Kentucky Political News Headlines

Monday, December 22, 2014

SOPA is Alive

A few years ago, millions of Americans helped stop SOPA, Stop Online Piracy Act, that was supported by MPAA and would have led to censorship across the web. Congress received millions of phone calls and emails in opposition. SOPA didn't pass.

However, over the weekend news broke that MPAA's efforts are still alive and have a new target...Google. And their new path...the states.

In this New York Times article the MPAAs plans to work with one state's Attorney General to continue their censorship fight...Here is a key passage:

The movie association and its member companies, the messages show, have assigned a team of lawyers to prepare draft subpoenas and legal briefs for the attorneys general. And the groups have delivered campaign contributions — with several movie studios sending checks — to Jon Bruning, the Republican attorney general of Nebraska, who was helping push their cause, and who made an unsuccessful bid for governor this year.
In one instance it even appears the MPAA edited a letter on behalf of the MS Attorney General Hood.

Document Letter to Google From Mississippi’s Attorney General This document shows revisions to a letter sent to Google by the attorney general of Mississippi, that had been largely drafted by a law firm representing the Motion Picture Association of America. OPEN Document

Here is more from Google's post on this topic:

The MPAA conspired to achieve SOPA’s goals through non-legislative means
According to The Verge, “at the beginning of this year, the MPAA and six studios … joined together to begin a new campaign” to figure how it could secretly revive SOPA. It “joined together to begin a new campaign” to achieve wholesale site-blocking by “[convincing] state prosecutors to take up the fight against [Google].” The movie studios “budgeted $500,000 a year towards providing legal support”—and the MPAA later sought up to $1.175 million for this campaign. 

 All in all it looks like SOPA is still alive and its supporters to censor the internet are also alive and well.

Monday, December 8, 2014

Senate Republican Committee Assignments

It was announced today that Sen. Chris McDaniel (R-Taylor Mill) will chair the Senate Appropriations & Revenue Committee; Senator-elect Julie Raque Adams (R-Louisville) will chair the Senate Health & Welfare committee; Sen. Albert Robinson (R-London) will chair the Senate Veterans Affairs committee.

Here is an unofficial copy of the Republican rosters for Senate committees for 2015. These are Republican members only. Apparently Democrat appointments will be made at a later date.

Paul Hornback, Chair
Carroll Gibson, Vice-Chair
Majority Senate Members:
C.B. Embry
Chris Girder
David P. Givens
Stan Humphries
Damon Thayer
Whitney Westerfield

Appropriations & Revenue:
Chris McDaniel, Chair
Stan Humphries, Vice-Chair
Majority Senate Members:
Ralph Alvarado
Danny Carroll
Carroll Gibson
Chris Girdler
David P. Givens
Wil Schroder
Brandon Smith
Max Wise

Banking & Insurance:
Tom Buford, Chair
Jared Carpenter, Vice-Chair
Majority Senate Members:
Julie Raque Adams
Chris Girdler
Chris McDaniel
Albert Robinson
John Schickel
Dan “Malano” Seum

Economic Development & Labor:
Alice Forgy Kerr, Chair
Chris Girdler, Vice-Chair
Majority Senate Members:
Carroll Gibson
Ernie Harris
Jimmy Higdon
Wil Schroder
Mike Wilson
Max Wise

Mike Wilson, Chair
Max Wise, Vice-Chair
Majority Senate Members:
Julie Raque Adams
Jared Carpenter
Danny Carroll
Carroll Gibson
David P. Givens
Jimmy Higdon
Alice Forgy Kerr

Health & Welfare:
Julie Raque Adams, Chair
Ralph Alvarado, Vice-Chair
Majority Senate Members:
Tom Buford
Danny Carroll
David P. Givens
Jimmy Higdon
Alice Forgy Kerr
Max Wise

Whitney Westerfield, Chair
Wil Schroder, Vice-Chair
Majority Senate Members:
Danny Carroll
Carroll Gibson
Alice Forgy Kerr
John Schickel
Dan “Malano” Seum
Robert Stivers

Licensing & Occupations:
John Schickel, Chair
Paul Hornback, Vice-Chair
Majority Senate Members:
Joe Bowen
Tom Buford
Jimmy Higdon
Chris McDaniel
Dan “Malano” Seum
Damon Thayer

Natural Resources & Energy:
Jared Carpenter, Chair
Brandon Smith, Vice-Chair
Majority Senate Members:
C.B. Embry
Chris Girdler
Ernie Harris
Paul Hornback
John Schickel
Whitney Westerfield

State & Local Government:
Joe Bowen, Chair
Stan Humphries, Vice-Chair
Majority Senate Members:
Julie Raque Adams
Ralph Alvarodo
Chris McDaniel
Albert Robinson
Dan “Maleno” Seum
Damon Thayer

Ernie Harris, Chair
Brandon Smith, Vice-Chair
Majority Senate Members:
Joe Bowen
Jared Carpenter
C.B. Embry
Jimmy Higdon
Albert Robinson
Whitney Westerfield
Mike Wilson

Veterans, Military Affairs & Public Protection:
Albert Robinson, Chair
C. B. Embry, Vice-Chair
Majority Senate Members:
Carroll Gibson
Ernie Harris
Stan Humphries
Chris McDaniel
Dan “Malano” Seum
Whitney Westerfield
Mike Wilson
Max Wise

Monday, November 10, 2014

October Receipts - GF up 4.6% & RF down .3%

General Fund receipts rose 4.6 percent
Road Fund receipts fell 0.3 percent

FRANKFORT, Ky. (Monday, November 10, 2014) - State Budget Director Jane Driskell reported today that October’s General Fund receipts grew 4.6 percent compared to last year. Total revenues for the month were $755.7 million, compared to $722.5 million during October 2013. Receipts have increased 1.9 percent for the first four months of the fiscal year, and need to grow 4.4 percent over the final eight months of FY15 to achieve the official revenue estimate of $9,801.2 million.

Driskell noted that the General Fund had a solid month after a first quarter in which receipts grew only 1.1 percent. “October was clearly a strong month of revenue growth as nominal collections grew $33.2 million, an amount higher than the nominal growth in the entire first quarter of FY15. The main contributions to the healthy growth in October were the individual income tax and sales taxes, which grew 4.8 percent and 6.3 percent respectively while corporate and property receipts continue to underperform.”

