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December 30, 2011

Countdown to Session - The Budget

In his four years in office, Governor Steve Beshear has had to balance Kentucky's budget over 10 times, because he is never willing to make the necessary spending reductions to put Kentucky on a sustainable path.

At Issue

Last year's session ended with a special session because Governor Beshear, with Kentucky House Democrats and House Republican Leadership, rejected the Senate's plan of responsible spending cuts. Here's a refresher on the trainwreck if you've forgotten.

  • In the 2011 Session, Governor Beshear promised and Speaker Greg Stumbo and House Republican Leader Jeff Hoover foolishly believed that he could borrow the necessary 2011 funding from 2012, implement a managed care program in Medicaid by October 2011, and create the necessary savings and make ends meet. Here's what Janie Miller, the embattled Secretary of Health and Family Services said at the time:
    "Other states have implemented expanded managed care contracts that have generated savings while improving health outcomes," said Health and Family Services Cabinet Secretary Janie Miller. "We are confident that we will replicate those results. The Cabinet is poised to act quickly and aggressively to achieve contracts with managed care organizations to capture the required savings in FY 12."

The Medicaid managed care program was finally implemented last month.

What must be resolved

All signs would point to a relatively easy budget session in 2012.

Beshear has finally implemented his Managed Care Program to control costs in Medicaid.

Additionally, state revenues are up, according to the Consensus Forecasting Group.

The Consensus Forecasting Group, a group of independent economists, released its final forecast for the state's revenues over the next biennium on Wednesday after a more than three-hour meeting.

The economists predicted a $136.5 million surplus for the current fiscal year, which ends June 30. That forecast, which calls for total revenue of $9.007 billion this year, is down by $1.2 million from the October prediction.

For fiscal year 2013, which starts July 1, 2012, the revenue estimate is $9.2 billion, an increase of almost $50 million from the October estimate. For fiscal year 2014, the revenue estimate is $9.5 billion, an increase of a little more than $100 million from the October estimate.

Despite the implementation of his plan and higher revenues, Beshear's promises of balancing the budget are empty, just as we, and the Kentucky Senate, predicted.

Beshear is once again planning cuts that he should have implemented years ago.

Gov. Steve Beshear's administration is implementing another round of 2 percent cuts to many state agencies to help cover a $189.9 million budget gap in the current fiscal year.

Mary Lassiter, Beshear's budget director, told lawmakers Tuesday afternoon that the latest round of cuts would come on top of recurring 1.5 percent cuts to the agencies.

In addition, his administration says that the 2.2% and 3.3% increases in revenue predicted for FY 2013 and 2014 are inadequate to cover Frankfort's spending problem.

Kentucky's chief budget officer told the House on Tuesday that the next two-year state budget will be the toughest yet for lawmakers to craft and more cuts to state agencies are likely.

"It will be the most difficult budget we will face," said Mary Lassiter, the state budget director and secretary of Gov. Steve Beshear's cabinet.

Even though modest revenue growth is expected for the next two years, Lassiter told House members during a briefing that the state's finances remain shaky.

Revenues are finally expected to rise and the Governor still can't manage keep spending decisions undramatic? What does it say about his competence as a leader that he has had to do the same thing over and over again - rebalance the budget - more than one dozen times in four years?

Or is his mismanagement a ploy to beg Kentuckians to erect casinos for his friends in the horse business?

Timing and fearless prediction

The budget always starts early and finishes late. The budget must start in the House, and the House never moves the budget forward before the January 31 filing deadline, so we predict an irresponsibly indebted budget to pass to the Senate by President's day. The Senate must make quick work because, by the time they get the budget, over half the session has elapsed. We'll expect the Senate to pass and return the budget to the House in early March. The ultimate deadline to reach a conference agreement is later than March 27, but here's an optimistic prediction that they'll send it to the Governor by then.

The budget process could be complicated by the casino debate. Governor Beshear has said he will not include casino revenue in his budget, but he needs several budgetary gimmicks and pork promises to get casinos passed, like letting Pikeville University join the public trough. If the budget becomes a proxy casino fight, all bets are off.

December 29, 2011

Universal Pre-K Has a Long Track Record of Not Making a Difference

Apparently, Steven Beshear has mumbled something about investing in Pre-K or universal Pre-K or something. As if our education system in Kentucky didn't already have enough problems creating results.

But pushing for greater funding of Pre-K would have much in common with Governor Beshear's other leadership to date in that it has shown to be completely ineffective time and time again.

