Many of Gov. Beshear's 2007 campaign pledges remain undone

Economy and slots bill crashed

jcheves@herald-leader.comOctober 9, 2011 

Gov. Steve Beshear spoke at a pro-slot machine rally on the Capitol steps in June 2009. The slots bill was never passed.

  • Steve Beshear

    Born: Sept. 21, 1944

    Residence: Clark County

    Occupation: Governor; former lawyer and office managing partner for the Lexington branch of Stites & Harbison PLLC.

    Education: University of Kentucky, B.A., history (1966); University of Kentucky College of Law, J.D. (1968)

    Family: Wife, Jane; two children

    Public office: Ky. House of Representatives (1974-1979); Ky. attorney general (1979-1983); Ky. lieutenant governor (1983-1987); Ky. governor (2007-present)

    Web site: Stevebeshear.com

Editor's note: This is the first in an occasional series of stories about the candidates for governor.

When Steve Beshear ran for governor in 2007, he built a winning campaign on the promise of legalizing slot machines at horse racetracks.

Slots would save Kentucky's ailing horse industry and create $500 million a year in state revenue, Beshear told voters. He would use that money to end college tuition hikes, give health insurance to every child and extend prescription drug coverage to senior citizens.

"Now, the question is, what happens if we don't pass it?" Beshear asked at a rally that year. "Well, I'm gonna tell you something. I'm not going to have to answer that question because I am going to pass it."

He didn't pass it.

Beshear, who is seeking a second term amidst an economic funk that just won't end, has fewer successes to tout than he envisioned four years ago.

The Democratic governor doesn't talk much anymore about slots or his other past campaign promises. He pushes lunch-pail issues instead. He says his tax breaks are creating jobs, and he credits himself for keeping the state afloat financially.

Voters seem sympathetic: Polls show him far ahead of his challengers, Republican David Williams, the state Senate president, and independent Gatewood Galbraith, a lawyer.

When he does address his failures, Beshear lays them at the feet of others. On expanded gambling, for example, he blames Williams and the Republican-led state Senate for not cooperating. But some Beshear allies said he goofed by not working closely with legislators. Beshear typically isn't a player during the General Assembly, leaving his agenda to languish in disinterested hands, they complained.

"He was in the perfect position of getting it done, and he did not," former Gov. Brereton Jones, a horse breeder, said after Beshear's first slots failure in 2008. "It was extremely doable with a new governor showing the proper leadership."

On his 2011 campaign platform — creating jobs and balancing the state budget — Beshear's accomplishments are debatable.

Beshear claims that he "balanced the budget eight times in three years." However, Kentucky relied on $3 billion in federal stimulus money to fill the void created by decreasing state tax revenue. Washington, which Beshear attacks as dysfunctional in his campaign ads, helped Kentucky pay for prisons, schools, health care, construction and many other routine expenses.

Even with that outside aid, the state's debts — including the multi-billion-dollar unfunded pension liability for state workers, among the nation's worst — prompted ratings agencies to downgrade Kentucky's bonds this year.

In a report issued in July, the Kentucky Chamber of Commerce warned that Beshear and the legislature are lashing together state budgets with massive borrowing and one-time funds that can't reliably pay for recurring expenses.

"The governor and General Assembly will face replacing more than $400 million in fiscal year 2013 to keep spending at current levels," the chamber said.

How many jobs?

In campaign ads, Beshear says he created or retained nearly 19,500 jobs using tax incentives. But a check with individual employers has shown that many specific jobs he touts do not exist.

One of Beshear's biggest jobs disappointments, which he no longer brags about, is an electric-car factory in Shepherdsville that would employ 4,000. The project won approval for $48 million in incentives, and Beshear famously drove a victory lap around the state Capitol in a prototype car. But the deal later evaporated, and nothing was built.

Meanwhile, Kentucky's unemployment rate stood at 9.5 percent this summer, up from 5.6 percent the day he took office. The state's median household income fell in 2010, forcing one in three Kentucky households to live on less than $25,000 a year.

Economists and business leaders say Beshear is the victim of a national recession that coincided with his term in office. Local and state politicians typically are helpless to act until a bad economy improves, they said.

Dave Adkisson, president of the Kentucky Chamber of Commerce, was mayor of Owensboro during a recession in the 1980s. Adkisson said unemployment was 14 percent when he won office; it had fallen to 7 percent by the time he ran for re-election.

"You can be sure I bragged about it during my campaign," Adkisson said. "But truth be told, when you're a chief executive, like a mayor or a governor, probably 80 percent of it is the national economy and 10 percent of it is anything that you do."

The recession shrank the state's tax revenue and forced Beshear to cut more than $1 billion from spending. He furloughed state workers and slashed the budgets of many state agencies by more than 20 percent.

On the campaign trail, Beshear says he played as good a game as he could with the lousy cards the economy dealt him.

"I've been working as governor 24 hours a day, seven days a week, to create a strategy and get our people back to work," Beshear told business leaders in Frankfort last December. "We've had to tighten our belts. We've had to do more with less."

If Beshear didn't win great victories, he also didn't produce calamities or major scandals, said political scientist Don Dugi at Transylvania University in Lexington.

"Beshear's big positive is that he's handled the budget responsibly enough that we've not found ourselves in the dire straights of less fortunate states, like California, where it's just a financial disaster," Dugi said.

