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May 6, 2009

Another shortfall — 05/07/09

Legislators should not assign Beshear task of erasing deficit

Anonymous The Daily Independent Wed May 06, 2009, 09:12 PM EDT

The 2009-10 fiscal year budget for the state of Kentucky will not take effect until July 1, but already Gov. Steve Beshear is sounding the alarm: If you think the $456 million revenue shortfall for the current fiscal year’s budget was bad, just wait until next year.

Based on current revenue projections, the budget shortfall for the next fiscal year will range between $818 million and $1.1 billion, the governor warned. That would require deep cuts in state spending, increased taxes, or a combination of the two.

The projected shortfall is not official. The independent, nonpartisan group of experts that make revenue predictions has yet to meet. Until it does, state leaders will not know exactly how much spending will need to be cut and revenue increased to eliminate the shortfall.

And state leaders have no choice but to erase any revenue shortfall. The Kentucky Constitution prohibits the state from deficit spending. So do the constitutions of most states. That’s why Kentucky is hardly alone in it money woes.

The group of experts predicted that $456 million shortfall for this fiscal year soon after the year began. Beshear ordered an immediate reduction in spending for most state agencies, developed a plan for eliminating the shortfall and conducted a series of town meetings throughout the state to gain support for his proposals.

The 2009 General Assembly adopted a modified version of the governor’s plan, doubled the tax on cigarettes and added the sales tax to packaged beer and alcohol sales to eliminate the shortfall.

But as they did so, legislative leaders and the governor emphasized that the “fix” was only temporary. Sure enough, the shortfall for the coming fiscal year could be double what it was for this fiscal year — and that’s with the added revenue from higher cigarette and alcohol taxes. The legislature’s plan to eliminate the shortfall also eliminated another option used to eliminate deficits. It took so much from the state’s “rainy day fund” that to make further raids on the fund designed to meet unexpected emergencies would be irresponsible and extremely risky.

Beshear already has said he likely will call a special session of the General Assembly later this year to deal with the shortfall, but Senate President David Williams, R-Burkesville, said the legislature should give Beshear the authority to manage the shortfall before seeking legislative help.

What a legislative cop out that would be. If the General Assembly were to give the governor the authority to balance the budget, it would force Beshear — and Beshear alone — to make the unpopular cuts to balance spending with revenue. Legislators then could blame the governor for the cuts, saying they had nothing to do with them.

However, the budget for the coming fiscal year was approved by the 2008 General Assembly as part of the state’s two-year budget. That budget was based on revenue projections made by legislators. Mostly because of the worldwide recession, revenues are falling far short of projections.

The members of the General Assembly helped create the problem. It is their responsibility to be part of the solution. If legislators do not want to increase taxes, they must approve the cuts in the budget they approved necessary to balance it. Shifting that responsibility to the governor would be to shirk their duties.

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Another shortfall — 05/07/09

Legislators should not assign Beshear task of erasing deficit

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