The Bluegrass Institute's Jim Waters explains:

Lisa Snell, director of education policy at the Reason Foundation, wrote in The Wall Street Journal that while preschool attendance has increased nationwide from just 16 percent to nearly 70 percent, fourth-grade reading, science and math scores have "remained virtually stagnant since the early 1970s."

Credible research reveals that while universal preschool initiatives may have some positive impact on helping prepare children - especially disadvantaged kids - for kindergarten, the benefits are "fading out" quickly.

A Strategic Research Group study of Tennessee's universal preschool program - considered the gold standard - found that whatever advantages children gain from government-run programs largely disappear by the time they reach second grade.

"In every case, in every subject, there was no statistical difference between the children who attended preschool and those who did not." Snell said of the group's findings. "Nor was there any advantage for low- or middle-income children in particular."

Supporters of strapping backpacks on all 4-year-olds point to Oklahoma's program, where teachers are credentialed, funding is through the public school system at a level of $8,000 per child in the program and great results are witnessed in kindergarten.

Yet in the decade since Oklahoma implemented its universal preschool program, fourth-grade reading and math scores have actually declined.

But it will sure sound like a great thing to fund with slot machines!

Coutdown to Session - Redistricting

Decennial redistricting will be the first item on the agenda when the legislature meets in January.

At Issue

Every ten years following the national census, the Kentucky legislature must redraw districts for the state house of Representatives, the state Senate and the boundaries for Kentucky's delegation to the US House of Representatives. In 2001, the leadership of the Kentucky House drew the boundaries for the House, Senate leadership drew the boundaries for the Senate, and the houses worked in consultation with the federal delegation to create new boundaries for the six US House districts.

What must be resolved

This year, we can still expect the House and Senate to draw districts for themselves, but there is disagreement over the map for the federal delegation. House Speaker Greg Stumbo is trying hard to protect US Rep. Ben Chandler, a fellow Democrat who was reelected by the slimmest of margins in 2010. Ironically, Stumbo would make Northern Kentucky's 4th district, open since the retirement announcement of US Rep. Geoff Davis, more assuredly Republican. His map, which can bee seen in this piece from CN2's Ryan Alessi, eliminates the "tail" on Kentucky's 1st district, but adds ridiculous geographic tails to the 4th and 6th.

The chairman of the Senate State Government Committee, Damon Thayer, has proposed a map with minimal changes (also seen in the Alessi piece.)

Stumbo is digging in his heels to gerrymander a district for Chandler. In a recent analysis in the Courier-Journal, he practically resolves to throw it to the courts.

If the two chambers can't come to an agreement, Stumbo said the House could simply refuse to approve any plan and throw the issue into the courts.

"I'm not suggesting we should do it. I think we should enter into a compromise and make some sense out of all of that and move on," Stumbo said. "(But) if the Republicans and Sen. Thayer think they're going to gain some kind of advantage over, say, ... Rep. Chandler, and they're going to dictate the plan, I can tell them that's not going to happen."

Stumbo said one solution by the courts could be to order all six of the state's congressmen to run statewide, as they did in 1932 when nine Democrats swept the state's congressional delegation.

Our former Attorney General is wrong on that last point; US courts have ruled since 1932 that such statewide "districts" violate the "one person, one vote" principle.

He is also foolish to refuse to compromise and resolve to throw it to the courts. While keeping the current districts for another year is superior to his gerrymandered maps, it is certainly the sentiment of a spoil-sport. It's also a losing strategy for Stumbo. After all, the independent "redistricting expert" quoted in the article suggested that the consistency of Thayer's map is favored by the courts.

Justin Levitt, a professor at Loyola Law School in Los Angeles who has expertise in redistricting, said that although only 25 states have completed redistricting this year, 111 lawsuits have been filed. Seventy of those suits are still active.

He said both Republicans and Democrats have been responsible for such suits -- "it's whichever parties find themselves aggrieved," he said -- but that Democrats have been more aggressive recently because the GOP controls redistricting for three times as many seats.

In cases in which the legislature can't agree on a redistricting plan, the courts are likely to draw the lines themselves.

"The courts deeply dislike having to draw district lines," Levitt said. "So the overwhelming trend is to change the districts as little as possible to make them constitutional."


Currently, the deadline to file for office is 4:00 PM Eastern, January 31, 2012. The objective would be to resolve the district boundaries well prior to the deadline so that aspirants will know the district they will run in prior to filing.