Among the major accounts:

● Individual income tax collections rose 4.8 percent, primarily on the strength of withholding collections. Receipts are up 5.2 percent for the first four months of FY15.

● Sales and use tax receipts rose 6.3 percent in October and are up 4.1 percent for the year. Corporation income tax receipts decreased 0.3 percent in October. Year-to-date receipts have fallen 24.1 percent.

● Property tax collections increased 41.1 percent in October, but are down 5.5 percent year-to-date. Large swings in property tax revenues are typical in the fall months as the bulk of receipts in this category are received between November and January.

● Cigarette tax receipts grew 11.5 percent in October and are up 0.2 percent for the first four months of the fiscal year.

● Coal severance tax receipts decreased 5.8 percent for the month and are down 5.2 percent year-to-date.

● Lottery revenues fell 3.3 percent in October but are up 4.2 percent for the year.

Road Fund receipts for October totaled $126.7 million, a 0.3 percent decrease from October 2013 levels. Based on year-to-date collections, Road Fund receipts can decline 2.0 percent and still meet the official FY15 estimate of $1,546.7 million. Motor vehicle usage tax receipts fell 4.3 percent for the month and have declined 1.4 percent year-to-date. Motor fuels taxes increased 0.8 percent in October and have grown 1.4 percent for the year.

Director Driskell noted that the October Road Fund performance is not unexpected. “Road Fund collections continue to be weak, as we anticipated. Growth in motor fuels tax collections is limited by a decline in demand. Motor vehicle usage tax receipts have been hampered by the impact of recent legislation which provides for a new car trade-in. It is anticipated that the credit will reduce collections by $34 million in the current fiscal year.”


Friday, November 7, 2014

Lt. Gov. Jerry Abramson Appointed to White House Post; Gov. Beshear to Appoint Former Auditor Crit Luallen New Lt. Gov.

Commonwealth of Kentucky
Office of the Governor

Kerri Richardson

Terry Sebastian

Lt. Gov. Jerry Abramson Appointed to White House Post;
Gov. Beshear to Appoint Former Auditor Crit Luallen New Lt. Gov.
Abramson named Deputy Assistant to the President and Director of Intergovernmental Affairs
FRANKFORT, Ky. (Nov. 6, 2014) – Kentucky’s Lieutenant Governor, Jerry Abramson, will resign effective Nov. 13 to take a new position as Deputy Assistant to President Barack Obama and Director of Intergovernmental Affairs in the White House, and Governor Steve Beshear will appoint former state Auditor Crit Luallen as the state’s new second-in-command.
Governor Steve Beshear announced the resignation and appointment today in the Capitol’s formal State Reception Room, flanked by his current and incoming lieutenants.
“This is a bittersweet moment for me and for our administration. Jerry and I have been friends for more than 30 years, and I chose him as my Lieutenant Governor because I knew that his extensive experience as longtime mayor of Louisville, his contagious enthusiasm and his knack for building momentum around new ideas would make him a great partner in leading our state,” said Gov. Beshear. “But the White House noticed all those skills, too, and realized that he will take those same gifts and put them to work on our nation’s domestic agenda. He will be an outstanding addition to the President’s administration, and we will miss him terribly.”
Abramson’s role is to be the nexus between the President’s domestic agenda and city, county, state, and tribal governments.  He will help state and local governments manage policy issues and challenges, such as infrastructure, natural disasters, and public health.
“The challenges that face America’s local communities – such as workforce training, education, infrastructure investment, shrinking budgets, affordable housing, public transportation, and emergency response – are the issues that I’ve worked on for more than 30 years in local and state government. I’m honored to be in a position to help this country’s mayors, county executives, governors and other local officials tackle these issues and work to find innovative solutions,” said Lt. Gov. Abramson. “I’m grateful to Gov. Beshear for bringing me on board three years ago, and I’m proud of the work we’ve done together to bring jobs to our state and to strengthen Kentucky families.  My experience in the Kentucky Capitol will be vital as I step into my new role.”
In addition to serving as a key advisor to the Governor, Lt. Gov. Abramson led multiple initiatives for the administration.  He served as chair of the Blue Ribbon Commission on Tax Reform, and launched a statewide version of “Close the Deal”, a program he created while mayor of Louisville to give high school students the tools they need to navigate applying to college.  Lt. Gov. Abramson also chairs the kyhealthnow initiative, which seeks to improve several of Kentucky’s worst health statistics over the next few years.
“The good news is that now, there’s a Kentuckian in the White House. What an asset for our state to have someone who understands Kentucky’s needs and can make a direct appeal on federal decisions and policies,” said Gov. Beshear. 

Luallen, a former state Auditor, has decades of experience in Kentucky’s executive branch, including stints as state budget director, Secretary of the Governor’s Executive Cabinet, Secretary of the Finance and Administration Cabinet and Secretary of the Tourism Cabinet.

“Crit is a well-known and beloved public servant, respected by members of both parties for her resolute pursuit of clean, ethical government,” said Gov. Beshear. “She was my first and only choice to serve as the new Lieutenant Governor, and I know Kentuckians will be confident that she is more than up to the task.  I’m glad she agreed to return to state government, and I’m certain she will bring that same tenacity and grit to the Lt. Governor’s office.”

“It is a high honor to stand here today in partnership with this Governor,” said Luallen.  “Serving as Lieutenant Governor gives me an opportunity to continue to serve Kentucky and offer my experience and perspective to Gov. Beshear and the fine team he has assembled. It will be my personal goal to help the Governor end his term in office with the state in as strong a position as possible to face the challenges the future holds.”

Luallen worked for six Kentucky governors before winning two terms as Auditor. During her time as Auditor, the Auditor’s Office uncovered millions of dollars in government fraud and questionable expenditures, leading to the criminal prosecutions of 34 individuals.

In 2001, Luallen was awarded the National Excellence in Leadership Award by Women Executives in State Government, and in 2009, she was named Public Official of the Year by Washington, D.C.-based magazine “Governing” for her positive impact on government in Kentucky.

