Gov. Matt Bevin broke decades of precedent by not giving legislative leaders and journalists an advance look at his budget proposal before he presented it to a statewide television audience Tuesday night.
Once everyone saw the details, they understood why: Bevin wanted as little bad news as possible to intrude on his hour-long show of spin, obfuscation, cost-shifting and finger-pointing.
And like several Democratic and Republican governors before him, Bevin danced around the hard reality that tax increases are not only necessary, but long overdue.
Bevin’s budget includes some good things and some bad ones, but it is essentially a big shell game. The only “new” revenue comes from eliminating a $162 million tax credit for filmmakers that has been the subject of recent Herald-Leader reporting.
▪ He funds public employee pension obligations with $3.31 billion over the next two years. About $2.3 billion would go toward stabilizing the Kentucky Teachers Retirement System, although school districts would have to pick up more health insurance costs.
▪ He helps the state’s frayed social service system by investing $46 million to hire new social workers; $25 million to give them badly needed raises, $5 million to lift the 2013 moratorium on kinship care; and $10.8 million to improve adoption and foster-care services.
▪ He helps the justice system with funding for 75 new commonwealth’s and county attorneys and 51 public defenders, plus $4 million for state police cars. He nearly doubles the budget of the Executive Branch Ethics Commission.
But since Bevin is just shifting money around, he said, “You have to take the money from somewhere.”
The big headline of the night was Bevin’s request to eliminate state funding for about 70 programs.
Although Bevin gave the impression he wasn’t cutting K-12 education, because he was keeping the basic SEEK formula at $3,981 per student, he is cutting education a lot, largely by shifting transportation and insurance costs to local school districts.
In all, K-12 education would be cut by $198 million, plus about 20 of the programs he would eliminate involve teacher training and student services, which are especially important for poor school districts.
The Kentucky Center for Economic Policy estimates that the funding gap between Kentucky’s rich and poor school districts is almost what it was in 1990, when the General Assembly enacted the historic Kentucky Education Reform Act.
Bevin cuts higher education by $78 million, or 6.6 percent, in 2019. Plus, his plan eliminates state funding for 24 higher ed programs, including the University of Kentucky’s Center for Entrepreneurship and the Robinson Scholars program, which helps students from 29 Eastern Kentucky counties who are the first in their families to attend college.
KCEP figures that, adjusted for inflation, state funding of higher education by 2020 will be 39 percent lower than it was in 2008.
Many health programs would be eliminated, including those that screen for lung, breast, ovarian and colon cancers — all big problems in Kentucky — and help disabled people achieve independence.
Bevin boosts the state’s “rainy day” fund by diverting $150 million from the Kentucky Permanent Pension Fund that was raided two years ago from the Kentucky Employees Health Plan. Talk about a shell game.
Most state agencies and programs that survive would be cut. Many have already seen their budgets cut by as much as half since 2008.
“The real budget focus this year is getting our financial house in order,” Bevin claimed. But this budget doesn’t do that. It just shifts too little money around, picking new sets of winners and losers.
But I give Bevin some credit: Cutting the filmmakers’ tax break is the first step toward tax reform. He promised Tuesday night that “tax reform is coming,” but gave little clue about what it would look like.
In his State of the Commonwealth address last February, when Bevin first started promising tax reform, he singled out special-interest tax breaks. He called them “sacred cows” that needed to be turned into “hamburger.” He was right, and he needs to follow through.
Kentucky collects $12 billion in taxes each year, but gives up $13 billion in tax breaks. Not all tax breaks are bad; some are very beneficial for the overall state economy. But many tax breaks don’t justify their cost, and there has been too little legislative analysis or accountability.
Bevin closed his budget speech by saying, “Let’s dream big dreams.” OK, here are my big dreams:
I dream that Kentucky’s governor and General Assembly, after three decades of shirking their duty, will enact real tax reform that generates enough new, sustainable revenue to adequately fund Kentucky’s needs and make vital investments for the future. And I dream that Kentucky’s wealthy special interests and average voters will look beyond selfishness long enough to let them do it.