Archive for June, 2009

Beshear says cuts won’t come until mid-July

FRANKFORT — A new fiscal year begins Wednesday but state agencies won’ t know until mid-July how deep they must cut their budgets to balance the budget, Gov. Steve Beshear said Monday.

Beshear met with cabinet secretaries Monday afternoon to discuss the special legislative session that concluded last week.

The General Assembly passed a budget fix that included using $741 million in federal stimulus dollars and several cost-cutting measures to address a projected $996 million shortfall. But the legislature also added tax incentives to an omnibus economic incentive package. Those tax breaks — including an income tax exemption for all active-duty military personnel — will translate to deeper-than-expected cuts for many state agencies.

The General Assembly also added about $22 million in new spending that Beshear’s proposal did not call for, Beshear said.

Beshear said Monday at a Capitol news conference that the state is still waiting to tabulate tax receipts for the current fiscal year, which ends Tuesday. That means a final estimate will likely not be available until mid-July.

Beshear originally proposed a 2.6 percent cut to most state agencies with the exception of some select programs, such as Medicaid, the main funding formula for K-12 and post-secondary education.

Beshear said Monday that Medicaid, K-12 and post-secondary education will not be asked to cut their budgets to make up for the additional revenue lost to the tax incentives.

Beshear also declined Monday to say whether he would seek re-election in 2011 or when he would make that announcement. “I’ll be talking about that in due course,” Beshear said.

– Beth Musgrave

Payday loan users say they have no options, study says

FRANKFORT — A survey of low-income families in nine Kentucky counties showed that many turned to payday lenders because they couldn’t access or didn’t trust banking services.

That’s one of the findings released Monday from a Kentucky Youth Advocates 2008 survey of families and their financial needs. Fifty-two people in Boyle, Campbell, Christian, Jefferson, Kenton, McCracken, Mason, Pulaski and Warren counties participated in focus groups and interviews over three months in 2008.

The 2008 survey is a follow-up to a 2007 Kentucky Youth Advocates and Brookings Institution study that showed that a quarter of low-income Kentucky families did not have a bank account. More low-income families also used high-cost check cashing services —approximately 31 percent — compared to high income families — 5 percent.

The most recent study looked at real-life experiences of low-income families.

Short-term lending services provide immediate cash but often charge high interest rates. Some studies show that Kentuckians pay $131 million a year in fees to payday lenders.

Race is on to be Beshear’s running mate

By Jack Brammer – jbrammer@herald-leader.com

FRANKFORT — The biggest political guessing game in the Capitol these days is the answer to this question: Who will be Gov. Steve Beshear’s running mate in a 2011 re-election bid?

The most frequently mentioned names are Louisville Mayor Jerry Abramson, state Auditor Crit Luallen, Education and Workforce Development Secretary Helen Mountjoy of Owensboro, and state Rep. Tommy Thompson of Owensboro, who ran for lieutenant governor in 1995.

Beshear, a Democrat, is keeping quiet on the subject for now. He won’t confirm that he’ll seek re-election or acknowledge whether he has a short list of running mate candidates.

“The governor’s focus right now is on policy rather than politics,” said Beshear spokesman Jay Blanton, noting that the governor must manage a difficult budget for the coming year. “In due time, he will focus on his political future, which would include decisions about re-election and running mates.”

Under state law, Beshear must name a new running mate before he can start raising money for his re-election campaign. Many Frankfort insiders expect him to make that decision before Aug. 1, the date of this year’s annual Fancy Farm political picnic in far Western Kentucky.

His current lieutenant governor, Daniel Mongiardo, is running for the U.S. Senate in 2010, a move that effectively prevents him from being Beshear’s running mate in 2011.

Like Beshear, the four people most often mentioned as likely running mates are saying little.

Hayes recruiting battery plant despite owning nearby land

By John Cheves – jcheves@herald-leader.com

FRANKFORT — Gov. Steve Beshear hopes to lure a major employer to a small Hardin County community where two of his cabinet members — acting Economic Development Secretary Larry Hayes and Transportation Secretary Joe Prather — own nearly 90 acres of land.

Hayes leads the effort to bring a lithium-ion car battery plant to an industrial site in Glendale, about 12 miles south of Elizabethtown, despite being advised by an ethics panel to abstain from any state activity that improves the site or otherwise enhances the value of his nearby properties.

Hayes and the Prather family own 8.5 acres just a few lots away from the 1,551-acre industrial site where the state plans to put the National Alliance for Advanced Transportation Batteries, a consortium of companies.

Hayes, who also is secretary of Beshear’s executive cabinet, failed to list the property on his annual financial-disclosure statement. After the Herald-Leader inquired this week, Beshear spokesman Jay Blanton said the failure was an oversight that Hayes will correct.

Additionally, Prather and his family own 81 acres around Glendale, where his Transportation Cabinet plans to spend millions of dollars building roads and a new Interstate 65 interchange. Prather and his son also own half of Silver Gate Properties, which is developing 72 residential lots north of Glendale, on the main road to Elizabethtown.

Hayes and Prather acquired the land from 1999 to 2006, before taking their current posts in the Beshear administration. They are friends, Elizabethtown businessmen and veteran Democratic politicians.

Feds launch civil rights probe of Kentucky’s Medicaid program

By Beth Musgrave – bmusgrave@herald-leader.com

The U.S. Department of Health and Human Services has launched a civil rights investigation into Kentucky’s Medicaid program after a Lexington man’s services were cut earlier this year, according to documents provided to the Herald-Leader.