“Crit Luallen has served state government in a variety of ways over the years, so she certainly will bring a wealth of information to the administration.  I wish her the best as she takes on this responsibility,” said Speaker Greg Stumbo.
“I have great respect for Crit Luallen,” said Kentucky State Senate President Robert Stivers. “She and I have always worked well together, professionally and personally, and I look forward to that relationship continuing with Lt. Gov. Luallen. On behalf of the Kentucky Senate, we would like to wish Jerry Abramson the best in his new role in the Obama administration.”

Lt. Governor Abramson’s resignation will be effective at 5 p.m. Thursday, Nov. 13.  Luallen will be sworn in at that time at a private ceremony, with a formal public swearing-in scheduled for Friday, Nov. 14 at 2:30 p.m. in the Capitol Rotunda.

About Lt. Gov. Abramson
Lt. Governor Abramson, of Louisville, was nicknamed “Mayor for Life” after winning a total of five terms as that city’s mayor, two of them over a merged city and county government. He oversaw a dramatic transformation of Louisville during his tenure, including bringing the KFC Yum! Center to the city’s waterfront and supporting the expansion of major employers such as UPS, Ford and GE. At the same time, Abramson supported local small business and accelerated the community’s downtown revitalization with the addition of Slugger Field, Waterfront Park, Fourth Street Live, the Frazier History Museum and the Muhammad Ali Center.

In Louisville, Abramson pioneered local public-private partnerships to further policy goals, including “Close the Deal,” which brought together the business, government, education and civic leaders from Greater Louisville to expand the number of high school students going on to college; and the “Louisville Education and Employment Partnership” (LEEP), which focused on decreasing the high school dropout rate.

He also collaborated with diverse partners to reinvent Louisville as a “City of Parks” and to develop a nationally recognized public housing model. In 2008, the U.S. Conference of Mayors acknowledged Abramson’s impact when it named Louisville “America’s Most Livable Large City.”

Abramson received a Bachelor of Science in business economics from Indiana University and a law degree from Georgetown University in Washington, D.C. He served in the U.S. Army from 1969-1971, and then went on to two terms on Louisville’s Board of Aldermen. In addition to privately practicing law, he served in state government as general counsel to Kentucky Governor John Y. Brown Jr.

He and his wife, Madeline, have a son, Sidney.

About Crit Luallen
Luallen’s service began in 1974 as a campaign staff member to Wendell Ford. She served nearly seven years as Secretary of the Governor’s Executive Cabinet, a position similar to chief operating officer. In this position, Luallen was the chief operating officer of Kentucky, with responsibility for more than 35,000 full-time employees and a budget of $17 billion.

Luallen also served as State Budget Director, Secretary of the Finance and Administration Cabinet, Secretary of the Kentucky Tourism Cabinet, Commissioner of the Kentucky Department of the Arts, and Special Assistant to the Governor. She also spent four years in Louisville and served as President of the Greater Louisville Economic Development Partnership, a regional economic development agency.

She also served two terms as Kentucky’s Auditor of Public Accounts.  During her tenure, the Auditor’s Office uncovered millions of dollars in government fraud and questionable expenditures, leading to the criminal prosecution of 34 individuals.

During her years of service to Kentucky, Ms. Luallen was pivotal in many of the Commonwealth’s greatest accomplishments.  She played a key role in developing and securing passage of the historic Higher Education Reforms of 1997 and the Early Childhood Development initiative. Ms. Luallen chaired EMPOWER Kentucky, a government efficiency initiative that produced savings to Kentucky taxpayers of $600 million.  She helped develop the Agricultural Development Board that determines the uses of Kentucky’s tobacco settlement funds and she chaired Kentucky’s Homeland Security Team.  In response to allegations of wrongdoing in the Transportation Cabinet, Ms. Luallen spearheaded the creation of an Office of Inspector General.  

Ms. Luallen also played a leadership role in developing the Governor’s School for the Arts, the Kentucky History Center, the Northern Kentucky Convention Center, and the expansion of the Commonwealth Convention Center in Louisville.

Luallen is a native of Frankfort, a graduate of Centre College where she serves on the Board of Trustees and is married to Lynn Luallen, retired CEO of the Kentucky Housing Corporation. 



Governor Beshear’s press releases are available on his official website at

Wednesday, November 5, 2014

Election Update

2014 Election Update

Kentuckians went to the polls today after what has been a contentious campaign season. The U.S. Senate race between Minority Leader Mitch McConnell and Alison Lundergan Grimes and control of the state House were in question.  All six Congressional seats were up  with half of the State Senate and numerous local races also on the ballot.

Below are the unofficial results based on current information available. We will provide a more extensive summary and analysis in the coming days. 

U.S. Senate - McConnell Wins

Senate Minority Leader Mitch McConnell was challenged by Secretary of State Alison Lundergan Grimes. After what many thought would be a close race, McConnell won by what appears to be 15% points.  After the race was called early in the evening, the big question became whether a Republican wave would follow, especially in the State House races.

KY State House of Representatives - Democrats Maintain Majority

After millions of dollars were poured into State House races, it looks like the evening ends in a wash.  The House Democrats held a 54-46 majority going into tonight and while it appears the margin will stay the same, some races still aren't final at this time.

Of the 100 House seats, there were 52 contested races.  The Democrats held 28 of those seats, while the Republicans held 24. 

Two House Democrat incumbents did fall - Rep. Jimmie Lee and Rep. Richard Henderson.  One Republican incumbent, Rep. Toby Herald, also appears to have been defeated.

Details on House races to follow, after all races have been called.

Congress - All 6 Incumbents Win

Incumbent Kentucky Congressmen, Whitfield, Guthrie, Yarmuth, Massie, Rogers, and Barr all handily win reelection.

State Senate - Republicans pick up 2 seats (plus 1)

The Senate Republicans now hold the majority by a margin of 26-12.  The numbers going into tonight were 23-14-1, although the Independent caucused as a Republican.  

Of the Senate races, the most interesting was the loss by incumbent and Senate Minority Leader RJ Palmer to a Republican physician, Ralph Alvarado.  Alvarado will be the first Latino elected to the Kentucky General Assembly.

Former House member CB Embry (R) wins in Madisonville which is currently a Democratic seat.

Supreme Court - Keller wins

In the only contested Supreme Court race, incumbent Michelle Keller defeated Teresa Cunningham.

