KY DEFICIT SPENDING

1994 Long Term Policy Research Center published an article entitled

$5.8 Billion and Change

On page 34 states "we project general fund spending to grow approximately 6% each year through FY2004, compared to 5.3% annual growth for general fund revenues. The difference may not seem like much, but at this rate, expenditures would grow 79% between FY1994 and FY2004, while revenues would only grow 67%."

In 2004 authors of $5.8 Billion and Change wrote "We looked at how much money the state might save if broad reforms were enacted to lower the general cost of running the government. By reducing all other costs per person by 10%, the state could enjoy cumulative savings of close to $1 billion over 10 years". [p.58, 59, $5.8 Billion and Change, Peter Schirmer, Michael T. Childress, Charles C. Nett]

In 2008 after Kentucky's elected stewards decided against implementing all 1994 recommended reforms, Kentucky's, i.e.,

1) Medicaid budget is $112 million in deficit;
2) Annual appropriations exceed tax resources by more than 12% creating an estimated $400 million annual debt to creditors
3) Bonded Indebtedness estimated annual payments $1.75 million per year
4) State tax expenditures' total now estimated @$700 million which further depletes tax resourcess to fund other services and benefits

In 1994 Ky legislators were apprised of "deficit budgeting" by Long Term Policy Research Center.

In 1995 Governor Jones established two task forces to study state expenses and income. Expense one was Commission On Quality & Efficientcy and the income one was Commision On Ky Tax Policy. Commission On Quality & Efficiency recommended cutting state expenses over four years by $1 billion dollars.

LAWMAKERS only adopted recommendations requiring no political wherewithal to reduce state expenses over a period of time. Lawmakers did nothing significant to enhance state resources. In addition, they did not discuss skyrocketing state tax expenditures growth.

In 2000 Governor Fletcher addressed state resources by enhancing state resources but leaving state appropriations to the ‘credit card mentality’ crowd---the General Assembly.

The severity of Kentucky’s debt should be reason new Governor declare legislative moratorium on all legislative appropriations exceeding state tax resources for next two bienniums!

One priority in 2008 should be reforming current tax base simultaneously incorporating significant cuts in state appropriations & state tax expenditures while enhancing state resources.

This need is the result of past general assemblies and administrations' acquiescence to overspend & raid other state funds to cover general fund deficits!

In 2008 new Governor & General Assembly recognize 2005 Deficit Reduction Act jeopardizes current and future biennium budgets by significantly reducing Feds past estimated 28% share!

KY must collect all due-and-owing 23 years old taxes!

Legislation must be amended allowing Kentucky a method to collect an estimated $200 million of KY use taxes from online consumer purchases;

ADD ESTIMATED $588 MILLION TO CURRENT APPROPRIATIONS & EQUALIZE TAX BURDEN:

COLLECT: $60 million of Ky usage tax from mis-registered motor vehicles;

COLLECT: $40 million of state and local property taxes from mis-registered motor vehicles;
COLLECT: $40 million of uncollected u-drive-it usage taxes from mis-registered

lease/rental cars operating out of Kentucky airports;
COLLECT: $140 million KY use taxes from KY online purchases

REVENUE NEUTRAL: $80 million weight-distance taxes eliminated recouped through

enhancing Motor Fuels & Truck Registration

KY reduce future appropriations by amending legislation eliminating $200 million of Corporate tax shelters;

Administration & Legislature eliminate $100 million in personnel cuts:

•Eliminate 70 statutory PVA positions saving $50 million annually as recommended by 1995 Commission On Quality & Efficiency task force

Review state employee statutory salaries listed below eliminating

FULTON CO PVA SALARY IS $53,600 COMPARED TO AVG. CO. SALARY OF $39,100

ADAIR CO PVA SALARY IS $57,780

MARTIN CO IS $57,380

LAWRENCE CO IS $56,410

PULASKI CO IS $70,170

CRITTENDEN CO IS $53,660

ALLEN CO IS $57,780

HOPKINS CO IS $70,170

BOYD CO IS $70,170

BOYLE CO IS $61,910

MERCER CO IS $61,900

WARREN CO IS $78,420

FAYETTE CO IS $78,420

Non-merit positions:

Those hired are: When Gov. Steve Beshear was sworn into office, the state's personnel roster listed 33,889 full-time employees on the payroll.

As of Dec. 14, 2007 there were 33,880 on that list, according to records provided to The State Journal by the state personnel department. The State Journal will update weekly a list of those joining and leaving state government.

Here's listing from State Journal dated 12/14/07 of people who joined and left state government from Dec. 10 to 14. [State Journal, 12/14/07]


NAME STATE POSITION MO SALARY

Clara M Girkey, Office Manager, $4,666.68/mo.
Courtney L French, Scheduling Director, $5,166.68/mo.

Ann R Garrity, Administrative Assistant, $4,916.68/mo.

Jessica D Martin, Administrative Assistant, $3,166.68/mo.

Sherman A Brown, Administrative Assistant, $5,000/mo.

Debra H Gall, Administrative Assistant, $3,333.34/mo.

