The facts as presented by Governor Steve Beshear seem to be clear. We are facing a $1.5 billion shortfall in Kentucky, the largest ever. Six (6) times during his Administration this governor has been responsible for having to fill budget shortfalls ranging from $100 million to $1 billion. Working with the General Assembly, he has kept critical areas off the chopping block: education, healthcare, public safety and the jobs of public employees. Yet, this budget, he says, is responsibly balanced; does not raise taxes; creates jobs; and guides spending for the next 2 years . . . if he gets expanded gaming. It is a tough call all the way around.
How does one go about recommending how to balance what to this state is a massive amount of money? According to the governor, there are limited options for addressing this budget crisis and he clearly laid out each option: (1) make cuts; (2) depend on additional federal stimulus funds; (3) a broad-based tax increase; or (4) use revenues and license fees at horse tracks [AKA: expand gaming].
Governor Beshear also explained what we as a state should expect as consequences of each option. Cuts will lead to mass layoffs and could be as high as 12 percent the first year and 34 percent the second year. Federal stimulus funds should be used as the state’s contingency planning bank and since they are non-recurring, so IF we get them, he has plans for their use. A broad tax increase would place an increased burden on the people and businesses we depend on to grow ourselves out of this recession. Finally, he concludes that Option 4 above is “the only practical option for funding priorities from recurring expenditures” and that these funds from expanded gaming provide a reliable source of revenues.
What should citizens be watching out for in the coming months? There is a pragmatic and a political side to the ensuing debate on our fiscal woes you will be hearing. Senate President David Williams has said in the past that you (citizens) have not felt the pain of nearly eight (8) years of sustained state budget cuts and that the governor’s bet on expanded gaming has stumbled at – no, refused to enter the gate. Should we find no additional revenues and the governor’s warnings come to fruition, that pain will be all too evident to the Senate President and to all Kentuckians. This leaves open the question of which of the remaining three options will be the winning ticket. It may be a fifth option will have to be created.
Politically, Governor Beshear seems to have worked himself between a rock and a hard spot. On one hand, the Senate is clearly not interested in cooperating with him in good faith as a partner to address a real or a perceived budget crisis. On the other hand, by not bringing in House Leadership on the front end, as his budget was being prepared, and (apparently) not heeding advice regarding the gaming issue the governor has made yet another questionable gambit in the upcoming Gubernatorial Challenge Match. This one may have exacerbated a problem many perceive to have been caused by his opening move; the selection of a Lieutenant Governor.
The governor has some time to generate movement on the bill he wants. Now is the time for a mobilized and motivated public to push members of the General Assembly to fall in and support his gaming legislation if they have been adequately sold on the governor’s plan. We will see if that is what develops over the next week or so. If not, it may be House Leadership, the Appropriations Committee, and House members facing the prospect of crafting a state budget and creating our own options for meeting this $1.5 billion deficit.