You can find various media reports of the election results from across the state in our KY Political News email tomorrow morning.  Again, we will provide a detailed breakdown as it relates to the Kentucky Legislature in the coming days.

Tuesday, May 20, 2014

KY Primary Election Update

Kentuckians went to the polls on Tuesday to cast votes to select party nominees in the 2014 Primary Election. Despite several high profile elections, in particular the U.S. Senate race that is getting national attention, voters went to the polls in low numbers with turnout being measured at around 24%.

- In the U.S. Senate race, the U.S. Senate Minority Leader Mitch McConnell won the Republican primary against Matt Bevin. On the Democrat side, KY Secretary of State Allison Lundergan Grimes won the primary and thus McConnell and Grimes will square off in November.

Of interest in state legislative races, there were 22 primary races in the State House and 6 in the State Senate. The key highlights from these 28 races are:

- Two Incumbents Lose: Of the 28 state legislative primary races, 14 incumbents (11 in the House and 3 in the Senate) had challengers and all prevailed except for these:  

  • Senator Sara Beth Gregory (R-Monticello) lost to Max Wise a Republican political science professor. This was a hard fought race in a district that was augmented significantly through redistricting.

  • Representative Keith Hall (D-Pikeville) lost to Chris Harris a Democrat local official. Redistricting may have played a factor in this race also as Martin County was added and apparently Harris ran well their.

- New Legislators: In the event that a candidate doesn’t draw a challenger from the opposite party then some primary races are the final election and determine who will serve the legislative district that was the case in 9 races (3 in the Senate and 6 in the House). These candidates join those legislators running unopposed in the General Election and will join or continue in the ranks of the General Assembly:

  • Senate: Incumbent Republicans Sen. Paul Hornback and Sen. Dan Seum. They will be joined by Max Wise who won the 16th District primary.

  • House: Incumbent Republicans Rep. Addia Wuchner, Rep. Tim Moore, and Rep. Regina Bunch. Incumbent Democrat Rep. Fitz Steele will be joined by Chris Harris who won the 93rd primary and former Lexington Councilman George Brown who won the open seat to replace retiring legislator Jesse Crenshaw.   

We will focus heavily on media reports of the various election results from across the state in our KY Political News email tomorrow. Further we will have an updated breakdown of candidates for the general election in the days to follow.

Monday, April 14, 2014

And Then There Was...One

On Sunday we sent out an email laying out how we thought the final two days of the legislative session would likely play out with the main issues being overriding vetoes and the transportation budget. The General Assembly took no action on either of those topics today. 

The legislature did move several issues along. They gave final passage to several bills, including: HB 369 (reducing contractual statute of limitations) and SB 200 (juvenile justice reform). They also appointed conference committees for others like HB 125 (lab reports). Besides posturing over the transportation budgets, the legislature, and in particular the House, found itself dealing with the outcome of the Legislative Ethics Commission decision in the John Arnold case from last week. 

The General Assembly will return at 10:00 a.m. on Tuesday, April 15 for the final day of the 2014 Session.

Monday, April 7, 2014

Newsletter Technical Issues

We have experienced some outages and technical problems over the past several days with our news feeds that produce our nightly newsletters. We believe to have the problem solved and will be doing a supplemental newsletter delivery today, Monday @ 1:00 pm EST. Then normal delivery timing should resume tonight at 1:00 a.m.

Thanks and sorry for the inconvenience.

Friday, January 31, 2014

Candidate Filing Deadline

As we have mentioned in our various reports leading up to and during the legislative session, the 2014 State Legislative elections look to be an important dynamic impacting all issues for this session. Yesterday the candidate filing deadline past, and so now the field of candidates for May and November elections is set.

The spreadsheet below provides a quick look at the candidates that have filed. There are tabs for State House, State Senate, and Supreme Court. On the charts the colors signify: Yellow are primaries, green are unopposed incumbents, and red are incumbents with races. 

This is all very preliminary in terms of analysis, but here are a few facts:

State Senate
- Of the 19 Senate seats up in 2014, 13 are contested and 4 of those are open seats (Leeper, Rhoads, Denton, Stine).
- 9 of the 13 contested seats are currently held by Republicans, 3 by Democrats, and 1 by Independent. 
- 3 Incumbents have primaries (Gregory, Hornback, and Wilson)
- The Republicans currently control the Senate 23-14-1. 

State House
-  Of the 100 seats up in 2014, 62 are contested in either the primary or general election, of which Democrats hold 34 and Republicans hold 28.
- There are 7 open seats all contested (J. Adams, B. Damron, D. Butler, J.W. Stacy, CB Embry, and J. Crenshaw).
- 12 incumbents have May primaries (6 Democrats: Hall, D.Watkins, Glenn, J.Lee, Steele, Collins) & (6 Republicans: Moore, Webber, Bunch, Rader, Upchurch and Wuchner)
- The Democrats currently hold the House 54-46.

Tuesday, January 21, 2014

Gov. Beshear's Budget Address

Governor Beshear gave his Budget Address this evening to a joint session of the General Assembly. A copy of the Governor's speech and accompanying press documents are attached. To preview an actual copy of the Governor's Budget proposal access it HERE.

A few highlights from the Governor's budget proposal, we will be previewing and providing more analysis:

- To meet the Governor's spending goals in his plan it was necessary for him to come up with roughly $756 million. The sources of those funds are: 

Fund Transfers -- $370,769,500 
Savings from the Affordable Care Act -- $166,763,600 
Spending Cuts -- $98,599,400 
FY 14 Estimated Ending Balance -- $69,458,400 
Other Resources and Lapses -- $49,546,200 

- Of the roughly $99 million from spending cuts, the Governor cut most state agencies 5%. Though he held several agencies harmless from the cuts including Education Funds, Medicaid, Public Health, Economic Development Cabinet, and many others.