Creasa Reed, the mother of James Reed, who is autistic, bipolar and mentally handicapped, filed the complaint in April after Medicaid cut her son’s budget for in-home services, leaving the 60-year-old disabled mother and her 65-year-old husband to provide more hands-on care for James Reed.

The Reeds were providing 48 hours of care in their Lexington home for their 31-year-old son. Because of the cuts to services, the Reeds now have to provide 88 hours of care.

Without the additional help, the Reeds say they may have to put James Reed in an institution.

“The last two places he was at, the state shut them down because there were so many problems,” Creasa Reed said. “He is at eminent risk of out of home placement.”

According to a June 12 letter that the U.S. Department of Health and Human Services Office for Civil Rights sent the Reeds, the office will be investigating whether state Medicaid officials acted appropriately when they cut James Reed’s services without considering that Creasa Reed has a disability and may not be able to provide 88 hours of care.

Two KET shows will discuss special session

The recently concluded special session of the state legislature will be discussed on this weekend’s “Comment on Kentucky,” a public affairs show on the Kentucky Educational Television network.

Joining host Ferrell Wellman as panelists will be reporter and columnist Ronnie Ellis of CNHI News, Courier-Journal horse industry reporter Greg Hall and Lexington Herald-Leader columnist Larry Keeling.

Beshear says stimulus funds won’t offset cost of new tax breaks

FRANKFORT — State officials are still trying to determine how much the state must cut from its budget because lawmakers approved a host of tax breaks included in a bill that was signed into law on Friday by Gov. Steve Beshear.

The measure includes tax breaks for active-duty military personnel, those who buy new cars and for people who buy newly built homes. Beshear signed the bill, which also included an overhaul of the state’s economic incentive programs that Beshear pushed, despite misgivings about the the impact the tax breaks added by lawmakers will have on the state’s shaky finances.

The tax breaks added by lawmakers are likely to cost the state about $23 million in the fiscal year that begins July 1, Beshear’s office has said. In the following year, the cost of those programs and several others pushed by Beshear and approved by the General Assembly is expected to balloon to $84 million.

Beshear also signed a bill on Friday that would help balance a projected $996 million shortfall for the fiscal year that begins July 1. To balance the state’s books, the plan calls for spending $741 million in federal stimulus dollars and gives Beshear broad authority to make other necessary cuts.

Beshear had been planning on trimming 2.6 percent from most state agencies, excluding Medicaid, higher education, the per-pupil spending formula for K-12 education and a handful of other programs. Now, most state agencies will take much larger cuts to offset the cost of the three new incentive programs, which take effect in the next few months.

House Speaker Greg Stumbo, D-Prestonsburg, suggested on Wednesday that Beshear could use more federal stimulus money to offset the cost of the incentive programs, but Beshear has no such plans, said spokesman Jay Blanton.

“We have no intention to dip further into the stimulus funds — the 45 percent set aside for the next fiscal year — to make up additional cuts,” Blanton said.

Beshear signs special session bills into law

FRANKFORT — With no fanfare, Gov. Steve Beshear signed into law Friday the two bills lawmakers approved in the recent special legislative session.

Beshear spokesman Jay Blanton said the governor signed the bills into law and filed them with the secretary of state’s office. No bill-signing ceremony was held.

Beshear signed into law a bill that would address a nearly $1 billion shortfall in the state budget that begins July 1 and a bill providing economic development incentives and a way to fund mega-transportation projects such as the Ohio River bridges project in Louisville.

Beshear said on Wednesday, the final day of the special session that began June 15, that he would not veto the bills.

–Jack Brammer

Study: Coal takes more than it gives

By John Cheves – jcheves@herald-leader.com

FRANKFORT — The coal industry takes $115 million more from Kentucky’s state government annually in services and programs than it contributes in taxes, according to a study to be released Thursday.

The Berea-based Mountain Association for Community Economic Development, or MACED, spent a year examining the coal industry’s impact on the state’s general fund and road fund.

“The coal industry is pretty free about discussing the positive impact of coal on the state. But there’s almost no public discussion about the cost,” said MACED President Justin Maxson.

Bill Caylor, who lobbies Frankfort for the Kentucky Coal Association, said he didn’t know about the study and thus had no specific rebuttal, but he’s sure it’s inaccurate. The coal industry contributes plenty and is the largest private employer in some Eastern Kentucky counties, Caylor said.

“I’ve got a lot of choice words that I could offer on this, but it would sound pretty bad,” Caylor said. “It’s voodoo economics.”

Beshear: New tax breaks mean bigger budget cuts

By John Stamper and Jack Brammer – jstamper@herald-leader.com

FRANKFORT—Lawmakers plugged the state’s projected $1 billion budget shortfall on Wednesday, but not before approving a passel of expensive tax breaks that Gov. Steve Beshear said would bring deeper cuts than planned to most state agencies.

The list of last-minute tax breaks inserted into the economic incentives bill includes an exemption of active-duty military pay from the state’s income tax, a car trade-in benefit that will reduce taxes on new vehicle purchases, and a tax credit of up to $5,000 for those buying a newly-built house.

Previously, Beshear had said most state agencies other than Medicaid, higher education and the per-pupil funding formula for K-12 education would face 2.6 percent cuts. But the new tax breaks will “seriously and significantly increase those cuts,” Beshear said.

The incentive programs added by lawmakers will likely cost the state about $23 million in the fiscal year that begins July 1, said Jay Blanton, a spokesman for Beshear. In the following year, those programs and several others pushed by Beshear are expected to cost the state $84 million.