FRANKFORT — Gov. Steve Beshear on Tuesday night offered state lawmakers reluctant to tackle tax reform in an election year a two-year budget he said filled him with both pride and regret. It’s a budget that proposes more money for elementary and secondary education and for state workers’ salaries – but cuts nearly everything else.
“It is a plan – to be honest – that fills me with both immense pride and with intense regret,” Beshear said. “Regret because the choices reflected in this document do great harm to many state programs and services needed by Kentuckians.
“But pride because these same choices empower us to make bold investments in the intellectual capital and economic competitiveness that Kentucky’s future demands,” Beshear went on.
College students and their parents might not see it that way. The budget cuts another 2.5 percent from higher education. In 2000, the state provided about 68 percent of college costs while students and parents paid for about 32 percent. In 2013, the percentages were reversed: the state paid 38 percent and tuition costs provided 62 percent.
Beshear’s proposed budget exempts student aid from the cuts and fully funds the KEES merit-based scholarships – but it does not increase need-based funding as tuition continues to rise making it harder and harder for lower income families to pay for college.
“Look, I am painfully aware that with this reduction, our colleges and universities will have undergone cumulative cuts of 17 percent during this historic recession,” Beshear said. He said it was among the most difficult decisions he made “because higher education deserves more, not less.”
But, he continued, there was no other way to create the money he’s using to increase funding for K-12 education.
Beshear tries to soften the blow for universities by authorizing bonding authority for the universities to pay off bonds for capital projects with their own money, including at least one project for each of the community colleges.
Dr. Wayne Andrews, president of Morehead State University, said MSU’s General Fund budget in 2008 was $49 million and is “now $1 million and falling. We’re putting the difference on the backs of our students.”
The budget contains funding for Rupp Arena and Lexington Convention Center; Kentucky International Convention Center in Louisville; and the University of Kentucky law school.
It provides money to extend high-speed broadband services throughout the state with an emphasis on eastern Kentucky; money for the Brent Spence Bridge in northern Kentucky and the two Ohio Bridges in Louisville; extend and four-lane the Mountain Parkway to Prestonsburg; to complete six-lanes of I-65 between Bowling Green and Elizabethtown; proposes using coal severance funds for a regional development fund for southeastern Kentucky; and funds scholarships for students from coal counties.
Beshear began the speech touting the measures taken over his first six years in office to minimize the damage of $1.6 billion in cuts over that time. He laid out strategies used to manage the budget – transfers from under used funds; management of state debt and savings in other areas.
But it’s difficult “and quite honestly sometimes impossible task,” Beshear said, talking about 41 percent cuts to some agencies while asking them to provide the same level of services.
Despite holding basic school funding flat since 2008 and cutting most school support services, Beshear said schools have “performed at high levels, pushing us to the cutting edge of education reform in this country.”
Even with the increases proposed in the new budget, Beshear said, it leaves the state “six years behind.” His proposals to increase funding for education and to give teachers raises drew applause from lawmakers.
He also will recommend “freezing the floor” on gasoline taxes which fell 1.5 cents in January as wholesale prices fell. That would cost the road fund $107 million over two years. But freezing the rate will cost motorists 1.5 cents more per gallon of gas.
But, Beshear said, there are alternatives to the cuts and hard choices.
“I am deeply disturbed by the damage these reductions will do,” Beshear continued. “Now we all know there are alternatives that would allow a lot more progress and a lot more investment with a lot less damage to needed services.”
“Yes, I’m talking about tax modernization and expanded gambling,” Beshear said – although his proposed budget contains no revenues from either.
Beshear offered no specifics but, as he did in his State of the Commonwealth speech two weeks ago, promised soon to offer “specific recommendations” on tax reform.
He also called for a constitutional amendment to allow voters to approve or reject casino gambling.
Andrews said the state has to come up with more revenue for education and he will plead with lawmakers to make that happen. He said he favors tax reform or an amendment for gambling or both.
“We have to have more revenue to support education,” Andrews said.