Offering hope for the future and painful sacrifice for the present, Gov. Steve Beshear said in his State of the Commonwealth speech Monday night that Kentucky must put its financial house in order.

“It is my duty and my responsibility to inform you that we have some tough times ahead,” Beshear said. “The revenue outlook is grim.”

But, Beshear said, “despite obvious problems, I remain filled with hope and optimism for the future, because I know we can meet this test with determination, honesty and unity.”

He remains committed to his program priorities he touted during his campaign — job development, health care and education — but said those must wait until Kentucky is on sounder financial footing. He blamed the problem on the national economy. He didn’t blame lawmakers for structural deficits in previous budgets, or his predecessor, Republican Gov. Ernie Fletcher, but emphasized he’d inherited the problem and intended to solve it.

And, Beshear said, the financial problems represent a “golden opportunity to change the way we do business in Kentucky.”

Lawmakers generally regarded the speech as hopeful but short on specifics.

State Rep. Harry Moberly, D-Richmond, the chairman of the House Appropriations and Revenue Committee, liked what Beshear said about restructuring the state’s economic development efforts to focus more on innovation and helping existing Kentucky businesses and entrepreneurs. He also liked Beshear’s call for bi-partisan cooperation.

He said Beshear’s grim description of the state’s financial condition was a “candid assessment of where we are.”

Moberly, a champion of education and an employee of Eastern Kentucky University, said Beshear appears committed to investments in education but said higher education institutions can implement efficiencies and should do so before increasing tuition rates beyond the 6 percent increase recommended by the Council on Postsecondary Education.

But, Moberly said, reductions in higher education funding of 12 percent — which Beshear has said is possible under “worst-case scenarios” — would be “devastating.” 

“I was pleased to see the governor extend an olive branch to both houses of the legislature and to both parties,” said state Sen. Ed Worley, D-Richmond, leader of Senate Democrats. “I think the governor set the stage for us to attack the fiscal crisis without partisan wrangling, and I intend to help him any way I can.”

The revenue shortfall is “real and nothing to be taken lightly,” Worley said. “We certainly cannot get out of this very difficult situation unless we work together — the governor, the house, the senate, Democrats and Republicans from every part of the state.

“I agree with the governor that we have greatness ahead of us, but we have some serious problems to solve in the near term.”

Moberly said he had been looking very closely at the state’s finances with appropriations and revenue committee and budget review committee staff. “We’ve been working very hard, trying to identify some solutions,” he said.

Beshear followed tradition by outlining some general themes in his state of the commonwealth address, Moberly said. “We’ll get many more specifics when the governor delivers his budget message on Jan. 29.”

In addition the governor’s call for bi-partisan cooperation, Moberly said he welcomed Beshear’s call to prepare Kentucky to compete in the new, global economy.

“We need to focus state efforts on developing an innovative, idea economy as well as entrepreneurship,” he said. “We haven’t had that in the past few years.”

Moberly said he was hopeful the downturn in the national and state economies would last no more than a year. “We have a serious problem to deal with this year, but I’m very optimistic about Kentucky’s future.”

Beshear said Kentucky must rely on creativity and imagination, innovation in business and supporting existing businesses and entrepreneurs, but he said little about how to accomplish those goals.

Nor did he mention expanded gambling — an issue on which he campaigned and one which, along with the budget, has dominated discussions in Frankfort during the first two weeks of the General Assembly.

Beshear said Kentucky government must become more efficient and more responsive. The financial problems present an “opportunity to begin preparing Kentucky to compete in the new economy.”

He said only two options are open to lawmakers: raise taxes or cut spending.

“Raising taxes is and will continue to be a last resort as long as I’m governor,” he said.

But Beshear also ran through a litany of problems and social ills that plague Kentucky without offering any solutions. He said too many Kentuckians rely on Medicaid, have health problems and abuse drugs. He said the state’s infrastructure needs improvement and the state’s elderly face problems.

“I see unlimited requirements and painfully limited resources.”

But, Beshear said, “the status quo is not an option and it is not one my administration will tolerate.”

House Republican Leader Jeff Hoover of Jamestown said Beshear was “trying to create a feeling of hope and optimism for the next two weeks when he gives his budget address. Beyond that, I didn’t see anything he wanted to accomplish.”

He said the speech contained “no specifics at all,” but said he would defer for now to a governor who has been in office only a few weeks. But, Hoover said, lawmakers will need those specifics on Jan. 29 when Beshear delivers his budget address.

Democratic House Speaker Jody Richards of Bowling Green said it “was a good speech in that it did accurately assess the state of the commonwealth. It was not all peaches and cream. He talked about many aspects of the state of the commonwealth being unacceptable.”

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. The Richmond Register is a CNHI newspaper.

Register news writer Bill Robinson contributed to this story.

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