Kentucky State Government Addresses the Revenue Shortfall

By LaneReport.com Staff

Early in his new term, Gov. Steve Beshear is asking state agencies to trim their budgets by 3 percent in an effort to erase an estimated $289 million revenue shortfall for the balance of the ’07-08 fiscal year ending on June 30th.

State colleges and universities face a $34.5 million cut; the University of Kentucky, for example, will take a $10 million hit.  Beshear has asked his cabinet to trim $23 million from its budget for the balance of the fiscal year and is proposing a hiring freeze.  Gov. Beshear stated that “Kentuckians are taxed too much already” and he does not support any new taxes.

Proposed new taxes by others include:
• Increasing the Kentucky cigarette tax to equal the average tax paid by                smokers in the seven states adjacent to Kentucky.
• Raise the income tax on Kentucky’s high wage earners.
• Tax upscale goods and services and tax dues to country clubs.

Beshear indicated that the bad financial news on the ’70-08 budget was not political posturing to gain support for legalized casino gambling in Kentucky.  He does, however, hope the General Assembly will put the gaming issue on the election ballot this year.  Recently appointed cabinet secretaries and members of Gov. Beshear’s executive cabinet will be responsible for overseeing cost cutting measures.

Current Cabinet Members
Larry Hayes
Secretary, Governor’s Executive Cabinet
[email protected]
(502) 564-2611

Brigadier General Edward Tonini
Adjutant General
[email protected]
(502) 607-1558

Marcheta Sparrow
Secretary of Commerce
[email protected]
(502) 564-4270

John Hindman
Secretary of Economic Development
[email protected]
(502) 564-7670

Helen Mountjoy
Secretary of Education
[email protected]
(502) 564-0372

Bob Vance
Secretary of Environmental & Public Protection
[email protected]
(502) 564-3350

Jonathan Miller
Secretary of Finance & Administration
[email protected]
(502) 564-4240

Tom Preston
Senior Advisor for the Governor’s Office
[email protected]
(502) 564-2611

Jim Cauley
Chief of Staff  for the Governor’s Office
[email protected]
(502) 564-2611

Vince Gabbert
Deputy Chief of Staff  for the Governor’s Office
[email protected]
(502) 564-2611

Janie Miller
Secretary of Health & Family Services
[email protected]
(502) 564-7042

J. Michael Brown
Secretary of Justice
[email protected]
(502) 564-7554

J.R. Gray
Commissioner of Labor
[email protected]
(502) 564-3070

Nikki Jackson
Secretary of Personnel
[email protected]
(502) 564-7430

Mary Lassiter
Director of the State Budget
[email protected]
(502) 564-7300

Joe Prather
Secretary of Transportation
[email protected]
(502) 564-5102

Eleanor Jordan
Executive Director of the Commission on Women
[email protected]
(502) 564-2611

Wow! If you think trying to forecast Kentucky’s political outlook for 2007 was difficult, (see page 50 of the December 2007 issue of The Lane Report or go to lanereport.com/ archive), try making a forecast for the 2008 presidential race.  At press time, the race between Democrats and Republicans was a mixed bag.  No one candidate of either party seemed to be a locked frontrunner.

Hillary Clinton – with recently declining poll numbers – may not end up as the Democrat’s presidential standard bearer.  Until primaries in January and February firm up voter support, the top candidates are unknown.
Regardless of the nominees, the presidential race will likely be focused on important domestic and fiscal policies.  Here’s our pick of top issues:

Tax policies
Higher vs. lower individual tax rates; tax reforms.

Health care
Universal coverage and Medicaid.

Congress
The Democrats may be faulted for their management of the legislative branch of government; the ratings for Congress are extremely low.
The War
Dems may also get poor ratings for their positions opposing the Iraqi war and funding for U.S. troops.

Pork and Waste
The Republicans are vulnerable to claims of poor fiscal control over government spending and excessive earmarking.

State’s Rights
The roles of the Federal government vs. those of the states.

With important political issues like these, the 2008 presidential election will likely be a key referendum on the future economic and political viability of the United States.

Every election is important; but some elections are more important than others.  2008 looks like an important political year.  The candidates are not that inspiring; hopefully voters will discern how important the issues are and they will turn out in force to make their positions known.

Parsing the Unemployment Numbers
The most recent set of statistics on employment in the commonwealth was encouraging. The November jobless rate for the state clocked in at 5 percent, its lowest level since April 2001, according to the Office of Employment and Training, an agency of the Kentucky Education Cabinet. November 2006’s jobless rate was 5.6 percent.

An increase of 1,600 jobs in November 2007 brought Kentucky’s nonfarm employment to a seasonally adjusted total of 1,860,100. Since November 2006, Kentucky’s nonfarm employment has risen by 14,000. That’s not great, but it’s not bad considering the national economic environment.

“Despite facing the economic headwinds of a severe housing slump, tightening credit conditions, rising food and energy prices, and a volatile stock market, Kentucky’s economy showed resiliency, as the state’s unemployment rate dropped to its lowest level since April 2001,” said Justine Detzel, OET chief labor market analyst.

One potentially promising sign: Manufacturing jobs held steady from October to November after having declined by more than 5,000 jobs since November 2006. The drop was no doubt due to the housing slump and credit crunch nationally, both of which decrease demand for durable and non-durable goods.

The commonwealth’s construction job numbers stayed steady from October to November, and even show an increase of 800 jobs in the preceding year – another good sign. Hospitality and leisure jobs also increased in the previous year by 1,600, reflecting Kentucky’s efforts to build its tourism business, which topped $10 billion in revenues last year.

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