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It’s Complicated: Frankfort Faces a Winter of Tough Sledding

By wmadministrator

Movie night at the Governor’s Mansion could feature “It’s Complicated,” a popular film about the complexities of passions, relationships and life. So it goes in Frankfort this winter, as our 1,398 lawmakers and the chief executive face far more needs than the ailing state budget can take.

There’s been a recent uptick in revenue, but Kentucky has patched together funding for years in order to technically balance the ledgers, while meeting growing public needs.

The run-up to July 1 now barely balances, the sixth time since becoming governor that Steve Beshear has had to shear spending.

Almost $800 million in federal stimulus made the current budget work. Just under $500 million in stimulus is available for next year, but none after that.

In the two years starting July 1, the state will spend about $16.5 billion, but in round numbers, Kentucky is $1 billion short.

Beyond the recession, where did things go wrong? The Kentucky Chamber of Commerce “leaky bucket” theory, derived from careful financial reviews, shows a striking imbalance.

The Bluegrass State has overspent on Medicaid, corrections and public employees, while skimping in other large categories, like universities, community colleges and infrastructure.

The common thread is healthcare costs: large, steady increases have skewed the mix. For retirees, inmates and the indigent, healthcare obligations and general program costs in these three have taken a steady toll.

New revenue would help. Expanded gaming offers one solution. The political calculus, however, outdoes the math, and could undo it as well.

Last summer the House barely passed a gaming law with 52 votes out of the 100 members. Front and center was House Speaker Greg Stumbo, the prime sponsor.

Expect the state Senate to consider a constitutional amendment for this November. Note, however, that just getting the question on the ballot means moving through sticky wickets.

First, Senate President David Williams will have to make this happen. He rules the upper roost. The sponsor of the amendment is Sen. Damon Thayer.
Next, the action takes a 60 percent vote to win. This means some Democrats and some Republicans must unite. This happens more often than we think, but on this subject, it’s intricate.

Then, too, the prime force for the law option – the KEEP board of directors – voted 55-0 to oppose the amendment and favor the law. Their rationale is simple: A law works quicker to get financial results for racing.
Lastly, Speaker Stumbo, a powerhouse, will reintroduce the gaming bill, but it won’t move until it has a chance for a Senate vote.

Complications abound when taxes arise. Don’t look for them rise much.
“A broad-based tax increase is not in the picture,” said Adam Edelen, chief of staff to the governor. “Raising taxes in the teeth of a recession is a job-killing strategy,” he adds.

Plus, many see the Senate under Williams as a brick wall to any tax hikes.
The recession led Gov. Beshear to rule out tax reform; very bad timing for tax changes, he concluded.

But hold on, both President Williams and Speaker Stumbo have an open door to tax reform talks. Ideas abound.

Some 17 tax reform studies have been produced in the last decade or so, the Fox study being most prominent. Fox said tax services, such as accounting, and tax growth areas in the economy.

In an election year, this sounds like tax increases. Still, Kentucky’s antiquated system is like most states – it’s a framework dating back over 50 years, begging for modernization.

A key voice is Mary Lassiter, the Cabinet Secretary for the Governor and state budget director.
State Auditor Crit Luallen has the gravitas to help. She headed the whole cabinet several years back.

The two minority leaders have steady voices. Sen. Ed Worley and Rep. Jeff Hoover, both well-grounded in local concerns, and in their respective roles, are compromise-makers.

Though governing may be very complicated, edgy voters will be very demanding this time around.

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