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.
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.
- Back in 2010, the Governor and the General Assembly foolishly included a $240 million increase in Kentucky's Medicaid budget that they expected to receive from the federal government despite Congress never promising or authorizing such a sum. Their willful suspension of disbelief left Kentucky with a $240 million hole for the 2011 Medicaid budget.
- 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.