KY's Budget: The Next Phase

The call on the special session has been made. There will be another round of "cuts" to the budget - reported to be 2.6% - or about $200 million. This comes on top of a 4% reduction from last year. Even with these "belt tightening" measures - state governments most vital (and expensive) services have remained whole: education, Medicaid, justice and public safety. We don't doubt that some social service agencies and their clients may be feeling a pinch but we do believe that the vast, vast majority of Kentuckians that were receiving government services will not be faced with a considerable detachment from them e.g. to date - no seniors have been removed from nursing homes.

Even with these spending reductions, we are told that the fiscal challenge will remain with us for a couple of years. Of course - these "challenges" are typically defined by there not being as much money to spend in Frankfort as originally anticipated. Even with the downturn in revenues, we shouldn't lose sight of the fact that Frankfort still spends about $9 billion in a budget year - not an inconsiderable sum.

What happens in the special session will certainly have a huge impact on what sort of revenue situation the General Assembly will find itself faced with when they meet in January 2010. Perhaps gaming will pump a massive amount of new funds into the state coffers and alleviate a lot of the pressure for "new revenues." Count us as skeptical - not that gaming (which the Coalition remains neutral on) wouldn't put new dollars into the state's general fund. It simply won't satiate the appetite of Kentucky's constituencies for resources. See Indiana - they have a huge gambling industry and had to cut $796 million from their FY '09 budget.

Bottom line: Kentucky must enter a new phase of fiscal responsibility. It is time to

1) Look at innovative ways to bring in resources for the Commonwealth. (NOTE: "Bring In" does not translate as "enhance revenues" or, dropping the euphemisms, "raise taxes". There are other ways to accomplish this end.)

2) Examine budgets more thoroughly and make choices about whether we should redirect funds from certain programs toward more vital services. These programs may have some merit and certainly have a constituency. The question we will ask is whether it is more important to spend $1 on Program X when that same dollar could go toward buying textbooks for students? 

We're open to ideas and welcome the debate.