Near the end of his first State of the Commonwealth speech, Gov. Matt Bevin repeatedly asked for patience. “This is not a sprint,” the newly elected Republican governor said of the struggle to right Kentucky’s financial ship.
But Gov. Bevin and his team have been sprinting in the few short weeks since he was elected and sworn in to create a budget proposal that would act swiftly to reduce spending dramatically in many areas in order to put a lot more money into the needy pension system, which clearly must be the state’s first priority.
Some of the patience needed with his budget is that it requires us to wait and see what the real impact will be, because most of the cutting will have to be determined by different agencies and institutions. Undoubtedly, everyone will find things in those decisions to oppose and to favor.
For those agencies, Gov. Bevin set off another sprint. By ordering that the cost reductions begin in the current fiscal year (already seven months over), all those affected will have to race to find savings. Getting 4.5 percent out of costs in the balance of this fiscal year almost finds the 9 percent that is expected in the next fiscal year if you assume the reductions will come in recurring costs such as payroll (meaning layoffs) and not one-time expenses.
While Democratic House Speaker Greg Stumbo can suggest that lawsuits (what else would a trial lawyer suggest) may arise if Gov. Bevin doesn’t spend all the money budgeted by the General Assembly for the remainder of the biennium, we think that’s an unlikely scenario to change the course of action.
Keep in mind this isn’t the first time state government has had to tighten its belt. Democratic Gov. Steve Beshear repeatedly slashed spending as the Great Recession took hold early in his term. Some of the priorities set by a Bevin administration may be different than the Beshear administration’s, but it’s a reality the state has dealt with before — and not all that well, given where Beshear and past General Assemblies left the pension system.
Of course, that’s why those already making the direst predictions have been the state’s universities, who’ve felt the blow of year after year of punishing budget cuts and were actually hoping Gov. Bevin would reverse that trend as he focuses on workforce development. Instead, Gov. Bevin took an idea the Council on Postsecondary Education offered to link increased funding to performance metrics and seemingly took it further, saying all higher education funding would eventually be tied to outcomes.
While the details of who will sacrifice in the budget cutting weren’t available for his speech, Gov. Bevin was able to use his solicitation of ideas from the public to showcase some token increases he spread on worthy causes, including veterans and police officers. Given Kristina Goetz’s investigation into the underfunded public defender system, we were pleased to see more money going there. Social services programs and workers, whose challenges Deborah Yetter has been highlighting, also will gain.
Bevin got well-deserved cheers for saying he was ending the practice of sweeping funds from various accounts into the General Fund, including the hijacking of lottery proceeds intended for education. But then James Bruggers discovered his budget swept under the rug the continued diversion of money paid for nature conservancy license plates – intended for a fund to buy and conserve land.
The budget also required some patience to dig through the proposal to find what’s included (vs. what was highlighted in budget briefings and the speech) and what was excluded. Tom Loftus, for instance, found it would eliminate funding for any agency that provides abortion services and would repeal the prevailing wage in government contracts — neither surprising given Gov. Bevin’s past statements but conveniently not discussed. Often, it’s harder to find what’s missing from a budget, but Phillip Bailey was patient in looking for Louisville’s wish list and finding Democratic Mayor Greg Fischer struck out with the new Republican administration on its requests for funds for summer jobs for youths and the FoodPort, among other things..
One area where we are willing to be patient to learn more is Medicaid, where Gov. Bevin reiterated his plans to find “new and novel” ways to “cover those in need in a way that is affordable to us.”
“We will create an approach to Medicaid here in the Commonwealth of Kentucky that will be a model,” he promised. No need for a sprint there, especially if his team delivers on that promise.
One important topic that didn’t even sound as if it were walking, let alone sprinting is tax reform. Gov. Bevin said he’d like to see a tax cut but the state can’t afford it. But he did little to suggest that broader tax reform – something that, like the new state budget, would have winners and losers – is on his radar. It should be.
As with everyone in a situation like this, we’ve highlighted things we like and those that still trouble us. We as Kentuckians must all be prepared to accept some of each as we work through this process. Patience might be the right virtue.