Fearless prediction

The Kentucky House, Senate and Judicial redistricting maps will pass in the first two weeks of session. The US House map will be some revision of Thayer's map and pass by the end of January.

December 28, 2011

The Races: More Members File for Re-election

We recently posted several members who had already filed for reelection. Here are some more who have filed since that last post.

House Filings

District Member Party
16 Martha Jane King D
20 Jody Richards D
28 Charles Miller D
40 Dennis Horlander D
67 Dennis Keene D
77 Jesse Crenshaw D
81 Rita Smart D
84 Fitz Steele D
90 Tim Couch R

Senate Filings

District Member Party
3 Joey Pendleton D
31 Ray Jones D
35 Denise Harper Angel D

Obamacare Mandates Continue to Roll Out

Governor Beshear's Cabinet for Health and Family Services, when it isn't getting berated by the legislature, is busy rolling out Obamacare mandates to help increase our insurance premiums:

Under a 2010 order from Kentucky Insurance Commissioner Sharon P. Clark, all insurers selling in the commonwealth's individual health insurance market must offer an annual open enrollment period in January for Kentuckians under age 19.

Clark took the action after insurers notified the Department of Insurance in 2010 that they planned to cease writing policies on Sept. 23 of that year, the date the federal Patient Protection and Affordable Care Act prohibited companies offering these policies from denying coverage because of an applicant's pre-existing health condition. At that time, Clark said she was concerned that all Kentucky children who needed a "child-only" policy, even those who were healthy, would have to turn to Kentucky Access, the state's high-risk pool, placing extra demands on that program.

Kids need insurance and Commissioner Clark recognizes a truth: insuring children who would need a "child-only" policy place extra demands on the program they are in. If the program is state-run, it is supported by taxpayers. If the program is in the private insurance market, it is supported by premium increases to the insured. Either way, it's your money being coerced by this new mandate to support more of the same in our inefficient, government-sponsored healthcare system.

December 27, 2011

Countdown to Session - Top Issues

We are seven days away from January 3 and the "Long" 60-day session of the General Assembly. Over this week, we'll count down the days with a closer look at the top issues they will consider.

Unlike most sessions, this year we have a pretty good idea of the issues that are of most importance to taxpayers and will take the lime and attentions of the legislators:

  • Redistricting - This is the first item up for consideration. Legislators will try to have a deal as soon as possible so that the districts can be set in the first days of session.
  • The Budget - We're already hearing that the Governor has failed to create the savings he arrogantly promised during the last session. Fortunately, he is still pushing for cuts. Unfortunately, it is probably a cynical push for expanded gambling.
  • Expanded Gambling - As soon as Governor Beshear sounded sincere about putting forward a new effort to pass expanded gambling, he declared that it would have to begin in the Senate and has simultaneously refused to discuss it with the Senate. That's the kind of leadership we've come to expect from our absentee Governor.

These three are certain. After those, there are several issues that are critically important and have actually received a fair amount of attention from legislators in recent months.

  • Pension Reform - Even House Speaker Greg Stumbo and House Appropriations and Revenue Chairman Rich Rand have admitted that the current system is unsustainable. Maybe the legislature will begin to consider serious reform proposals this year.
  • Tax Reform - While Governor Beshear has constantly ignored and avoided the subject, Kentucky's state and local tax burden relies much more on income taxes than most other states. It's time to shift to tax policies that don't penalize productivity and distort market choices less.
  • Other topics of interest to conservatives: Sen. Damon Thayer filed a bill to eliminate the Constitutional Office of the Treasurer; Rep. Mike Harmon has filed a bill that would limit Kentucky's debt; unemployment insurance reform; and prevailing wage reform. All of these issues should see activity.
  • Between now and Tuesday, check back each day to see our analysis of the free market perspective on each legislative topic, and our guess about how the issue could develop during the session.

December 14, 2011

UK President Sets Priorities

University of Kentucky President Eli Capilouto's recent comments on Rupp Arena are worth noting:

In what remains a challenging economy, we must be unified as a campus community about our priorities as we seek private support and finite state dollars to help fund our dreams for the University and for the Commonwealth. To that end, our Board of Trustees, our faculty and staff, and our students have spoken with a clear and unequivocal voice: Our primary focus should -- and must -- be the construction and renovation of facilities and living and learning spaces so that we can revitalize the core of our campus and, in particular, further strengthen the undergraduate education we provide. Targeted investments in athletics facilities will be part of that equation as we continue to improve our competitive position across all sports. We also will further utilize this powerful brand to recruit and retain Kentucky's best students.

