May 20, 2009 08:15 pm
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While the Consensus Forecasting Group has yet to officially release its projection concerning the revenue shortfall for the fiscal year beginning July 1, that group’s chairman, Lawrence Lynch, has said that Gov. Steve Beshear’s warning that the budget shortfall could top $1 billion “seems plausible.”
Facing a possible shortfall, that is more than double the $456 million shortfall for the current fiscal year that legislators grappled with earlier this year, already has some lawmakers calling for unspecified tax increases to avoid sharp budget cuts and Speaker of the House Greg Stumbo continuing to beat the drum in support of video gambling terminals at the state’s race tracks.
Meanwhile, Senate President David Williams, R-Burkesville, continues to place most of the responsibility for making the cuts to balance the budget on the shoulders of Gov. Steve Beshear.
Williams told those attending a recent GOP dinner that he did not want the legislature to authorize Beshear to spend any more money than what’s been allocated. “He’s going to have to manage his money and be responsible and tighten his belt,” Williams said.
However, regardless of the size of the shortfall, taking the necessary steps to eliminate it clearly is a shared responsibility of the governor and legislators. After all, it is the 2008 General Assembly that approved the two-year budget that makes revenue projections that are falling fall short.
While we are certain that Williams and other legislators would prefer that the governor take the bulk of the political heat for budget cuts that are sure to be unpopular, legislators must work with the governor to either generate the revenue or make the cuts necessary to bring spending in line with current revenue projects, not those made almost two years ago before the start of the recession.
As of now, no one knows exactly how much the projected shortfall will be. The Consensus Forecasting Group, the nonpartisan group of financial experts created to remove the politics from budget forecasts, is not likely to make its official forecasts for the coming fiscal year until late June.
The 2009 General Assembly doubled the state tax on cigarettes and added the sales tax to retail packaged liquor sales to help eliminate the $456 million shortfall, but there is little indication that legislators are in the mood to raise taxes again. They also dipped into the state’s rainy day fund to balance the current budget, eliminating that option for the coming fiscal year.
Stumbo insists video gambling terminals at race tracks eventually could bring in up to $350 million per year in additional revenue, but even he admits that won’t help solve the budget woes for the fiscal year beginning July 1. Even without a snag, the fiscal year will nearly be over before the first video terminals are in place, and since even Stumbo expects a court challenge to approving expanded gambling without a state referendum, it likely will take much longer before video gambling at tracks becomes a reality.
This newspaper continues to oppose expanded gambling at tracks without approval by the voters of this state. Stumbo wants to give the Kentucky Lottery the authority to add the terminals to the track, but video slots at tracks certainly were not what voters thought they were voting for when they approved the lottery amendment.
Stumbo recently met with Democratic leaders in the House of Representatives to push for expanded gambling at the tracks, but even if the speaker is able to convince the Democratic-controlled House to approve a law authorizing slots at tracks, there is little indication the Republican-controlled Senate will approve more gambling. At this point, we’d call the odds of getting what Stumbo proposes approved by the General Assembly a long shot.
The state constitution prohibits the state ending the fiscal year with a deficit. Without additional revenue, state agencies, universities and community colleges and public schools should expect even deeper cuts in their budget for the coming fiscal year — cuts that will have a tremendous impact on this state.
The changes in the budget required to bring spending in line with revenue should be approved by the General Assembly, not by executive orders by the governor.
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