Susan H Bryan, Administrative Assistant, $4,166.68/mo.

Terrell E Renfro, Administrative Assistant, $3,166.68/mo.

Katherine B Allison, Executive Assistant, $7,500/mo.

Virginia L Woodward, Executive Assistant, $7,916.68/mo.

Lee E Jacobs, Special Ad TO Governor, $7,916.68/mo.
Commerce Cabinet
Kentucky St Fair Bd Vice President, $7,916.68/mo.
Education Cabinet
Workforce Investment KY Tech Instructor $3,742.10/mo.

Joseph S Collett, Kentucky Tech Instructor $3,742.10/mo.

Stephanie J Bertram, Adm Secretary, $2,006.08/mo.
Justice and Public Safety Cabinet Department of Corrections
Kimberly A Brown, Office Support Asst II, $1,658.16/mo.

Those who left are:

Staff Attorney Manager/Assistant, $6,149.50/mo.

Selina R Bowman, Executive Secretary II, $3,394.20/mo.
Auditor of Public Accounts
Ellen M Hesen, Executive Director, $8,077.04/mo.

Joseph U Meyer, Policy Advisor, $7,497.54/mo.
Governor
Bess C McGuire, Admin Asst, $3,741.08/mo.

Carolyn A Ammerman, Staff Assistant, $4,501.30/mo.

Cherrilee G Moore, Special Proj Coord $5,933.34/mo.

Cheryl J Hudgins, Executive Assistant, $3,667.70/mo.

\Daniel M Bayens, Dep Press Sec $4,812.52/mo.

Deanna C Brandstetter, AdmAssT $4,016.68/mo.

Elizabeth A Boison, Adm Asst $2,804.18/mo.

Grant D Friedman, Adm Asst $3,183.34/mo.

Grant D Jolliff, Administrative Assistant, $2,583.34/mo.

Donald C Storm, Adjutant General, $10,958.76/mo.
Secretary of the Cabinet
Robert B Rudolph, $10,836.50/mo.

Walter S White, Administrative Assistant, $5,350/mo.
Governor's Office for Local Development
Allen O Wilson, Executive Director, $7,083.34/mo.
State Treasurer
Greg T Haskamp, Staff Assistant, $3,016.68/mo.

Jonathan S Miller, Elected Official, $8,466.36/mo.
Office of State Budget Director
Mary E Lassiter, Dep Exe Director, $9,735.00/mo.
Transportation Cabinet
Office of the Secretary
Charles W Nighbert, Cabinet Secretary, $11,243.38/mo.

Douglas C Hogan, Executive Director, $7,941.68/mo.

Gary E Reece, Policy Advisor, $7,689.62/mo.

Lindy M Robinson, Executive Advisor, $2,916.68/mo.
Office of Legal Services
James R Wood, Executive Director, $7,954.30/mo.
Department of Transportation Safety
Deborah J Stigall, Division Director II, $6,265.84/mo.

Larry A Maggard, Executive Assistant, $6,250/mo.

Tim P Hazlette, Commissioner, $8,477.12/mo.
Department of Highways
Eric T Steely, Division Director II, $5,687.52/mo.

Marc D Williams, Commissioner, $10,079.60/mo.

Warren C Meadows, Exe Asst, $7,000.07/mo.

William G Clark Jr., Exe Advisor, $7,012.96/mo.
Department of Governmental Relations
Ginger R Wills, Commissioner, $8,750.02/mo.

Kathryn A Molen, Executive $3,215.72/mo.

Morgan R Wilson, Special Assistant, $4,375.02/mo.

Richard G Liebe, Special Assistant, $6,562.50/mo.

Virginia J Huddleston, $6,250.00/mo.
Finance Cabinet
Jenny L Stringer, Exe Advisor, $8,223.45/mo.

\Kenneth S Bishop, Exe Director, $5,899.38/mo.
Education Cabinet
Laura E Owens, Cabinet Secretary, $10,836.50/mo.

From 1980 through 2007 Kentucky stewards have done nothing to counter Kentucky's Medicaid deficit. Forty two other states have received a Federal Medicaid Waiver allowing qualifying seniors to have funds to reside in There is a cure but appointed state officials have been reluctant to go against industry lobbyists to apply for Federal Medicaid Waiver allowing Medicaid eligible recipients to use assisted living facilities in same manner as nursing homes; i.e., funding Medicaid eligible seniors to live in assisted living facilities for estimated 40% to 50% savings.

However, Kentucky’s General Assembly still is in the “credit card mentality” by passing legislation giving $100 million cash [appropriations] plus state tax expenditures in income, sales tax incentives to build a $3 billion+ coal liquidation plant!

NEW GOVERNOR FACING:

$4.2 billion dollars of bonded indebtedness created by 2005 and 2006 Legislative sessions
Legislators suggesting $800 million bonded indebtedness to bring up level of funding of state employees’ retirement, ABSENT ANY concessions from state employees who enjoy better-than-private retirees retirement packages that is less than Federal government’s retirement.
$140 million dollars of sales taxes not being collected from Kentucky consumers purchasing online

estimated 150,000 Kentucky car owners circumvent paying $100 million uncollected Kentucky usage & property taxes from mis-registered vehicles of Kentucky motor vehicle owners
uncollected estimated $20 million of u-drive-it use taxes from lease/rental car owners operating out of Kentucky airports.