The Governor's spending priorities included:

- Restoring K-12 education funding, increased funding for education supports, and making investments to pre-school by expanding eligibility
- Raises for state employees
- Fully funding ARC for public employee pensions
- Restoration of child care subsidy cuts
- A robust capital construction plan for universities and KCTCS, including an advanced manufacturing training center in Georgetown
- Investments in Eastern KY for broadband, 4-laning the Mountain Parkway, and economic development efforts

On the Road Fund: 
- The Governor froze the floor on the gas tax
- Identified several high priority projects (I-65 widening, completion of several bridge projects, and 4 laning the Mtn Parkway)
- Additional monies for revenue sharing and maintenance

In terms of political analysis, the Governor proposed a budget that has a little something for everyone. The initial areas of concern for some members of the General Assembly may be: the budget proposal increases bonded indebtedness to 7% an all-time high, some state agencies through the 5% cuts proposed by the Governor will have been cut over 40% over the last 5 years, and some of the funds the Governor has "found" may create structural imbalances that are difficult to deal with in the future.

The real question is whether the General Assembly will feel compelled to look at new revenues through either expanded gaming or tax reform to forgo these significant cuts to some agencies and prohibit the significant use of one-time monies. 

More analysis to come.

Attached please find a copy of Governor Beshear's budget address and budget fact sheets on education, families, healthcare, jobs and SOAR. 

Commonwealth of Kentucky
Office of the Governor

Kerri Richardson

Terry Sebastian

Education Gets Historic Lift in Gov. Beshear's Budget
Investment in education, children means deep cuts to many agencies

FRANKFORT, Ky. (Jan. 21, 2014) – Saying Kentucky needs to lead, not cower, Governor Steve Beshear on Tuesday unveiled a two-year budget proposal that combines harsh cuts and strategic borrowing to create funding for historic proposals that support Kentucky's schools and workforce.

Gov. Beshear's proposed 2014-2016 biennial budget increases per-pupil K-12 funding to its highest level ever; restores damaging cuts to teacher training, textbooks, school safety and Extended School Services; expands preschool services to more than 5,100 more children; dedicates funds to expand high-speed broadband access throughout the state; uses "agency bonds" for the first time ever to invest in the campuses of Kentucky's two-year community and technical colleges; restores funding to desperately needed child-care assistance programs that help parents stay employed; and builds a $24 million advanced manufacturing training center that will supply workers to the auto industry and other sectors.

In his budget address to legislators, Gov. Beshear urged legislators to join him in using the two-year budget to make a tangible and bold difference in the lives of Kentucky families.

"So tonight, we must answer a fundamental question: Does Kentucky march aggressively into the future, or do we cower under the covers as the world leaves us behind? Do we lead, or are we too afraid to even follow?" the Governor asked.

"This budget proposal clearly gives my answer: We can and we must build a more vibrant Kentucky. And this proposal provides the roadmap to do just that."

In his State of the Commonwealth address two weeks ago, the Governor signaled his intentions to cut other areas of state government to fund education, although he said Tuesday that he was "painfully aware" of what those cuts would do.

The challenge, he said, was that moderate projected increases in revenue are not sufficient to cover the growth in required expenses and maintenance of current levels of services.  As a result, Gov. Beshear recommended $98.6 million in cuts over the biennium.  Many agencies will see reductions of five percent in the first fiscal year, then a straight-lined (no increase or decrease) budget for the second year.  Since 2008, many of those agencies have seen their budgets slashed by 41 percent.  These cuts could lead to delays in service, loss of federal funds, possible facility closures, and even possible layoffs.

"Imagine running a business and being told to maintain the same level of services while slashing your budget 41 percent. That is a difficult and sometimes impossible task," said Gov. Beshear.

The Governor exhorted legislators to make these investments in education, even by slicing funding for other needs.  The state's school district budgets are stretched to their limits thanks to the simultaneous impacts of diminished property taxes and years of stagnant state budget allocations.  Despite those challenges, the Governor said Kentucky schools and students have excelled – and it is critical to maintain that momentum.
"We are accelerating the momentum that has seen Kentucky leap ahead of many other states in measures of student performance and policy reform," he said.  "This budget proposal strategically focuses our very limited resources on what I believe will deliver the greatest return: a more highly educated population that will become a more talented workforce."

Improving Kentucky's Competitiveness through Strategic Investments
Improving Competitiveness through EducationThe most important investments in the Governor's proposed budget are in K-12 education. The largest item is SEEK, the main funding formula for our classrooms.  From 2000 to 2008, SEEK grew an average of 3.4 percent each year.  But from 2008 to 2014, funding flatlined – even as enrollment expanded, costs increased and local support in some areas declined. In effect, per-pupil spending dropped, even though the annual SEEK allocation remained the same.

Governor Beshear recommends investing $189 million over the biennium into SEEK, bringing per pupil spending to its highest total ever.

That allocation will include pay increases for all teachers and classified school personnel (2 percent the first year, 1 percent the second year).

Gov. Beshear's proposed education investments also include:
·         $95.4 million over the biennium for textbooks, professional development, school safety and Extended School Services (restoring funds to near-2008 levels)
·         $36 million over the biennium to expand preschool services to serve 5,125 more 4-year-olds by increasing eligibility from 150 percent of the poverty level to 160 percent. This is a 22 percent increase in enrollment.
·         $50 million for technology and school equipment upgrades, funded through General Fund-supported bonds
·         $100 million for school facilities construction to replace aging K-12 school buildings through General Fund-supported bonds

Improving Competiveness through Higher EducationThe Governor also recommends using $520.3 million in General Fund supported bonds and $704 million in agency bonds to invest in critical infrastructure for our state universities. These investments include new construction, such as new science buildings, health care and student services facilities, as well as renovation and maintenance projects. 

The budget also recommends $60 million for Bucks for Brains, the endowment match program which helps universities attract world class faculty for research and innovation.

For the first time, the Governor recommends authorizing $145.5 million in agency bonds for the Kentucky Community and Technical College System.  About 100,000 students access education through KCTCS and its 16 colleges and 73 campuses.  The General Fund can't meet the system's infrastructure needs, so KCTCS leadership recommended issuing agency bonds for up to 75 percent of project costs.  The remaining 25 percent will come from local communities and other public or private sources.  The bonds will support one project at each KCTCS college. 

