Wed December 16, 2009
Kentucky financial situation 'worst in 30 years'
By Tony McVeigh
Frankfort, KY – Kentucky lawmakers continue preparations for the 2010 legislative session, which begins in less than three weeks. During a budget briefing in Frankfort not too many people were smiling.
Bringing the informal hearing to order, House Speaker Greg Stumbo told colleagues the state's financial situation is the worst he's seen in his 30 years with the General Assembly. But Stumbo's confident the state will cope.
"Kentucky has actually managed fairly well through this recession," says Stumbo.
Stumbo says the Commonwealth avoided severe cuts in basic education funding, Medicaid, health and human services and public safety. And even though tough budget decisions are ahead, Stumbo believes lawmakers will find solutions.
"If we continue to do what we have done to date, and that is to put aside our partisan differences, to come here with an open mind, to guarantee that we're going to work - not only with each other in this chamber, but with our counterparts in the Senate, and with those in the governor's office - we can truly continue to bring Kentucky through this terrible crisis until times get better," says Stumbo.
House Minority Leader Jeffrey Hoover agrees, saying the Commonwealth faces unprecedented times that require novel solutions.
"We will continue to work in a bipartisan manner," says Hoover. "We may have different ideas. We may have different alternatives as we approach the budget situation, as we try to address that. But let us disagree without being disagreeable."
So how bad is the state's financial situation? This bad. Even after $800 million in spending cuts over the last two years, Kentucky still has a $161 million deficit in the current fiscal year. And the shortfall could soar to $1.2 billion over the next two years. House Budget Chairman Rick Rand says state revenues have been in free fall.
"This is the first time in modern history that we have gone two years with negative growth in our general fund," says Rand. "So, we are in unprecedented times - the first time in modern history, that we could find record of, that we have had two consecutive years of negative growth."
But as bad as it is, Rand says some states have it even worse.
"Nearly every single state are in much more difficult circumstances than we find ourselves in," says Rand. "And that is, I think, a tribute to the leaders, and certainly the gentleman who held my position before I, and the good work that they have done."
Rand says the legislature still has more than a half-billion dollars in federal stimulus money it can use to help plug the deficit. Tax hikes on alcohol and cigarettes approved this year are generating some new revenue. And the economy is again showing signs of life. But Rand's anxious to see what the Consensus Forecasting Group has to say. The panel of economic experts meets Monday to assess the revenue situation and make projections.
"They will come out with a revised estimate for 2010, as well as the number," says Rand. "And the number they give - and they'll give us a very specific number of how much revenue that we're going to have over the next biennium to deal with."
The governor and lawmakers will use the numbers to balance the current budget and craft a new one. Perhaps they'll get some fresh ideas from the newest member of the House, Representative Jill York of Grayson. York won a recent special election in northeast Kentucky.
"I do welcome the opportunity to be a new set of eyes on the books, to bring maybe a little bit more creative thinking to things," York tells Kentucky Public Radio. "Out in our district, we're very anxious to see people shouldering the load a bit, because we realize that times are tough all over."
Once the 2010 session begins, lawmakers will have 60-days to get the state's finances in order, and take care of all other business. The opening gavels in the House and Senate fall on January 5th.