The Richmond Register

December 18, 2013

Beshear not counting on expanding gaming, tax reform revenues

By Ronnie Ellis
CNHI News Service

FRANKFORT —  Gov. Steve Beshear said Tuesday he wants more money to “reinvest in education,” but he won’t include revenues in his new two-year budget proposal from tax reform or expanded gambling.

Beshear said the budget he will propose to the General Assembly after the first of the year will be based on the revenues projected by the Consensus Forecasting Group, a group of independent economists who estimate state revenues for the legislature.

“We’re not going to assume revenue from either tax reform or expanded gambling,” Beshear told reporters during a year-end interview. He said the preliminary CFC estimate of about $230 million in revenue growth means “we are going to have an extremely tight budget and if we are going to reinvest in education at all, it will require some cuts in other areas.”

He didn’t specify where those cuts might come or in which areas he wishes to boost education funding. The state’s basic funding formula has been frozen for several years, and Kentucky Commissioner of Education Dr. Terry Holliday has warned of as many as 2,000 teacher layoffs without more funding. Holliday has been calling for tax reform or expanded gambling to raise more money for education.

“I am determined to reinvest in education,” Beshear said. “I am also determined in this session that we will discuss some specifics in tax reform as well as expanded gaming. What our success may be I don’t know.”

Getting lawmakers to act on either in an election year, the governor said, will be difficult, “but it is time to discuss both of these in detail.” He said he doesn’t “harbor any false hopes” but has seen “some encouraging signs” that lawmakers might re-think their past unwillingness to pass expanded gambling.

The legislature is required by a pension reform bill passed in 2013 to fully fund the annually required contribution to the state’s badly underfunded employee pension fund, an amount estimated at around $100 million. That’s on top of the more than $500 million it already spends on the pension fund. The separate teachers’ retirement fund is also seeking $800 million more over the next two years.

Those costs combined with the need to replace one-time funds to cover on-going costs in the current budget easily exceed the projected $230 million in new revenues.

Beshear also said he’s looking for ways to four-lane the entire Mountain Parkway, which is currently four lanes only from Winchester to Campton and then becomes two lanes to Salyersville. That was one idea that came out of a summit convened last week in Pikeville by Beshear and U.S. Congressman Harold “Hal” Rogers, R-Fifth District, to look for ways to diversify eastern Kentucky’s economy during a severe downturn in the coal industry, which has produced 6,000 layoffs.

“That’s a big-ticket item and it’s not going to be easy to do and I’m still looking at the options to try to make that happen,” Beshear said. “But I’m serious about making it happen.”

He also said he and Rogers are searching for ways to bring high-speed broadband services to rural Kentucky, including eastern Kentucky.

“You cannot guarantee an area they will get more jobs if they have high-speed broadband but you can almost guarantee that they won’t get them if they don’t have it,” Beshear said. “It’s just a very essential tool for business to want to locate in the area.”

Beshear reviewed his administration’s 2013 accomplishments, a list headed by his embrace of the Affordable Care Act and the expansion of Medicaid. He said about 85,000 Kentuckians have so far to sign up for health coverage.

He said the response has been “just amazing” and he said critics of the law have been putting out “so much misinformation … that everybody’s been confused.” But when they learn what’s available, “They really like what they’re finding, and they’re signing up.”

Other accomplishments he listed were raising the high school drop-out age; increases in automobile exports from Kentucky auto manufacturers and Toyota’s decision to begin production in Kentucky of its Lexus ES 350 model; investments in over 200 job creation projects which he said could create as many as 12,000 new jobs; dramatic gains in education rankings; and beginning construction of two new Ohio River bridges in Jefferson County.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.