Despite a strong start to the fiscal year, relatively low unemployment, and major new job announcements, the state may still end the year with a $113 million deficit.
The journalists on KET’s Comment on Kentucky discussed the potential impact of the shortfall, as well as Congressional legislation on health care, and higher education news from around the commonwealth.
Budget and Taxes
State budget officials attribute the looming shortfall to lower than expected tax revenues, says Ronnie Ellis of CNHI News Service. He says Gov. Matt Bevin can address the shortfall by dipping into the state’s Rainy Day Fund or by trimming some spending.
Kentucky’s constitution mandates a balanced budget, and Ellis says some previous governors have used “smoke and mirrors” to address unexpected deficits. He says the annual budget for the commonwealth is about $10.5 billion, so making up a $113 million shortfall should be relatively easy for Bevin. The current fiscal year ends on June 30.
As lawmakers prepare for a special legislative session on tax and pension reform, a shortfall could help the governor make the case for a tax overhaul that generates more revenues for the commonwealth. Ellis says there’s no debate in Frankfort that tax reform is needed, but he says what’s been missing is the political will to make it happen. He says that’s especially true now with the new Republican majority in the state House of Representatives. Ellis says new GOP legislators facing reelection in 2018 may be reluctant to vote for higher taxes on Kentuckians.
In his State of the Commonwealth address earlier this year, Bevin said the state needs more revenues to address unfunded pension liabilities and cover basic spending needs. Ellis says the governor proposed a shift away from income taxes to more consumption (or sales) taxes, as well as closing tax loopholes. Bevin is expected to call a special session this fall.
U.S. House Repeals Obamacare
On Thursday Republican Congressmen James Comer (KY-1), Brett Guthrie (KY-2), Hal Rogers (KY-5), and Andy Barr (KY-6) voted for the House Republican bill to repeal and replace the Affordable Care Act. Democrat John Yarmuth (KY-3) and Tea Party Conservative Thomas Massie (KY-4) voted against the measure.
Linda Blackford of the Lexington Herald-Leader says Massie was highly critical of the legislation when it was first proposed by House Speak Paul Ryan in March. She says Massie’s opposition continued with the updated version of the bill that passed the House last week. As a member of the House Freedom Caucus, Massie prefers a complete repeal of the ACA, says Ellis.
Senate Republicans said they won’t vote on the House bill, and will instead write their own repeal and replace legislation. Sen. Rand Paul has his own ACA alternative that includes tax credits for health savings accounts. Kevin Willis of WKU Public Radio in Bowling Green says Paul also criticized the House bill for giving billions to health insurance companies.
That money would come from a surcharge levied against individuals who let their policies lapse for more than 60 days and then reapply for coverage. Ellis says that provision is similar to one in the ACA that mandated a tax penalty on people without insurance. Instead of that money going to the federal government, as it does under the ACA, the House health care bill would direct that money to insurance companies.
Critics of the House plan also argue that it fails to properly fund high-risk pools for individuals with preexisting medical conditions, and it could scale back Medicaid expansion. Blackford says this has many hospitals worried that they might see a return of uncompensated care if people lose Medicaid coverage. She says the University of Kentucky Medical Center has seen its charity care costs plummet because Medicaid now covers so many people who previously received free care at the hospital. Blackford says reducing Medicaid rolls could have a dramatic impact on health care facilities that treat poor and rural populations.
Higher Education News
UK also faces a potential loss in federal research dollars under the budget plan proposed by President Donald Trump. Blackford says a proposed 18 percent cut to biomedical research funding at the National Institutes of Health could result in UK having to lay off some 350 people across the state. University officials also contend the cuts would halt critical momentum in cancer research.
Blackford says Sen. Mitch McConnell supports NIH funding and has helped state universities land significant federal research dollars during his tenure in Washington.
Sports fans will see a new name on UK’s 44-year old football stadium come this fall. Blackford says Commonwealth Stadium will be branded Kroger Field after the grocery company agreed to pay $1.85 million a year for the next dozen years for naming rights. That money will go to JMI Sports, the marketing agency that holds media rights to UK Athletics.
Blackford says the decision was panned on social media by fans devoted to the Commonwealth Stadium name, as well as by some students and faculty members at the school.
A new name will adorn the Mass Media and Technology Hall at Western Kentucky University. Willis says the building is being renamed for state Rep. Jody Richards (D-Bowling Green). The 40-year veteran of the state legislature has helped secure state funds for several building projects at the university. Willis says Richards taught communications at WKU and served as staff advisor for the school newspaper and yearbook.
WKU is also getting a new president. After 20 years leading the school, Gary Ransdell is set to retire on June 30. Willis says that’s a remarkable tenure since most university presidents only average five or six years on the job. He says WKU’s new president, Timothy C. Caboni, will face student recruitment challenges and state funding issues.
Jay Morgan will become the new president of Morehead State University on July 1. Blackford says Morgan worked for the Council on Postsecondary Education, where among his other duties, he helped craft the new performance-based funding model that will be applied to state appropriations for universities and community colleges. She says school officials, including outgoing President Wayne Andrews, have expressed concern that the new metrics used to determine university funding could hurt MSU.
Adoption Czar Named
Gov. Bevin appointed a senior vice president at the Southern Baptist Theological Seminary as the state’s new adoption and foster care “czar.” Ellis says Daniel Dumas will earn $240,000 a year plus bonuses to oversee foster care and streamline the adoption process for the commonwealth. Ellis says the governor, who has four adopted children, wants to make it easier for prospective parents to adopt children who are in state care.
Attorney General Andy Beshear wants Bevin to stop fighting a lawsuit over foster care payments. Ellis says the state used to give stipends to relatives who take of foster children. Those payments, which were smaller than what regular, non-blood foster parents receive, ended under former Gov. Steve Beshear because of budget concerns. Ellis says a woman who took in two of her nephews has sued the state, arguing that individuals who take in related children should be paid the same as traditional foster parents.
A federal appeals court has ruled in favor of the woman, and if that decision is upheld, the state could have to pay significant moneys to thousands of Kentuckians who foster related children. Ellis says the Bevin Administration is fighting the case, which could go to the U.S. Supreme Court. Attorney General Beshear, who is Steve Beshear’s son, called on Bevin last week to drop the litigation.
The opinions expressed on Comment on Kentucky and in this program synopsis are the responsibility of the participants and do not necessarily reflect those of KET.