Tuesday, January 19, 2010

Governor's Budget Address

Here is our summary of the Governor's Budget Address from this evening. To see the various news articles on the budget proposal click HERE.



Governor's Budget Address



In his budget address tonight, Governor Beshear laid out his plan for dealing with a $1.5 billion shortfall and outlining his spending priorities for the next biennium.


Beshear's plan for dealing with the budget shortfall relies on over $700 million in new revenue from expanded gaming at Kentucky horse tracks. This option was one of three that the Governor considered to deal with the shortfall. The second option was for drastic cuts in the already depleted state budget; 12% the first year and 34% the second year.  His third option was to raise taxes, which he was unwilling to do.


Even with the gaming revenues, Beshear's budget plan still relies on cuts to state government to deal with the shortfall. He proposed a 2% cut to most state agencies, many of which have already been cut up to 12% over the last year.


Even with the gaming funds this proposal includes many expenditures of one time money for recurring programs.


The funding priorities the Governor laid out include the following:


- Primary education funding, the SEEK formula, was not cut under his proposal. 
- $150 million in bonds for school construction
- $500 million on bonds for University School Construction
- Reducing premiums for KCHIP to get more children enrolled
- Smoking cessation coverage for Medicaid
- $300 million in bond funds for state highway construction and $100 million in federal highway funds for the Ohio River Bridges project.


All told, the Governor tried to entice support for expanded gaming and the revenues it produces by basing his budget proposal on those revenues. Without the gaming revenues, the budget would likely include massive cuts to education and state programs that would be visible to the average Kentuckian.


Politically the Governor has thrown the ball to the General Assembly and said if you don't want to pass expanded gaming, then you will have to make the deep cuts to education, health services, corrections, and public safety. Not to mention no new roads or schools. Since he was unwilling to propose new taxes and make the deep cuts to state services this may have been the Governor's only or best option at this point.


We will put out a more detailed analysis of the budget proposal in the days ahead; you can access the full text of the speech HERE.

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