Beshear plans to pitch stimulus bill for states to Obama

By Ryan Alessi – ralessi@herald-leader.com

Gov. Steve Beshear

When Gov. Steve Beshear joins other governors to meet with President-elect Barack Obama Monday night, he expects to make a pitch for a stimulus plan for states that could include cash to help struggling programs.

Beshear and other state leaders are scheduled to sit down with Obama in Philadelphia, first at an informal session Monday evening, then in a formal conference Tuesday morning, Beshear said.

“We’re going to be talking about a number of possibilities to help us with this situation we find ourselves in,” Beshear said. “Obviously an infrastructure stimulus package would help Kentucky as well as other states in helping people get back to work.”

He said he and other governors also are expected to ask for help to bolster Medicaid programs and unemployment insurance funds that are running low as the jobless rates take off. Beshear also mentioned the possibility of a direct “cash infusion” from the federal government to state coffers, similar to what the Bush administration approved earlier this decade.

“Back in 2002 and 2003 when there was a stimulus package, there was a direct cash infusion back to the states on some type of formula basis,” Beshear said.

He declined to say whether he prefers that approach now.

“I’m certainly going to be pushing for all the types of stimulus packages to weather this storm,” he said. “It is not going to be easy.”

Kentucky’s government faces a $456 million shortfall, which is roughly 5.1 percent off what the General Assembly had budgeted for this fiscal year, which ends June 30.

Beshear has asked all agencies and public schools and universities to draw up plans to cut their budgets mid-year by 4 percent. Those plans are due to his office by Friday.

After that, Beshear said he will look at ways to cut spending or propose revenue increases.

“We hope to be able in the early part of December to put out a plan,” he told reporters at a news conference announcing a new bio-fuels project at Eastern Kentucky University. “I want to have discussions with legislators before we do that.”

Rep. Harry Moberly, the House budget committee chairman and a Richmond Democrat who is an EKU administrator said after that press conference that he will support a steep increase in the tax on packs of cigarette taxes – something he’s advocated in the past.

That rate is 30 cents per pack, although the House approved a quarter-per-pack increase last session that went nowhere in the state Senate.

“We passed 25 (cents) this year. I think we can do better than that now,” Moberly said. “I think likely to propose 70. I don’t know if we can get that or not.”

Doug Whitlock, EKU’s president who is working on his school’s plan to trim about $3 million in state funding, told the Herald-Leader that preventing cuts to personnel in the middle of the year “is our first priority.” Many instructors and faculty could not be laid off anyway because of their contracts.

Instead, the university will try to trim administrative and travel costs and look for other revenue streams to make up the cuts, he said.

In the long term, he and other university presidents will likely have to evaluate which programs at each institution need to be protected or even strengthened which programs or departments should be pared back, Whitlock said. That, he said, isn’t something that can be done in the middle the fiscal and school years.

“We may have to move folks from areas of less strategic importance to more strategic importance,” he said. “But that’s a decision that other people are going to have to participate along with us.”