Kentucky revenue shortfall worries school, health-care advocates
The Courier Journal
May 4, 2009
FRANKFORT, Ky. -- Advocates for public schools and health-care programs -- largely exempted from deep funding cuts this year -- are staggering after Gov. Steve Beshear's announcement Thursday that next year's revenue shortfall could exceed $1 billion.
"The concern level shot up," said Brad Hughes, spokesman for the Kentucky School Boards Association. "It's one thing for us to tell members that things are looking bad and to plan conservatively. It's another thing for the governor to drop the 'B' bomb -- the billion-dollar bomb."
Beshear said his budget office had made a preliminary estimate that the shortfall in General Fund revenue for the fiscal year that begins July 1 will be $818 million to $1.09 billion. That's about 9 percent to 12 percent of revenues budgeted for next fiscal year.
The governor presented no immediate plan to deal with the problem and said that all options for cutting spending and raising revenue are on the table as he begins to develop a solution with legislative leaders.
Hughes said school districts must plan their own budgets for next school year without knowing if, or by how much, they could be cut."We are as nervous as we have been in a long, long time. It's just so iffy," Hughes said. "Districts have until May 15 to tell the school employees whether they have a guaranteed job next year or not."
Sharron Oxendine, president of the Kentucky Education Association, said, "A shortfall this size is a train wreck. The best you can say is that it's a train wreck that about 48 other states are having right along with us."
The shortfall will be eased by funding from the federal stimulus package. But Beshear said that because most stimulus funds come with strings attached, he was not yet sure how much help they will be.
Terry Brooks, executive director of Kentucky Youth Advocates, said his group's analysis shows that the stimulus funds will help, but they're not the entire solution.
"We are suggesting that $250 million to $300 million will be available as a hole-plugger," Brooks said. "But even with that help, we still have a shortfall that will be bigger than the $456 million shortfall we had this year."
Kentucky Youth Advocates, which lobbies for health and family services programs, advocates revising Kentucky's tax system to produce a fairer tax code that produces stronger revenues.
Sheila Schuster, a mental health and health-care advocate, said many advocates are concerned that "chronically underfunded programs, particularly the ones saved from the last round of budget cuts like the community mental health centers, are now back on the cutting block."
Schuster supports a solution that would boost revenue rather than allow more program cuts, but she is doubtful that comprehensive tax changes will be part of the immediate solution.
"I doubt that would be done in a special session because I just think the time it takes to work that out is problematic," she said.
Beshear has asked for an official revenue forecast from the team of experts that makes such predictions. When that is in hand late this month, he and lawmakers will have an official estimate of the shortfall that must be dealt with.
He said he wants to call a special session as soon as possible after that but would not do so until he knows it will result in a quick solution.
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