Improving Competiveness through Economic DevelopmentThe Governor's top priority throughout his administration has been helping Kentucky businesses thrive and attracting new jobs to the Commonwealth.  His proposed budget recommends several investments to continue the state's economic development momentum.
·         Statewide high-speed broadband access through the Next Generation Information Highway:  High-speed Internet access is no longer a luxury in today's economy.  It's a critical need that supports economic development, education, health care, and every business sector.  Kentucky ranks 46th in broadband availability, and 23 percent of rural areas do not have any broadband access at all. To attack this gap and promote economic growth, Gov. Beshear allocated $60 million in bonds to build the Next Generation Kentucky Information Highway, which will provide high-speed broadband capability for the entire state.  An additional $40 million is planned from federal and private sources. Eastern Kentucky will be the first priority region.  Two-thirds of the state debt service will be supported by existing state expenditures set aside for Internet access. 
·         Building an Advanced Manufacturing Training Center:  Gov. Beshear proposes to spend $24 million in General Fund supported bonds to build an advanced manufacturing training center in Georgetown associated with the Bluegrass Community and Technical College. This College has been partnering with the Kentucky Federation of Advanced Manufacturing Education to produce workers for Toyota and other manufacturers.

Improving Competiveness by Strengthening Eastern Kentucky:  To support the continuing efforts of the "Shaping Our Appalachian Region", or SOAR initiative, Gov. Beshear recommends multiple investments in the region to enhance economic development and leverage public-private partnerships.
·         Four-laning and Extending the Mountain Parkway:  Gov. Beshear's proposed Highway plan recommends a series of projects, totaling $753.6 million, by which the Mountain Parkway would be four-laned and extended by 2020.  The Governor's plan would make the current two-lane section – from Campton to Salyersville – a four-lane highway.  It would then extend the Parkway from Salyersville to Prestonsburg by four-laning 16.2 miles of two connecting routes – U.S. 460 and Ky. 114. At Prestonsburg, the new Parkway would connect with four-lane U.S. 23 – creating a modern, four-lane corridor all the way from I-64 near Winchester to Pikeville. 
·         Funding Coordination of the SOAR Initiative.  Gov. Beshear's budget provides $400,000 over the biennium from multi-county coal severance funds for administrative costs associated with coordinating SOAR-related initiatives. These funds will be matched with other public and private funding to cover costs including staff support, workgroup  meetings, economic analysis, public hearings, and other outreach efforts to improve the region
·         Creating a Regional Strategic Development Fund for Eastern Kentucky: Gov. Beshear's budget creates a new Regional Strategic Development Fund and provides $4 million from the Local Government Economic Development Fund Single County allocations over the biennium.  Details on how the funds should be governed and invested will be discussed over the next several months through the SOAR initiative, and recommendations will be made to the 2015 General Assembly.
·         Increasing Funding for Coal County Scholarships.  Gov. Beshear proposes to double current funding for the Coal County College Completion Program to $2 million per year, which will provide more than 500 scholarships per year in eastern Kentucky.

Improving Competitiveness through Strengthening Families and ChildrenGov. Beshear recommends investing in services that support families and children, to help families become economically stable and to ensure safety for our youngest citizens.
·         Restoring Child Care Assistance Cuts. Last year, the loss of federal funds forced the state to freeze applications to the Child Care Assistance Program and to reduce eligibility guidelines from 150 percent of the poverty level to 100 percent.  As a result, many parents who could no longer afford child care had to quit their jobs, and many child care centers which relied on those payments had to close their doors.  Gov. Beshear's budget restores the funding cut from that vital program. This action will impact 18,000 children and more than 10,000 families.
·         Funding Staff for the Child Fatality Review Commission.  Gov. Beshear will fulfill the request made by the new Child Fatality Review Commission for $840,000 for staffing and support over the biennium.

Competitiveness through Improving Health:  The federal Affordable Care Act created $166.7 million in savings for the Commonwealth, which the Governor is reinvesting in health and family services such as Medicaid, child care assistance and numerous other services.  Among those investments: 
·         Funding for Colon Cancer Screening.  For the second straight budget, Gov. Beshear will again provide $1 million for the Kentucky Colon Cancer Screening Program to provide screenings for low income and uninsured Kentuckians.  The Kentucky Cancer Foundation will match the budget allocation.  To date, more than 900 Kentuckians have participated in the program. 
·         Funding to Increase Screening for Women for Breast and Cervical Cancer.  Gov. Beshear proposes $1 million to expand screenings through the Kentucky Women's Cancer Screening Program to increase breast and cervical cancer screening among Kentucky women.  The funding will also develop systems to help women navigate the health care system.

Investing in Pension Solvency and State Workforce:  Gov. Beshear's budget proposal fully funds the actuarially recommended contribution (ARC) for the Kentucky Retirement System.  That means additional General Funds of $101.3 million in FY15 and $106.3 million in FY16.

The state's workforce has not had a raise since 2010.  Gov. Beshear recommends a sliding scale of salary increases for all state workers, with the largest percentage increase – 5 percent – going to workers earning $27,000 or less per year in FY15, and a 1 percent across-the-board raise in FY16.

Competitiveness through Transportation Infrastructure:  The Governor's Biennial Highway Construction Plan would provide about $1 billion in new construction each year for transportation improvements across the Commonwealth.

Proposed projects include widening and extending the Mountain Parkway for economic development in eastern Kentucky, completion of the six-laning of Interstate 65 and continuation of funding for the Ohio River Bridges Project.

The proposed plan also would provide for badly needed new bridges across Lake Barkley and Kentucky Lake, funding to support the Brent Spence Bridge project in northern Kentucky and continuation of long-awaited projects to complete the I-69 Corridor in western Kentucky.

New Investments Funded through Severe Cuts Elsewhere
Gov. Beshear noted that this budget does not rely on new funding from sources like gaming or tax modernization. Instead, the new investments are largely created through new, deep cuts of 5 percent for many state agencies.  Some agencies are held to just 2.5 percent reductions, including higher education institutions and state police.  A few agencies are protected entirely from cuts.

"Look, I am painfully aware that with this reduction, our colleges and universities will have undergone cumulative cuts of 17 percent during this historic recession. This was one of the most difficult choices made in this budget, because higher education deserves more support, not less," lamented Gov. Beshear. "But there simply is no way to create enough money to make the needed investments in pre-K through 12th grade unless higher education is included in the reductions.