Kentucky’s weight-distance tax on trucks is cumbersome and expensive to enforce and since 1994 tax evasion factor around 28% needing to eliminate it recapturing $80 to $100 million of tax revenues by enhancing motor fuels tax and truck registration fees (called revenue-neutral strategy)

alleviating Medicaid deficit by allowing qualified Kentucky seniors currently in nursing homes costing Medicaid estimated $75,000 annually to use a Federal Medicaid Waiver allowing those seniors to reside in assisted living facilities costing less than $35,000 annually, reducing state’s Medicaid costs,

ELIMINATING STATE EXPENSES:

Eliminate $100 million merit and non-merit state personnel from administrative, legislative and judiciary branches of State Government; review all personal service contracts, eliminate 70 PVA positions

Amend state employee KRS replacing 5% increase with pay-for-performance

Retrain staff & award pay increases to merit job holders whose positions receive added duties from downsizing

Reassign skilled employees

Eliminate practice of technical state employees from being rehired immediately after retiring at same or more pay

Legislate new employees be on a defined contribution retirement program

Recommend better ways for state to stop payment on checks with insufficient funds

Review personal service contracts eliminating unnecessary & political ones

Review estimated $700 million state tax expenditures to eliminate, renovate, equalize

OPTIONS OF NEW GOVERNOR

Enhance state resources by:

Expanding Ky sales tax base thru inclusion of selected services
Collecting estimated $350 due-and-owing usage property, u-drive-it taxes and registration fees on all Ky owned mis-register cars
Eliminate costly administration of unfair, cumbersome weight-distance tax on trucks & recoup by enhancing motor fuels and truck registration fees
Amend H.B. 44 to make permanent the 15.5 cents real estate property tax rate
Amend H.B. 44 enhancing state rate cap to 6% & legislating more tax authority to local governments
Amend legislation leaving estate tax as is
To insure future compliance with Kentucky’s motor vehicle titling and registration and usage & property tax laws recommend H.B. 698 be passed:

AN ACT relating to motor vehicle registration.

Be it enacted by the General Assembly of the Commonwealth of Kentucky:

Ssection 1. a new section of KRS 186.000 to 186.260 is created to read as follows:

(1) except as provided for in subsection (2) of this section, any motor vehicle operated on a public highway which is housed in the commonwealth for a period of more than one hundred eighty (180) days in any calendar year shall be required to be registered under the provisions of krs 186.050.

(2) the following vehicles shall be exempt from the provisions of this section, if the vehicles are properly registered in another state:

(a) vehicles that are properly registered in another state under the provisions of krs 186.050(13);
(b) vehicles used by students who are residents of another state but are attending a post secondary educational institution in the commonwealth;
(c) vehicles registered to active-duty members of the armed forces who are assigned to duty at a base or station within the boundaries of the commonwealth; and
(d) vehicles which are registered to individuals in another state and meet the criteria for registration as an historic motor vehicle under krs 186.043.

section 2. KRS132.570 is amended to read as follows:

(1) a person shall not willfully make a false statement or resort to any device to evade [property] taxation. any person doing so shall be subject to [current and up to 4 back years of omitted property taxes, if applicable, including penalty and interest to be collected by kentucky department of revenue and dispersed by kentucky department of revenue to local taxing jurisdictions in the county in which the property is liable for assessment and property taxation and dispersed to all citizens, law enforcement officers responsible for identifying tax violators
(2) in the case of a person who fails to register a motor vehicle under the requirements of section 1 of this act, twenty-five percent (25%) of the imposed penalty under this section shall be transferred by kentucky department of revenue to person reporting tax evader

Kentucky’s state budget is more than $1 billion deficit over one biennium, according to governor’s statement.

A billion seconds ago it was 1959!
A billion minutes ago Jesus was alive.
A billion hours ago our ancestors were living in the stone age.
A billion days ago no-one walked on the earth on two feet.
Latest KY biennium budget over $15 billion with large portion coming from Federal Government.

2005 Deficit Reduction Act will reduce Federal dollars, next KY biennium budget since it cuts $40 billion from states.

Governor Beshear---- whose let it be known publicly---is only interested in being Kentucky's governor needs to do more than cut 3% from each state agency.
In 1995 task force called Commission On Quality & Efficiency recommended to KY’s elected stewards to cut $1 billion over four years! Of course, past general assemblies and administration of Governors’ Julian Carroll, John y. Brown, Martha l. Collins, Wallace Wilkinson, Brereton Jones, Patton and Fletcher who adopted a “credit card mentality” allowing state to spend more tax dollars than it collects.

Such "credit card mentality" is one of the reasons in 2008 Beshear's administration is facing such tough financial decision making---if he does not make right ones draconian cuts will have to be made as proposed above.

Bill Huff