Beshear projects deep cuts and pushes for gambling in speech to lawmakers

He urges legislators to act decisively on state finances, pushes gambling, tax reform

bmusgrave@herald-leader.com; jbrammer@herald-leader.comJanuary 5, 2012 

FRANKFORT — Gov. Steve Beshear projected deep cuts in the next two-year state budget, pushed for a constitutional amendment to allow expanded gambling and called for overhauling the state's tax structure in his fifth State of the Commonwealth address on Wednesday.

The cuts could be as deep as 7 percent to 9 percent during the next two years, state officials said.

Beshear, speaking before a joint session of the House and Senate, asked legislators to be "decisive and aggressive" and to take bold steps to fix the state's finances, better prepare its work force and attack Kentuckians' addictions to prescription drugs.

Beshear told legislators that 10 rounds of budget cuts during the past four years have resulted in $1.3 billion in cuts. But $3 billion in federal stimulus money that propped up the state's past three budgets is gone, and he said he would not ask for tax increases to balance the next budget.

That means spending cuts in the upcoming two-year budget — which the legislature must approve in April — probably will be deep and painful.

"We will not be relying on new revenue to balance this budget," Beshear warned. "We will be cutting. A lot. We will, of course, continue to find efficiencies, but the numbers are so wretched that we will likely be forced to carve into some of our most critical, basic services. And it will hurt."

Beshear will lay out his budget plan to lawmakers Jan. 17.

Kerri Richardson, a spokeswoman for Beshear, said after Wednesday's speech that the administration has asked state agencies to plan for possible 7 percent to 9 percent cuts for the next two-year budget. That's on top of previous cuts, Richardson said.

"Over the past four years, some state agencies have reduced spending by 25 to 30 percent," Richardson said. "Spending pressures and critical needs in priority areas will result in the most difficult budget the commonwealth has faced in some time."

Beshear used the backdrop of the state's anemic financial health to make a case for expanded gambling. He said legislation that would propose a constitutional amendment probably will be introduced soon so voters could decide the issue in November.

People from Kentucky are gambling in Illinois, Indiana, Ohio and West Virginia. He argued that's money Kentucky needs.

Beshear campaigned on the issue of bringing casino-style gambling to Kentucky and the horse-racing industry when he ran in 2007. The measure never passed during his first four-year term.

But two recently released polls show that Kentuckians overwhelmingly want to vote on the issue, Beshear said.

"Kentucky money is funding early childhood education, schools, libraries, police officers, roads and bridges in our neighboring states," Beshear said. "It makes no sense to continue watching that happen."

He did not say in his speech how the constitutional amendment would be worded — a factor that could determine its fate. Some legislators have reservations about allowing a constitutional amendment that would guarantee casino licenses for Kentucky's eight horse racetracks.

But gambling money will not be enough to sustain the state's finances in coming years, Beshear said.

He also called for reforming the state's tax code. The state has spent more money than it has collected in taxes and fees for more than a decade.

Beshear gave few details Wednesday about how he would like to reform the tax code, saying he would detail his plans in coming days.

"I will lay out a process to ensure this issue gets both the thoughtful attention it deserves and the public input needed to develop consensus," Beshear said.

He said all options would be discussed.

The rampant abuse of prescription drugs in Kentucky also must be addressed because it is one "of the largest threats to productivity and health in our communities," Beshear said, drawing one of the loudest rounds of applause during his more than 30-minute speech.

According to one poll, 32 percent of Kentuckians have a family member or a friend who has suffered from prescription drug abuse. In some age groups, more Kentuckians die from prescription drug overdoses than from car accidents.

"Think about that: Our medicine cabinets are deadlier than our highways," Beshear said.

The Democratic governor said he would be pushing legislation that would make the state's prescription monitoring system mandatory for all physicians and that would crack down on rogue pain clinics.

For the third year in a row, Beshear pushed for increasing the state's dropout age from 16 to 18. The measure has died in the Republican-controlled Senate over concerns about the increased costs to the state to keep the teens in school.

Beshear also said he would push to change state law so it's clear that records about children who have been killed or nearly killed as a result of abuse and neglect are open to public inspection. The Herald-Leader and The (Louisville) Courier-Journal have sued the state twice during the past two years to gain access to those records. A judge has ruled twice that the records are public.

The top two legislative leaders, Senate President David Williams and House Speaker Greg Stumbo, said after the speech that they were awaiting specifics on Beshear's plans, especially on gambling and tax reform.

"I don't think the governor knows what's going to be on the (gambling) proposal," said Williams, who was unsuccessful last year in trying to unseat Beshear from the state's highest office. "It's just been five years in the making."

Williams said Beshear was "pleasant" in his speech but needed to give lawmakers more details about his legislative proposals.

Stumbo said a State of the Commonwealth Address was "like a pep talk before the ball game." Reality will set in with the governor's budget address Jan. 17, he said.

Stumbo said he would like to hear more details from Beshear on reforming the tax code. There have been enough studies and task forces on the issue over the years. It's time to act, Stumbo said.

"Tax reform is like taking a vacation. You have to decide where to go and then decide if you have the time and resources to go there," he said.

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