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No ‘Comment’ this weekend; ‘KY Tonight’ will discuss state budget

“Comment on Kentucky,” a public-affairs show of the Kentucky Educational Television network, will be preempted this weekend because of the Fourth of July.

On the Monday, July 7, edition of “Kentucky Tonight” at 8 p.m. on KET and at KET.org/live, host Bill Goodman and guests will discuss the state budget and tax reform.

Scheduled guests are state Rep. Rick Rand, D-Bedford, chair of the House Appropriations and Revenue Committee; state Sen. David Givens, R-Greensburg, vice chair of the Senate Appropriations and Revenue Committee; Jason Bailey, director of the Kentucky Center for Economic Policy; and Bryan Sunderland, senior vice president of public affairs for the Kentucky Chamber of Commerce

Viewers with questions and comments may send e-mail to kytonight@ket.org or use the message form at KET.org/kytonight. Viewers may also submit questions on Twitter @BillKET or on KET’s Facebook page, facebook.com/KET. All messages should include first and last name and town or county. The phone number for viewer calls during the program is 1-800-494-7605.

“Kentucky Tonight” programs are archived online, made available via podcast, and rebroadcast on KET and KET KY. Archived programs, information about podcasts, and broadcast schedules are available at KET.org/kytonight.

“Kentucky Tonight” is a weekly KET production, produced by Deidre Clark. Bill Goodman is host and managing editor.

–Jack Brammer

Beshear’s tax reform plan gathering dust alongside eight previous proposals

By John Cheves
jcheves@herald-leader.com

In 2012, having slashed $1.2 billion in state spending during his first term, Gov. Steve Beshear named two dozen people to a “blue-ribbon commission” to study Kentucky’s tax code and suggest reforms to help the state budget keep pace with demand for services.

Beshear said this report would not end up like eight previous reports on the tax code since 1995, which got stuck on shelves around Frankfort to be forgotten. Ignore the skeptics, he said at a February 2012 news conference.

“I would say to them to fasten their seat belts,” Beshear said. “Get ready for not just another study but for some proposals that I think can refashion Kentucky’s future.”

Twenty-one months later, there’s no need for a seat belt.

Led by Lt. Gov. Jerry Abramson, the commission spent 2012 listening to economists, taxation experts and hundreds of concerned citizens at statewide hearings. At year’s end, it gave Beshear a 453-page report with scores of recommendations, many controversial, such as taxing more of retirees’ pension incomes, taxing some services and raising the tax on a pack of cigarettes from 60 cents to $1.

Taken as a whole, the proposals would have added $659 million annually to the $9.5 billion General Fund that pays for schools, police, prisons, social services, parks, environmental protection and other public needs. In addition, the report would have introduced scrutiny to the $12.1 billion that Kentucky gives away every year in largely unexamined tax breaks, some dating back to the Great Depression.

Beshear thanked the commission for its work. Then the report joined its eight predecessors on shelves around Frankfort.

House and Senate discuss differences on state budget bill

By Beth Musgrave
bmusgrave@herald-leader.com

FRANKFORT — After meeting for a little more than an hour Monday morning, House and Senate leaders agreed to return at 2:15 p.m. to resume negotiations on a more than $19 billion, two-year state budget.
The morning meeting focused on line-by-line differences between the House and Senate versions of the budget.

Senate budget committee Chairman Robert Leeper, I-Paducah, said there are very few major differences between the House and Senate budgets. Once some global decisions are made — particularly involving debt — there will be few decisions left to make, he said.

House budget committee Chairman Rick Rand, D-Bedford, said after the morning meeting that the break will allow both sides an opportunity to gather more information about why the other chamber made key decisions.

The House authorized $552 million in borrowing while the Senate version authorized $391 million. The Senate also booked savings throughout its budget by lowering the projected interest rates of bonds, which are at historic lows.

House panel passes $19.5 billion budget, 26-2

By Beth Musgrave
bmusgrave@herald-leader.com

FRANKFORT — The Kentucky House will likely vote Wednesday on a two-year, $19.5 billion state budget that calls for 8.4 percent cuts to some parts of government and very little new borrowing for capital projects.

The House Appropriations and Revenue Committee voted 26-2 on Tuesday to approve House Bill 265, the executive branch budget. The House made some modest tweaks to Gov. Steve Beshear’s proposed budget, which was introduced in January.

The latest proposal scrapped more than $450 million in bonds for universities over concerns about the state’s rising debt. The House budget also nixed a 1.5 percent cost-of-living increase for state retirees, which could save the ailing pension fund about $400 million, state officials said Tuesday.

Beshear said he was reviewing the House’s changes.

“As we said in January, this is a very difficult budget,” Beshear said. “It appears the House budget will not vary significantly from the budget I introduced. We will review the proposed changes carefully, and will work with both the House and Senate as the budget moves through the process.”

House budget nixes increase for retirees, Horse Park, bonds for universities

By Beth Musgrave
bmusgrave@herald-leader.com

FRANKFORT — The state House’s proposed budget would nix cost-of-living increases for state retirees and would not give additional money to the Kentucky Horse Park in the upcoming two-year budget.