The Governor warned that with these new cuts, many agencies will have endured cumulative cuts of 41 percent since 2008.  The impact of these cuts may include service delays, more employee attrition, possible layoffs, loss of federal funds, and possible facility closures.

"I am deeply disturbed by the damage these reductions will cause. Much of the "right-sizing" we've done with state government over the last seven years was needed," he said. "But some cuts went way too deep."

Governor Calls for Bipartisan Cooperation; Support for Gaming, Tax Reform
The Governor acknowledged that he could have simply slashed the budget across the board, but instead, he chose to make damaging cuts to some areas in order to make strategic investments in education.  He pointed to tax reform and gaming as two alternatives that would allow much more progress and more investment with far less damage to needed services. 

The Governor will present a tax modernization proposal to legislators soon, which will offer specific recommendations on how to move the Commonwealth's antiquated tax system into the 21st century and make the state more competitive.

"One of the silver linings of a more competitive tax structure is that it will, as the economy grows, also stabilize long-term revenue – not because of higher rates, but because it's aligned with today's economy, instead of one that existed a century ago," said Gov. Beshear.

Expanding gaming would produce additional recurring revenue even faster – again, not by creating a new burden on Kentuckians but by capturing a revenue stream that already exists.

"Kentuckians are currently spending hundreds of millions of entertainment dollars on gaming – but they're spending it in other states, funding programs outside our borders," said the Governor. "Let's allow Kentuckians to decide this issue by placing a Constitutional Amendment on the ballot related to expanded gaming."

He concluded his remarks by reminding the legislators of their recent successes attained by working across party lines – everything from robust prescription drug laws to pension reform.

"I believe that with the same level of respect, collaboration and vision, we can direct the resources of this budget to help Kentucky maintain its position as an innovative force in this 21st century world," he said.  "Now, let's get to work."


Tuesday, January 7, 2014

Gov. Beshear: State of Commonwealth Kentucky’s Positive Momentum in Jeopardy

Governor Beshear gave his State of the Commonwealth address to a joint session of the General Assembly this evening. The press release and a copy of the Governor's speech is attached. A few highlights from our perspective were:

- On Budget & Revenue - The Governor said he would push for tax reform relying on recommendations from the Blue Ribbon Task Force in 2012, including a constitutional amendment for a local option sales tax. He also said he would push once again for a constitutional amendment on expanded gaming. 

- On Health Care - He will announce a new public health initiative in the near future to address Kentucky's poor health ratings. He will also push for a statewide smoke-free legislation and banning the sale of e-cigs to minors. 

- On Education - The Governor dedicated significant time in his speech to education issues. He focused heavily on early childhood education and the ALL-STARS program to increase the quality of preschool and kindergarten readiness. He highlighted Kentucky's adoption of the Common Core and Next Generation Science standards. In terms of education funding he reiterated his intent to find the money to restore SEEK funding even if it meant cutting other areas of government drastically.

- On other initiatives - The Governor mentioned his interest in: "no phone" zones limiting cell phone use, battling heroin problem, and help on the SOAR initiatives like improving the Mountain Parkway and an upcoming Federal grant announcement related to SOAR. 

In general, the speech was politely received by the legislators in attendance. Maybe it was due to the lack of new policy issues or the length of the speech, but members were not generally enthusiastic with their applause of tonight's speech. We will have more analysis in the days to come leading up to the Governor's Budget address later this month.    

 Commonwealth of Kentucky
Office of the Governor

Kerri Richardson

Terry Sebastian
Gov. Beshear:  Kentucky's Positive Momentum in Jeopardy
Speech urges action this session to support education progress, improve tax climate

FRANKFORT, Ky.  (Jan. 7, 2014) – Kentucky Governor Steve Beshear exhorted legislators in his seventh State of the Commonwealth address Tuesday to ignore the lure of partisan politics and continue collaborating with him on improving the state's business climate in two key areas:  strengthening Kentucky's future workforce by investing in education and creating a healthier population, and modernizing the tax code to make the state more competitive.

National observers have taken notice of Kentucky's progress in "shrugging off an historic reputation for backwardness and writing a new narrative founded on change and innovation," the Governor said, but he warned that the Commonwealth's future growth and opportunities, especially in education, will grind to a halt unless legislators take substantive action in this session.

"We must continue to focus our attention not on the next headline or next election but on a collective vision of a stronger Kentucky," said Gov. Beshear.  "What does that Kentucky look like?  It's a place where every person who needs a job has one, where every child has the opportunity to be successful, and where every family enjoys financial security and a high quality of life.

"But core challenges continue to stand in our way, and although we have made significant progress, much more needs to be done."

The Governor used his speech to a joint session of the General Assembly to discuss Kentucky's progress in creating jobs, building a more seamless and effective education system and making health care accessible and affordable to all Kentuckians, and to lay out an agenda for the 60-day session and the coming year.

Job Creation is Top Priority; Maximizing Competitiveness Key Goal
Creating jobs remains his top priority, the Governor said.

"Putting Kentuckians to work is the single-best thing we can do both for our families and our state," he said.  "The good news is that companies want to come to Kentucky, and Kentucky companies continue to expand workforces, facilities and production lines."

But to continue that progress, Kentucky needs to make itself more attractive to businesses.

Competitiveness through Modern, Business-Friendly Tax Reform:  The first step requires long-overdue changes in Kentucky's tax code to improve economic competitiveness, reduce assessments that create an unlevel playing field for existing Kentucky businesses and treat working families more fairly.

Gov. Beshear said he would present in this session a tax modernization proposal with specific recommendations on how to move Kentucky's archaic tax code into the 21st Century – a package specifically designed to maximize the state's competitiveness for job growth and sustainability.

The legislative package will be drawn from the report written by the Governor's 2012 Blue Ribbon Commission on Tax Reform, which included such items as:
·         lowering the top individual and corporate tax rates
·         broadening the tax base in the sales tax and retirement areas
·         establishing an angel investor tax credit for certain investments in small businesses; and
·         making changes that favor Kentucky-based companies.

Another recommendation will be a constitutional amendment to allow local communities to vote on local sales taxes for specific projects.

"Kentucky is developing a modern education system, a modern health care delivery system and a modern economy," the Governor said. "So why should the Commonwealth continue to hamstring itself by using an outdated tax structure?"

