Budget Shortfall News; Political Races Heating Up

by John Gregory | 07/14/14 4:00 PM

With a revenue shortfall of $90.9 million, Gov. Steve Beshear has a little more than two weeks to address the situation and bring the state budget back into balance.

This weekend on Comment on Kentucky, Ronnie Ellis of CNHI News Service told the panel that state officials attribute the bulk of the shortfall to lower-than-projected individual income tax receipts. Ellis explains that in 2013, tax collections were inflated as wealthy individuals sold off assets ahead of a capital gains tax increase. That bump did not continue into 2014, resulting in the lower tax receipts for the state for the fiscal year that ended June 30.

Ellis says the governor has several options to address the shortfall by the end of this month when the 2014 books are closed. He may tap into restricted funds within state agencies, he may use a portion of the state’s $98 million Rainy Day Fund, and he can delay the start of certain programs and projects.

Another unfortunate bit of budget news is that the state also faces a $22 million revenue shortfall in the road fund. Lower-than-expected gas tax receipts fueled that dip. Officials will present a plan for handling this shortfall as well.

On the Campaign Trail
In the U.S. Senate race last week, Democratic challenger Alison Lundergan Grimes released the first attack ad of her campaign. The commercial features a retired eastern Kentucky coal miner criticizing Sen. Mitch McConnell for voting to raise his Medicare payments. The Associated Press and fact-checking groups reviewing the ad say McConnell never cast such a vote, and the Medicare measure he did vote for would've applied to future retirees, not current retirees like the man in the Grimes ad.

The McConnell campaign released a counter attack within 24 hours. "They throw their ad out there to take advantage of the fact that [the Grimes] ad is so utterly false," says Sam Youngman of the Lexington Herald-Leader. "So what do they do? They put some falsehoods of their own in their ad."

McConnell's ad claims that Grimes supports paying for the Affordable Care Act by taking $700 billion from Medicare benefits for senior citizens. Youngman says that will never happen because the law cuts funds to health care providers, not beneficiaries.

Switching to the 2015 race for Kentucky governor, Youngman reports that Democratic candidate Jack Conway announced strong fundraising numbers. The state attorney general raised $750,000 in seven weeks this spring. Youngman says Conway is doing what he needs to secure support among the Democratic base.

Fellow Democrat and former state senator Daniel Mongiardo criticized Conway for soliciting campaign contributions while Alison Grimes is also trying to raise money for her Senate race. Youngman says that Mongiardo told him that Grimes and the Democratic Party deserve better, and that he's considering his own run for governor to "save the soul" of the party. Those comments did not sit well with other Democratic leaders, according to Youngman.

Republicans countered with their own bit of fundraising news last week. GOP candidate and Louisville businessman Hal Heiner announced that he pumped $4 million of his own money into his campaign. Youngman says that’s bound to get the attention of potential GOP challenger James Comer, the state's agriculture secretary. He's expected to announce his intentions to run a few days ahead of the Fancy Farm political picnic on August 2.

Health Care Issues
In describing some of her recent reporting, Laura Ungar of the Louisville Courier-Journal says implementation of Obamacare has been "neither a triumph or a train-wreck" for eastern Kentuckians. She says people in Floyd County are benefiting from going on Medicaid for the first time and getting care they've long needed. On the other hand, business owners fear Obamacare will hurt their profits, and local hospital officials worry that the ACA will exacerbate cost cutting measures and layoffs already facing their industry.

While expanded insurance coverage available through Obamacare was envisioned to help reduce unnecessary - and expensive - emergency room use by the uninsured, Ungar says there has been a surge in ER visits in Appalachia. She explains that many people in the region getting insurance are going on Medicaid, and there is a shortage of doctors willing to take new Medicaid patients. That leads those needing care to visit a nearby ER.

Watch the full Comment on Kentucky program for more on these issues, and discussion about why it might be hard for state House Speaker Greg Stumbo to run for governor, and a series of new laws scheduled to take effect on Tuesday.