The budget also would not fully fund an expansion of the state’s preschool programs and would not allow the state’s public universities to issue more than $450 million in debt.

Rep. Rick Rand, D-Bedford, said the House budget committee will vote on the proposed budget on Tuesday. The full House is expected to vote on the $19.5 billion two-year budget on Wednesday.

The House budget subcommittee chairman presented reports Monday that outline some of the House’s proposed changes to Gov. Steve Beshear’s budget, which was unveiled in January. Beshear had proposed 8.4 percent cuts to many state agencies and reduced cuts to other areas of government. Beshear had proposed no cuts to the main funding formula for schools. The House kept most of those recommendations — including no additional cuts to the main funding formula for schools.

Kentucky Horse Park needs millions from state to balance budget

By Linda B. Blackford and Beth Musgave
lblackford@herald-leader.com

As most state agencies brace for dramatic budget cuts, the Kentucky Horse Park could be getting millions of additional dollars.

In Gov. Steve Beshear’s recommended budget, the Horse Park faces no budget cuts, and instead would receive an additional $3.5 million increase this fiscal year, plus another $1.6 million each year of the next two-year budget.

State officials told lawmakers on Tuesday that the funds are needed to cover operational shortfalls that stem from utility costs for roughly 264,000 square feet of new facilities built at the park in anticipation of the 2010 Alltech FEI World Equestrian Games.

Lawmakers said they want to hear more before agreeing to increase the park’s funding.

‘Comment’ will discuss state budget, redistricting

This weekend’s “Comment on Kentucky,” a public affairs show of the Kentucky Educational Television network, will discuss Gov. Steve Beshear’s proposed two-year state budget and the redrawing of state legislative and congressional district boundaries.

Joining host Ferrell Wellman will be three journalists — Greg Stotelmyer, political reporter for WTVQ-TV in Lexington; Joe Gerth, political writer for The Courier-Journal; and Jack Brammer, political writer for the Lexington Herald-Leader.

The show airs live at 8 p.m. ET on KET1.

On Monday’s edition of “Kentucky Tonight” at 8 p.m. ET on KET and at www.ket.org/live, host Bill Goodman and guests will discuss the state budget.

Adviser: State pension fund sinking fast

Rick Rand, D-Bedford, is chairman of the House Appropriations and Revenue Committee

By John Cheves – jcheves@herald-leader.com

FRANKFORT — Kentucky’s state pension fund could run out of money in 2019 if contributions remain inadequate and market investments sag, under a worst-case scenario presented to lawmakers Thursday.

More likely, by 2018, the fund will pay out nearly half of its assets every year for retiree benefits, making it difficult to get the high returns it needs from large, long-term investments, pension officials said. The fund currently earns far smaller returns — 3.59 percent over the last decade — than its goal of 7.75 percent a year.

“You might be surprised at how expensive this is going to get,” Jim Voytko, president of R.V. Kuhns & Associates Inc., told the Program Review and Investigations Committee. R.V. Kuhns advises the Kentucky Retirement Systems, which covers 330,000 state and county employees and retirees.

“I’m already surprised,” replied Rep. Rick Rand, D-Bedford, a committee member.

Over the last two decades, the General Assembly sweetened retirement benefits for state workers, many of whom could leave after 27 years with a lifetime pension and free health insurance. But it failed to put enough money in the pension fund to honor its obligations.

Kentucky, like many states, now faces a growing wave of government retirees and no consensus on how to pay them without wrecking other state programs.

Leaders will discuss law-making session on ‘Kentucky Tonight’

Four state legislative leaders are scheduled to appear on Monday’s edition of “Kentucky Tonight” with host Bill Goodman to discuss the 2010 General Assembly.

They are Senate President David Williams, R-Burkesville; House Majority Leader Rocky Adkins, D-Sandy Hook; Senate budget chairman Bob Leeper, I-Paducah; and House budget chairman Rick Rand, D-Bedford.

The show will air at 8 p.m. EDT MOnday on KET and at www.ket.org/live.

Concerns raised about education cuts in Senate’s spending plan

FRANKFORT — Democratic House leaders raised concerns Tuesday about a provision in the Senate’s version of the two-year state budget that they contend could cut funding for primary and secondary schools by nearly $100 million.

Republican Senate leaders said on Monday that their budget cut the main funding formula for schools by $25 million over two years instead of axing two school days, which the House had proposed in order to save $36 million a year.

However, the Senate’s budget mandates that the school year remain unchanged but doesn’t restore the $72 million the House saved by cutting the days.

House budget chairman Rick Rand, D-Bedford, said it appeared to be an “unfunded mandate that could add up to $97 million in cuts over the two years” for schools.

Senate leaders acknowledged Tuesday that there is less overall money in the main funding formula for schools in their version of the budget, but said they have allowed school districts to divert money for construction projects to make up for the loss.

Senate President David Williams, R-Burkesville, said the Senate’s plan is a more fair way to cut the main funding formula for schools, called Support Education Excellence in Kentucky, or SEEK. Once the Senate’s proposed cuts are understood by the House, Williams said he believes the two sides can come to an agreement.