Legislators prepare to tackle fiscal crisis

Local News

January 5, 2008

Bill Robinson The Richmond Register Sat Jan 05, 2008, 09:07 PM EST

The fiscal crisis facing state government is “the worst I’ve seen since I began serving in the legislature 28 years ago,” state Rep. Harry Moberly said Friday.

As the General Assembly prepares to convene for its biennial budget session Tuesday, Moberly, chair of the House of Representatives’ Appropriations and Revenue Committee, and state Sen. Ed Worley, D-Richmond, Democratic party leader in the Senate, both said they would oppose raising taxes to avoid budget cuts.

“The average Kentucky family can’t afford to pay any more in taxes,” Worley said.

To offset an expected revenue shortfall of $430 million, newly inaugurated Gov. Steve Beshear has announced that all the budgets of all state agencies, except for public schools grades K-12, will be cut by at least 3 percent.

The cuts should produce a savings of about $300 million. A surplus of about $145 million from the current budget and another $42 million in unbudgeted or excess funds from around state government should make up the rest.

The state faces a another revenue shortfall of at least $200 million in 2009, Moberly said.

A nationwide economic downturn, driven in large part by a sharp drop in residential construction, has suppressed state revenues, which depend heavily on sales and income taxes, the local legislators said. Problems with subprime mortgage loans has exacerbated problems in the housing industry.

“No one predicted the crisis in the housing industry,” Worley said.

State government’s financial outlook would be even worse if a special session of the legislature had gone along with former governor Ernie Fletcher’s plans to spend most of what was then foreseen as a budget surplus, Moberly said.

Even if Beshear’s push for a constitutional amendment to legalize casino gambling in Kentucky is successful, revenue from casinos could not start flowing into the state treasury before 2010, Worley said.

If voters in November approve a constitutional amendment, the legislature would have to pass enabling legislation in 2009 before expanded gambling operations could begin.

Both Worley and Moberly said they would support allowing voters to decide whether casinos or other forms of expanded gambling should come to Kentucky.

“If we follow the expressed wishes of the people, we will give them an opportunity to resolve this issue, Moberly said. Opinion polls consistently have shown that between 70 and 80 percent of Kentuckians want to vote on expanded gambling.

“Some want to vote for it; others want to vote against it,” he said, “but the overwhelming majority wants to vote on it.”

Worley said a constitutional referendum would lay the issue to rest.

“Whenever the legislature meets and the state faces a financial crisis, expanded gambling is proposed as a solution,” he said. “We then spend a lot of time debating the issue. We need to let the people decide, once and for all, if they want expanded gambling, so we can go on to other issues.”

While state Senate President David Williams, R-Burkesville, opposes expanded gambling, Worley does not expect him to prevent the issue from coming to a vote in the chamber.

“The majority of the legislature believes this issue belongs to the people and we should let them decide it,” Worley said.

The governor has backed off a prediction that tuition increases next year for state university students would be limited to 6 percent, Moberly said. “Tuition increases may have to be more than 6 percent.”

The fiscal crisis also threatens to reduce the $41.6 million that Eastern Kentucky University was expecting for the second phase of a new science education building.

Funding is safe for the $90 million highway construction projects under way in Madison County or set to start this year, Worley said.

The Berea Bypass, widening of Duncannon Lane from Interstate 75 to US 25/421, widening US 25/421 from the Eastern Bypass to Punkin Run Road and improvement of Barnes Mill Road up to Poosey Ridge already were authorized in the state’s five-year transportation plan.

Despite the gloomy near-term outlook, Moberly said he remains optimistic about the future.

“We have faced economic peaks and valleys over the years,” he said. “This is definitely going to be a valley, but we will get through it.”

Worley said having someone of Moberly’s knowledge and experience in the House of Representatives would be of invaluable help in getting state government through the crisis. “Harry Moberly is absolutely the best appropriations and revenue chair the Kentucky House of Representatives has ever had. He’s got years and years of experience, and if you understand the past, you can better predict the future.”

Messages can be left with Moberly, Worley or any member of the General Assembly by calling 1-800-372-7181, toll free.

Moberly also may be contacted by e-mail at harry.moberly@lrc.ky.gov.

Southern Madison County is represented in the House of Representatives by Rep. Lonnie Napier, R-Lancaster. North-central Madison County is represented in the house by Rep. Don Pasley, D-Winchester.

Bill Robinson can be reached at brobinson@richmondregister.com or at 623-1669.

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