"Honestly, I don't how you're supposed to judge any politician that inherited this terrible economy, whether it's President Obama or one of the governors," Dugi said. "You're put in this position where you're not going to get to do anything other than put out fires."

Schools get axed

Education, among other crucial state services, took a bruising in the past four years.

Beshear and the legislature labored not to cut funding for Support Education Excellence in Kentucky, the main channel for state money to flow to local school districts. SEEK funding held fairly steady, dropping only slightly to $2.9 billion this fiscal year, or about $3,900 per pupil on average, according to the state Education Department.

The problem with frozen SEEK funding is that statewide school enrollment climbed by as many as 20,000 children in the past five years, reaching 645,000 this year, department spokeswoman Lisa Gross said. Funding might be frozen, but expenses are not, she said.

With SEEK funding off the table, nearly everything else the Education Department does for schools has been axed.

"We're getting to the point where state funding for our school districts just isn't adequate anymore," said Stu Silberman, executive director of the Prichard Committee for Academic Excellence and former Fayette County schools superintendent.

"There hasn't been any textbook funds available from Frankfort for three years," Silberman said. "Teacher training has been cut. Extended school services for kids who need extra help, that hasn't kept up. Some districts have had to lay off people."

State education funding at all levels, including universities, has grown more slowly in Kentucky since 2000 than state government spending as a whole. Many millions of dollars were diverted to prisons, Medicaid and state employee health insurance, the Kentucky Chamber of Commerce said in its July report. At the University of Kentucky, less state money led to a 130 percent jump in tuition over the past decade.

"Gov. Beshear believes education is the most critical long-term investment we can make," Beshear campaign spokesman Matt Erwin said. "There's no doubt that Gov. Beshear wants to do more and that Kentucky children deserve more."

Beshear has tried to get ahead of the financial drain imposed by prisons and Medicaid, although it's too soon to say whether he'll succeed.

His administration worked with legislators and court officials last winter to pass a penal code reform law. In coming years, the reforms could shift thousands of non-violent drug addicts away from expensive prison cells, placing them instead on probation in treatment programs.

Beshear also is privatizing much of the management of Medicaid, the health insurance program for the poor and disabled that covers one in five Kentuckians. Beshear said private management will save $375 million over the next three years. But some critics are skeptical that such savings will be realized. Beshear already has been forced to delay implementing his plan, from Oct. 1 to Nov. 1, because of questions from care providers.

Friend of coal

One industry satisfied with Beshear is coal, which employs only about 20,000 Kentuckians — 1 percent of the labor force — but is politically muscular because of its millions of dollars in campaign donations to Beshear and many other elected leaders.

Bill Bissett, president of the Kentucky Coal Association, said he could not think of anything Beshear has done that displeased him.

"Clearly, Gov. Beshear has been very supportive of coal production in Kentucky," Bissett said.

Beshear boosted spending at the state Office of Mine Permits, which approves plans for surface mines, from $7.7 million in 2010 to $8.4 million in 2011. The office has added more staff, responding to industry complaints that permits weren't issued fast enough.

The Beshear administration overruled and fired Ron Mills, director of mine permits, after Mills angered coal companies by blocking mining at properties where they had not obtained full legal access.

Beshear denied that Mills was fired to appease coal companies. His energy secretary, Len Peters, said he was unhappy with Mills' leadership. But a Beshear aide called a coal executive who had complained about Mills to announce the firing within minutes.

Beshear joined the coal industry in defending the controversial practice of mountaintop-removal mining, in which the tops of Appalachian mountains are blasted and the debris is dumped into nearby valleys and streams. Beshear joined the industry's lawsuit against the U.S. Environmental Protection Agency's enforcement of water pollution laws; he tried to prevent environmental groups from intervening in Clean Water Act cases.

"Coal provides 90 percent of our electricity and — because our rates are low — has helped us build a robust manufacturing industry," Beshear told the legislature in his State of the Commonwealth in February.

"But all that is in jeopardy because Washington bureaucrats continue to try to impose arbitrary and unreasonable regulations on the mining of coal. To them I say, 'Get off our backs! Get off our backs!'" Beshear said.

While expanding the Division of Mine Permits, Beshear cut funding to state offices that the industry finds nettlesome, such as those responsible for protecting water quality.

Environmental groups doing their own research found that coal companies submitted false water-pollution discharge reports to the state. Regulators failed to notice the false reports and later testified that they weren't sure how many discharge pipes existed.

"The cabinet should have been doing something that it wasn't," Bruce Scott, Beshear's environmental protection commissioner, said at a Frankfort court hearing in August.

Rick Handshoe, a Floyd County activist with the non-profit watchdog group Kentuckians for the Commonwealth, said the Beshear administration is more interested in coal company profits than the health of Eastern Kentuckians.

Handshoe, whose group is one of those suing over water pollution, regularly takes samples from Raccoon Creek, which runs near his home and a coal sediment pond. Mining is allowed to create dangerous pollution in Appalachia that would not be tolerated in Lexington or Louisville, but state regulators are indifferent, he said.

"Every meeting we walk into, every hearing, the state people and the coal companies are sitting together at one table glaring at us, just so angry at us. They treat us like we're the enemy because we're asking questions," Handshoe said.

"We're having to police the coal companies and the state regulators; that's what it comes down to," Handshoe said.

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