Beshear budget gets cool reception

State News

January 20, 2010

By Ronnie Ellis The Richmond Register Wed Jan 20, 2010, 08:26 AM EST

FRANKFORT — Gov. Steve Beshear stunned many lawmakers Tuesday night by proposing to balance the next two-year budget with $780 million of revenue from video lottery terminals at race tracks – a proposal that has failed in the past and prospects for which look bleak now.

Both House Speaker Greg Stumbo, D-Prestonsburg, and Senate President David Williams, R-Burkesville, had advised Beshear not to include such revenue in his budget proposal, but Beshear said there are only so many choices because the state faces as much as a $1.5 billion shortfall which will require draconian cuts to programs and services which have already been cut by more than $800 million in the past two years without new revenue.

Earlier Tuesday, Sen. Ed Worley, D-Richmond, introduced a bill to authorize VLTs at tracks but it “has no appropriation so it’s not an appropriation bill” which is required by the constitution to originate in the House. Williams called Worley’s bill a “sham” and said again gambling has no chance of passage and the legislature will “have to craft a budget without gambling.”

Stumbo said the governor has the right to propose a budget based on as yet unauthorized revenues, but he also said he assumes the governor has polled House membership to determine if he has the votes to pass it. But Stumbo didn’t sound as though he believed Beshear has done that.

“No member has told me they have been contacted about this proposal before today,” said Stumbo, nor has Beshear talked to Stumbo about the idea. He repeatedly said he could not imagine the governor would make such a proposal without first gauging support by members.

He said the governor deserves time to build support for his proposal – he said a week to 10 days – but it was not hard to see Stumbo is skeptical Beshear can get it passed. “I think it’s going to be a daunting task,” he said.

Rep. Johnny Bell, D-Glasgow, said based on what he previously had been told by House leaders he expects the House “to strip it out and start from scratch.”

Without gambling, Beshear said, the only way to deal with the budget shortfall is more budget cuts; to “hope and pray” for more federal stimulus; tax increases of which he opposes in time of recession; or expanded gambling.

“My friends, the analysis is now over, and the conclusion is clear,” Beshear told lawmakers. “Gaming revenue is the only practical option to begin funding longterm priorities with recurring revenues.”

“Good luck,” was the reaction of Rep. Ken Church, R-Monticello. He said it is clear the bill favored by Beshear and sponsored in last June’s special session by Stumbo will not pass the Senate. Republicans in the Senate are generally opposed to the idea, preferring a constitutional amendment or no gambling at all, and last week two Democratic Senators, Ray Jones of Pikeville and Mike Reynolds of Bowling, said they would vote against it. Another, R.J. Palmer of Winchester, said he would likely abstain from voting because of a professional conflict of interest.

Still, Worley said, “We believe the votes are there” to pass it in the Senate.

While a similar measure narrowly passed the House in June, Upchurch is not sure it can pass again, citing a change in the seat of one member who voted for it last time and “buyer’s remorse” on the part of some other members. And Stumbo’s version would use the money to construct new schools rather than to fund the state general fund, an approach he plans to follow when he files his own bill Wednesday.

The speech before the joint session was tepidly received. Lawmakers applauded about half as often as they did during Beshear’s State of Commonwealth Speech two weeks ago. And the applause did not come for gambling – it came when Beshear said he opposes “broad based tax increases” and when he said he would spend money to protect school funding or fund smoking cessation.

Beshear gets to $780 million in his proposal by moving revenue from license fees in future years into the second year of the budget by borrowing against those future payments.

Beshear’s budget would again protect basic school funding, Medicaid and public protection from the cuts while other agencies would be cut 2 percent in the first year and straight-lined in the second. Without the gambling revenues, Beshear said, those affected, non-protected agencies would have to be cut 14 percent in year one and 34 percent in year two – or the entire state budget would suffer 2.3 percent cuts in the first year and 7.3 percent cuts in year two.

Despite the dire revenue forecasts, Beshear still wants to issue bonds for construction, funding each universities top building priority, a specialty clinic at Oakwood in Somerset, and construction of a new Glasgow State Nursing Home. He would also fund growing health care costs for state employees, something criticized by Williams and state Chamber Director Dave Adkisson.

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.

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