The State of the Commonwealth is unacceptable

It must be tough to stand before those who are responsible for putting Kentucky in the financial hole it's in and maintain a positive tone, but that's just what Governor Steve Beshear did in his State of the Commonwealth address Monday night. (audio from H-L)"

"It is my duty and my responsibility to inform you that we have some tough times ahead. The revenue outlook is grim. Because of the economic slowdown, the cooling of the housing market, oil prices and a gap between what we spend and what we earn, we are facing an unprecedented budgetary shortfall."

"Raising taxes is and will continue to be a last resort as long as I'm Governor. So, that leaves cutting government spending. We can wring more efficiency out of state government and I intend to do just that. It's common sense, but it will require some painful sacrifices."

"Absent a bold new direction of innovation, creativity and 21st century thinking, Kentucky stands little chance of being economically successful in the new economy."

"The days of fretting about how we are doing against border states are long over and a waste of time. Something has to change. The ramifications are huge and will help determine how successful Kentucky becomes in the future. Therefore, re-engineering Kentucky's economy from within must be among the highest priorities."

"Yes, I have been handed an unprecedented financial problem to deal with, but the silver lining is that it will force us to change for the better, and grow. If we can show Kentuckians that we can balance the budget in tough times and once again place Kentucky on a sound financial foundation, that we're changing the way their government operates, that we're more accountable, and are putting the people first, then we've made a solid start. This crisis can indeed be a positive turning point for Kentucky!"

Criticized by pundits for its lack of specificity, and praised for its delivery and outlook, Beshear's speech told it like it was. He did not mention specific remedies to the revenue shortfall, such as casino gambling or a cigarette tax, but he did throw down the gauntlet by anticipating 12% cuts in the near future. (I assume Beshear was signalling the legislature his willingness to do what he says he will do - which is always refreshing - and that Beshear intends to pressure those who knowingly created the injudicious structural imbalance to be the ones who first propose raising revenue....because they haven't shown an ability to restrain themselves from a certain amount of pork-barrel spending.)

It certainly got the attention of education folks.

Saturday the Courier-Journal reported that a letter signed by the university presidents and Brad Cowgill, interim president of the Council on Postsecondary Education decried the call for cuts.

"A potential 12 percent cut in the higher education budget next year would reverse nearly all the funding gains made over the last decade, the state's university presidents said... When adjusted for inflation such a cut would leave about $931 million for the universities -- just $15 million more than they received a year after the legislature passed its higher education reform plan in 1997...such a cut would be ...remembered as arresting Kentucky's progress toward the reform goals of House Bill 1..."

The Courier-Journal opined Tuesday,

For years, those close to the budget process in Frankfort have understood what passing budgets with a "structural imbalance" eventually would mean. The Courier-Journal's Tom Loftus traced some of that history in a front-page analysis Sunday.

[Loftus reported that the Fletcher administration estimated in 2006 that the budget short-fall in 2008 would actually be closer to $600 million. But Senate President David Williams, R-Burkesville, rejected the suggestion that the 2006 legislature went on an irresponsible spending spree.]

Now, he explains, state government is caught in a perfect storm. A budget that's structurally out of balance, using one-time-money to pay for recurring expanses, suddenly has been hit with a falloff in revenue. The result? Unwelcome choices, like cutting services that already are underfunded, reducing personnel in departments that already are understaffed, losing momentum in programs that only recently gained momentum.

This is the final emergence of the General Assembly as the dominant force in making state spending plans -- plans that eventually pass by margins so large they presage an easy override of any veto. It only takes a legislative majority to render a governor's views moot.

Governors who exercise leadership and leverage their many powers can have an impact. But the fundamental dynamic is all too obvious: Legislative discipline is subverted by the immediate political needs and wants of members...

Governor Beshear's upcoming budget presentation on January 29th should be enlightening.