KET Legislative Coverage

State Budget Shortfall; Congressional Strategies

by John Gregory | 06/16/14 2:21 PM

It's news that nobody in Frankfort wanted to hear: State budget officials announced Tuesday that they expect a significant revenue shortfall in Kentucky's fiscal year 2014 budget.

The panel on this weekend's Comment on Kentucky discussed that story and the possible cuts that may result from lower-than-expected tax receipts.

The full extent of the shortfall won't be known until next month after all the corporate and business tax revenues for June are collected. Jack Brammer of the Lexington Herald-Leader thinks the potential deficit will be at least $28 million. Ronnie Ellis of CNHI News Service believes the shortfall could be as high as $100 million.

As Gov. Steve Beshear works to offset the loss with budget cuts, Brammer and Ellis speculate that state workers won't face layoffs, however furloughs and hiring freezes may be considered. Other options include delaying some debt payments and building projects, pushing back the start date on restoring funds to the child care assistance program, and moving payment of the last state payroll of the current fiscal year to the first day of the new fiscal year.

Brammer says the governor has become an expert at dealing with budget issues. This will be the 14th shortfall he's had to address, resulting in about $1.6 billion in cuts.

Some had hoped that $110 million in additional monies coming from the master settlement agreement with tobacco companies could be applied to the looming general fund deficit. Ronnie Ellis says that's not possible because those funds are designated by state statute to go to agricultural diversification projects, smoking cessation programs, and lung cancer research.

Election News
The biggest news from the campaign trail this week came not from Kentucky's Senate race, but from the Virginia Congressional contest that saw House Majority Leader Eric Cantor lose in the Republican primary. Cantor says he'll step down from his leadership post at the end of July, and suggested that House Majority Whip Kevin McCarthy of California would make a good successor.

But ‘Tea Partiers’ in Washington, including Kentucky 4th District Congressman Thomas Massie and Sen. Rand Paul, are supporting Idaho Rep. Raul Labrador's long-shot bid to be the next House Majority Leader. Nick Storm of cn | 2 says Massie believes Labrador is a strong alternative to the establishment Republican McCarthy. Massie tells Storm that Labrador would solidify the GOP, and give Tea Party members a seat at the negotiating table.

In Kentucky's Senate race, Democratic challenger Alison Lundergan Grimes gained a surprise endorsement in her bid to unseat Sen. Mitch McConnell. Storm says Massachusetts Sen. Elizabeth Warren will come to Kentucky to campaign for Grimes. Warren is upset that McConnell blocked a bill she sponsored to allow people to refinance student loan debts.

While the move gives Grimes another pocket-book issue on which to criticize McConnell, there is some risk to bringing Warren into her campaign. Jack Brammer describes Warren as another anti-coal liberal who favors President Obama - the exact kind of politician McConnell rallies against. But Ronnie Ellis says the GOP may underestimate Warren. He says she's very effective at framing complex issues in easy-to-understand language. Plus, he calls Warren a "prodigious" fundraiser. Dates for appearances by Grimes and Warren have yet to be scheduled.

Watch the full Comment on Kentucky program for more on these stories, as well as the latest on the 2015 governor's race, and the ongoing dance between the University of Kentucky and Lexington officials over Rupp Arena renovations.