Competitiveness through Strengthened Workforce:  The second step will be to strengthen Kentucky's workforce by improving the health and education of our citizens, especially the youth who are tomorrow's employers and employees, the Governor said.

"I talk to business executives almost daily about what they need to make their companies successful," he said. "Their No. 1 concern is their workforce – finding enough talented, skilled, energetic, healthy and educated workers."

One challenge is the collective health of Kentucky's population, which ranks among the worst in the nation, the Governor said. About 1 out of every 7 Kentuckians lacks health insurance, which not only threatens those families' financial security but also – on a statewide level -- decreases worker productivity, jacks up health care costs, and diminishes Kentucky's attractiveness to businesses. 

Gov. Beshear seized an historic opportunity to provide accessible, affordable health insurance to every Kentuckian by embracing and localizing federal health care reform.  Last year, he expanded Medicaid and created a state-based health insurance exchange so Kentuckians could find health insurance through a custom web portal called kynect.  Since the website's launch on Oct. 1, more than 130,000 Kentuckians have enrolled in affordable health insurance through kynect – many of them for the first time in their lives. 

Those efforts, combined with Medicaid reform, improved dental care access in rural areas, and expanded access to early cancer screenings, will help Kentuckians enjoy better health in the years to come.

Gov. Beshear pledged to intensify health improvement efforts through a new initiative, to be unveiled in the coming weeks.  The plan will identify multiple health goals and strategies, including:
·         supporting comprehensive state-wide smoke-free legislation
·         banning the sale of e-cigarettes to minors
·         cutting the state's obesity rate
·         requiring HPV vaccinations for youth; and
·         reducing rates of heart disease.

"Kentucky's leaders must recognize the direct relationship between a healthier, more productive workforce and our ability to attract and retain good-paying jobs for our people," said Gov. Beshear.

Competitiveness through Prioritizing Education:  A strong workforce is an educated workforce, and Kentucky has made enormous progress in creating a seamless, cradle-to-career education system that is better preparing students for a complex world. 

With special focus on early childhood education, raising the graduation rate, and increasing college and career readiness for all students, Kentucky's schools are emerging as national leaders in education reform and measurable student progress. 

In 2013, Education Week's annual Quality Counts report ranked Kentucky in the top 10 states in student performance and education progress.  The state is implementing the Graduation Bill passed last session, which will require students to stay in school until age 18.  And last month, Kentucky won a $44.3 million federal Race to the Top grant to improve early learning programs for thousands of Kentucky preschoolers. 

But schools have stretched their dollars as far as they can, the Governor warned, and will lose ground without new investment.

Kentucky has frozen SEEK – the basic funding formula for K-12 classrooms – for six years, even as student enrollment expanded, costs increased and local support in some areas dropped.  Plus, budget pressures forced deep cuts in areas ranging from textbooks to teacher training and school safety.

Meanwhile, because of impending federal sequester cuts, schools face the prospect of significant layoffs, increased classroom sizes and out-of-date technology.

"We are in danger of losing all of the positive momentum which has been built up. And I am not going to allow that to happen," the Governor said.  "I am determined to find money to reinvest in education – even if I have to make harmful cuts in other areas to do so."

Fiscal discipline and aggressive managing of the budget – including some $1.6 billion in spending cuts – helped Kentucky get through the recession, but in some areas the cuts went deep enough to damage programs and services critical to building a stronger future.

"We cannot continue making progress by paying teachers less than they deserve, by ignoring needs like textbooks and technology, by delaying research into innovative energy production, by pricing college out of reach, by leaving needed cancer screenings unfunded, and by retreating from things like child care and mental health services," said Gov. Beshear.

The Governor identified two possible sources of new, recurring revenue with which to make investments: tax reform, because increasing competitiveness by broadening our tax base and improving our business climate will help stabilize future budgets, and gaming.

Gov. Beshear said he would ask the General Assembly again to place a constitutional Amendment on the ballot related to expanded gaming.

Over the years several economic studies of various gaming scenarios have projected potential Kentucky tax revenues in the hundreds of millions of dollars – money that is currently crossing the border "to fund roads and schools in Ohio, Indiana, West Virginia and other states."

Kentuckians "want to vote on this issue," he said.

Additional Legislative Priorities
Also this session, Gov. Beshear will propose and support a series of initiatives designed to promote public safety.

·         Booster seats:  Kentucky should align its booster seat regulations with federal recommendations, because current state laws are not protective enough.  Federal safety officials and doctors recommend using a booster seat until either age 9 or until a child reaches 57 inches tall; in Kentucky, only children under 7 and between 40 to 50 inches tall are required to use a booster seat.  Recent Kentucky statistics show that 70 percent of children hurt in car crashes were 8 or 9 years old – kids who typically aren't tall enough for adult-sized seat belts to protect them properly.  Misaligned belts can cause serious trauma in an auto accident.

·         Substance abuse:  Since 2011, the rate of deaths attributed to prescription drugs has dropped while deaths attributed to heroin have surged.  Gov. Beshear will support legislation to mandate a more aggressive approach for both law enforcement and treatment.

·         'No phone zones':  Given the vulnerability of schoolchildren and construction workers, Gov. Beshear will support legislation creating 'no phone zones', areas such as school and construction zones where drivers are not permitted to use cell phones while driving.

·         Domestic violence:  Kentucky is the only state without any civil protection for victims of violence in a dating relationship.  Gov. Beshear will again support legislation to extend these critical protections to dating couples who do not live together.  

Governor Urges Continued Bipartisanship
Gov. Beshear thanked legislators for working with him in the 2013 session in a bipartisan manner on several difficult issues that threatened state budgets, communities and schools.  Those successes include comprehensive legislation attacking prescription drug abuse, raising the graduation age, shoring up funding for state pensions, and authorizing innovative funding mechanisms for state universities that required no additional taxpayer burden.

The Governor contrasted those efforts with the endless bickering and political posturing of Washington, D.C. 
"We have proven over the last few years that here in Frankfort, we can work through those differences and pass meaningful legislation that strengthens our capacity and builds a better quality of life for our people," he said.  "We must remember that we are Kentuckians first, and Democrats and Republicans second.  I believe we can continue to show our Washington colleagues what leadership really looks like."