We cannot at this time and in this economy support initiatives -- such as infrastructure proposals being made relative to Rupp Arena -- that compete with pressing on-campus priorities for scarce state operating dollars and capital construction funds.

Governing is about setting priorities, and Mr. Capilouto's statement provides an example of this.

However, Lexington's Mayor Jim Gray has proceeded to request the funding for the arena renovation:

Lexington Mayor Jim Gray said Monday he will ask for about $20 million from the General Assembly in the upcoming legislative session to start working on potential changes to the Rupp Arena district, but that request won't be backed by Rupp's main tenant, the University of Kentucky.

In actuality, $20 million is a reasonable request from Kentucky's second-largest city, depending on the amount of other requests the city will make.

We hope that Capilouto's statement is heart-felt and that this request-with-denial isn't just some ploy that reads "We'd like the arena funding too, but please don't take it out of my pot."

December 13, 2011

The Races: House and Senate Members File for Reelection

Several members of the Kentucky House of Representatives have filed for reelection over the past week. Here are some we have not yet included on this blog.

District Member Party
39 Bob Damron D
51 Bam Carney R
60 Sal Santoro R
70 Mike Denham D
73 Donna Mayfield R
75 Kelly Flood D

Additionally, one member of the Senate filed for reelection.

District Member Party
29 Johnny Ray Turner D

December 12, 2011

All Rogers Would Do Is Change the Type of Problem We Face

Jake over at linked this long video of US Rep Hal Rogers going on and on about how prescription drug abuse is a major problem in Eastern Kentucky.

It's seven minutes long so don't bother to sit through it:

We only post it to note that even Hal Rogers agrees that prescription drugs are greatly abused in Kentucky. He even notes how so many different elements are at play and how a large-scale concerted effort is necessary "to curb the rising tide of prescription drug abuse."

Rogers is also one of the strongest advocates of making Pseudoephederine a prescription drug to discourage the production of Meth.

Listening to him, it doesn't sound like a prescription limits illicit drug users from getting what they're after.

It would limit you and me though.

Rep. Mike Harmon on a Roll

We are generally fans of Mike Harmon. He scores consistently near the top of our scorecards, although we were disappointed with his initial support of a budget that depended on a $184 million tax increase in 2010.

Harmon has already started 2012 out right by pre-filing two bills that will make Kentucky better. One will lead to a better political process and the other will put a real "debt ceiling" on Kentucky's finances.

The first, prefiled as BR 327 would allow candidates for Governor to select their Lt. Governor running mate after the May primary.

"I think people are comfortable with the way we elect a President and Vice President and this mirrors that process on the state level. It allows parties to put forth the most qualified candidates for both offices in the General Election," said Rep. Harmon. "It is my hope that these proposed changes will in some part reduce voter apathy and gets more people engaged in having their voices heard."

Delaying the selection of running mates until after the primary may also encourage more primary participants.

Harmon's second bill, pre-filed as BR 264 would create an effective limit on Kentucky's runaway debt, placing a limit relative to Kentucky's expected revenues.

From the press release:

Rep. Harmon's proposal seeks to change Section 50 of the Kentucky Constitution that would dictate any authorization of appropriation-supported debt service by the General Assembly shall not at any time exceed the ratio to the Commonwealth's revenues by five percent. The bill makes exceptions in times when the Governor declares an emergency related to loss of life or property, such as a major natural disaster, and the Governor determines that it is necessary to exceed the five percent debt-to-revenue ratio. In those cases it would require a 4/5 vote by both the House and Senate to approve the request. Any funds borrowed under those situations would not be included in calculating the five-percent ratio cap.

Amen. As David Adams points out, Kentucky is currently above this threshold.

We are now almost 30% above this so Rep. Harmon's bill would stop the accumulation of bonded debt for several years.

Constitutional amendments are difficult to gain momentum. The Kentucky Club for Growth will help by scoring cosponsorship of this amendment on our 2012 scorecard. You can help by contacting your legislator and asking them to cosponsor HB 108 in January.

