucus.  He's not really someone who can punish the losers of the challenge.

Moberly is a different story entirely.  He may not run the chamber, but he commands the things that matter.  He is why Richards has such a strong chance to retain the Speakership despite general unease about the way the House is run.  I wouldn't want to challenge Moberly and lose.

Which is why it's such a gamble for the Governor to actively interfere in the House leadership contest and campaign against the budget chairman.  From Page One:

This week is going to get interesting. Rumors of a certain governor’s chief of staff pulling people aside to tell them they’re “for” Greg Stumbo and really need him to win. Rumors of, well, they’re not rumors– but Stumbo’s people defecting and supporting Jody Richards. The fur will surely fly tomorrow in Frankfort.

Governor Beshear has made a series of inept political moves since he took office, starting with forgetting to include Moberly, meddling and losing legislative races, hardheadedly pushing a nonsense casino bill without the legislature's input, flip-flopping around on the cigarette tax, flying around the state to campaign at taxpayer expense, hiring his friends and giving them raises in the middle of a budget crisis... 

Working to push Moberly out and losing would be the end of his hope for any influence.

Session Preview on Kentucky Tonight

KET's Monday political show, Kentucky Tonight will feature the legislative leadership discussing the upcoming session.

Guests include Senate President David Williams (R-Burkesville), House Minority Floor Leader Jeff Hoover (R-Jamestown), House Speaker Jody Richards (D-Bowling Green) and Senate Minority Floor Leader Ed Worley (D-Richmond).

Watch it at 8PM on KET.

Problems for Beshear's Proposal

Governor Beshear's got alot of problems, and his budget proposal's just the start of it.

We have blogged about how his $0.70 cigarette tax increase is likely DOA, but there are plenty of other hurdles as well.

Part of the proposal would ask coal counties to contribute some of the incredible surplus of coal severance tax, allowing the funds dedicated specifically to coal producing counties to keep what was budgeted plus an additional $20 million, then using any additional coal severance tax receipts to shore up the general fund.  

The Herald-Leader reports on opposition from House Democratic Leadership:

House Speaker Jody Richards and state Rep. Greg Stumbo, who is challenging Richards for the top leadership spot, both say they're against the idea.

...

Rep. Rocky Adkins, a Sandy Hook Democrat and House majority floor leader, says coal-producing counties should keep the money they generate.

"The money that is supposed to come back to coal counties must come back to the coal counties to make progress in resolving the needs we have," Adkins said.

House Appropriations and Revenue Chairman Harry Moberly takes issue with another element of the proposal.

Part of Beshear's proposal would transfer a $50 million surplus from the public employee health insurance trust fund to help defray the shortfall.

"Some of our members have looked at it and staff has looked at it and, as we see it, that move is unconstitutional," said Rep. Harry Moberly, chairman of the House budget committee. "Of course that presents a problem because if we can't get the money from that fund, we have to get it somewhere else."

So, of the Governor's proposal, the $81.5 million cigarette tax proposal and $67.5 million in transfers are in serious doubt, leaving a $149 million hole in his $456 million plan.

Perhaps he could balance those losses by increasing the elements of the plan where opposition has been low.  We haven't heard too much discussion about the $147 million in planned spending cuts.

January 2, 2009

Undoing Pension "Reforms"

In an attempt to bury a news story on New Year's, on Wednesday Governor Beshear announced his proposal to water-down last year's already weak pension reforms.

In the special session in 2008, the General Assembly took some meek first steps in addressing Kentucky’s $27 billion outstanding pension liability.  In order to avoid significant reform of the system, the legislature chose to require responsible contributions to the fund. 

Part of the bill was a commitment to make payments that would shore-up the fund over five years.  Wednesday, Governor Beshear proposed walking back that commitment, putting off these payments for cities and counties. 

The commitment to make payments was an attempt to avoid serious reform of the system.  Now we’ll be without payments or reform.

Happy New Year

We're back, and getting ready for session! 

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The KY Club for Growth seeks principled candidates who are committed to the following:

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