December 6, 2011

The Races: Senate 23 - Commissioner-Elect Comer Endorses McDaniel

Sen. Jack Westwood is retiring and not seeking reelection this year, creating an open, strong Republican seat in Boone County. Earlier, media had speculated that state Reps. Adam Koenig or Alicia Webb-Edgington may be interested in the seat, but neither has indicated that they are.

In another indication that no current House member will run for the seat, former Rep. and Agriculture Commissioner-Elect James Comer has publicly expressed his support for Chris McDaniel, a concrete contractor.

McDaniel's fundraiser in Edgewood will feature Rep. James Comer, R-Tompkinsville, who won the 2011 election for agriculture commissioner.

"Chris McDaniel has compiled an outstanding record of accomplishment in the U.S. Army and as a business owner in Northern Kentucky," Comer said in a statement. "His conservative values and proven leadership are exactly what we need in Frankfort."

We think Comer's hearty endorsement would be less likely if his House Republican colleagues were truly interested.

Another conservative, Will Terwort, has also filed for the seat.

What Farm Receipts Say About the Health of the Horse Industry in Kentucky

In 2011, Kentucky's farm receipts are expected to top $5 billion for the first time, thanks to Kentucky's health agriculture economy as well as high prices for corn. Looking at Kentucky's top crops by receipts, the landscape continues to change.

2011 farmcash estimates (in millions)
Poultry $990-$1,000
Corn $970-$980
Cattle $750-$760
Horses $740-$750
Soybeans $645-$655
Tobacco $310-$320
Dairy $250-$265
Wheat $210-$220
Hogs $110-$120
Hay $125-135

Where tobacco once ruled the economy, Kentucky farmers have adapted and succeeded.

This year's farm economy is a far different one from a decade ago, when tobacco and horses far outweighed all others, said Scott Smith, UK agriculture dean.

He said that he does not expect one crop to be that dominant again, thanks in part to the diversification fostered by the Governor's Office of Agricultural Policy and the state Department of Agriculture's emphasis on a wider variety of crops in the post-tobacco landscape.

"The buyout worked," Smith said. "We've basically succeeded in diversifying. We thought there was some magic (crop) -- hemp, aquaculture -- but no one crop will dominate from now on."

Horses rank only as the fourth largest "crop", lower than recent second-place finishes, but the lowered ranking is due to the success of other crops and not a decline of the equine economy in Kentucky.

Beef cattle and horses, both stronger this year, will be close behind poultry and corn at 14 percent each, followed by soybeans at 12 percent, other farm commodities such as fruits and vegetables at 11 percent, tobacco at 8 percent, and dairy at 5 percent.

Horse Farms in Kentucky are buoyant, and Kentucky's agriculture economy is able to succeed and adapt regardless.

December 5, 2011

The Races: House 53 - A Primary in Comer's District, But...

Earlier we reported that Republican Kirby Copas had filed for election to Kentucky 53rd House District.

Now, a second Republican has filed.

Bart Rowland, a Republican insurance agent and Vice-President of his family's Rowland Insurance Agency has filed to contest the primary in 2012.

While an open seat contest would be competitive, this seat will not be open in the November 2012 election.

Agriculture Commissioner-elect James Comer will have to resign this seat prior to his swearing-in on January 2, 2012, and Gov. Beshear will schedule a special election. The process for the special election requires a single nominee from each party, so the party committees of Cumberland, Green, Metcalfe, and Monroe counties will select one of these individuals (or possibly some other candidate) to be on the ballot.

So while this looks like an open seat now, some candidate will be an incumbent come November.

Even as an incumbent, a primary could still be competitive in November. It is likely that this individual will be elected in the current configuration of the 53rd district, then have to stand for reelection after redistricting in a slightly different district.

More Richie Farmer Shame

Although we're tired of discussing just how disappointing Richie Farmer is as a public servant, we wanted to record his latest horrible decisions for posterity.

We recently learned that not only did he unethically hire his girlfriend to his office, he also gave her friend a job too.

Meanwhile, his politically-appointed subordinate was found to have illegally created a classified job for herself, ensuring that she was the only "qualified" candidate. She has 10 days to respond to the Executive Branch Ethics Commission before they determine a penalty.

12/12/11 : Rep. Mike Harmon on a Roll

What Farm Receipts Say About the Health of the Horse Industry in Kentucky
In 2011, Kentucky's farm receipts are expected to top $5 billion for the first time, thanks to Kentucky's health agriculture economy as well as high prices for corn. Looking at Kentucky's top crops by receipts, the landscape continues to change....

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

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