Stumbo's Historically Stinko Idea

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Continuing the too-oft dubious tradition of the Kentucky legislature this week, House Speaker Greg Stumbo, (D) Prestonsburg, sounded more like another infamous legislator we know - (R) Burkesville.

Stumbo proposed the idea of recapturing school contingency funds to balance the state budget. This glaring disincentive to efficiency and frugality stands in history along side:

• the Seminaries of Learning Act (1798) where the legislature created a fund for schools only to divert the fund for non-school purposes;
• or the time in the 1830's when they received $1,433,754 as a gift from the national government to build schools but raided the fund and passed a law requiring the governor to burn the bonds on the capitol steps;
• or later when the Constitution of 1850 finally required the establishment of a school fund and declared it inviolable - and the legislature refused to put any money in it.

Stumbo's stinko idea can stand equally with these examples of bad governance. All to avoid the tough decision - a reformed tax code.

This from the Bowling Green Daily News:

Stumbo: State may need

school contingency funds

Kentucky lawmakers may consider dipping into local school districts' contingency funds to help balance the 2010-12 state budget, according to House Speaker Greg Stumbo.

Stumbo, a Prestonsburg Democrat, told The Courier-Journal in an interview this week that he has discussed the issue with Gov. Steve Beshear, who did not indicate his position.

"We do have a bunch of money that the schools have saved in their budgets, their 'Rainy Day' funds," Stumbo said. "And there's a pretty good sum of money there which will help us get through."

Various estimates say the funds contain hundreds of millions of dollars.

School officials say they are strongly opposed to the idea because they need those funds to balance their own budgets during tight economic times.

A preliminary state revenue forecast this week predicted a $161 million shortfall for the current fiscal year, which ends next June 30. The outlook looks worse for 2010-12.

Brad Hughes, spokesman for the Kentucky School Boards Association, said any effort to tap the contingency funds would be unfair to districts that have prudently saved more. He said such a move could be illegal because contingency funds include money raised with local taxes.

"But the most obvious concern of school districts is what happens if they get hit in the middle of the year with something like a major heating and cooling problem or something like that that could cost $50,000 to $100,000," Hughes said....

This from H-L:

Irresponsibility on tax reform

A recession worse than anything this nation has experienced in 70-plus years is a dominant factor in state government's dismal budget outlook. But Kentucky's fiscal fortunes were gloomy well before the big crash of late 2008.

State lawmakers started robbing Peter to pay Paul years ago, irresponsibly passing budgets "balanced" by vacuuming up every dime from a variety of funds state agencies and even universities generate through their own activity.

Our representatives and senators turned to a "smoke and mirrors" approach to budgeting because they simply lacked the backbone to do the right thing: Pass the kind of real tax reform that could provide state government with a stable, sustainable revenue base.

So, here we are again, preparing for another two-year budget cycle with dreary revenue prospects and the federal stimulus dollars that helped fill a $1 billion hole in the current year's spending plan set to expire. And what's the first plan that comes to legislative leaders' minds?

Why, robbing Peter to pay Paul again. Only this time, Peter is a schoolchild.

In an interview with The Courier-Journal last week, House Speaker Greg Stumbo proposed the atrocious idea of raiding local school districts' contingency funds to help lawmakers avoid their responsibility again. ...

Every dollar taken away from educating the youth of this state is a dollar deducted from this state's ability to compete in the modern high-tech, information-based economy.

Both Stumbo and Gov. Steve Beshear argue that taxes shouldn't be increased during this recession. But there is no better time than a recession to pass real tax reform that moves the state away from a tax structure that relies on retail sales and toward a tax structure that captures the growing service sector of the economy.

Reform of that nature may be revenue neutral on Day One but will soon pay dividends for the state — and help balance budgets without robbing Kentucky's schoolchildren.

This from the Paducah Sun (subscription):

‘We have been frugal' McCracken Supt criticizes

talk of using school surpluses

Kentucky House Speaker Greg Stumbo’s proposal to tap local school district surplus funds to balance the education budget is drawing strong opposition from local school superintendents and generating questions for Gov. Steve Beshear.

Each school district is required to maintain a cash surplus equal to at least 2 percent of its budget. The surplus is set aside to cover emergencies and unexpected increases in costs.

Most school districts maintain contingency funds equal to about 5 percent of their
budgets. But some carry more than 20 percent.

McCracken Superintendent Tim Heller said it would be irresponsible of the legislature to take that money away.

“We have been frugal to cut expenses and build a contingency fund, and for the legislature to threaten to take it away is pretty ridiculous,” Heller said, whose district’s surplus sits at about 6 percent of its budget or $3 million.

“If that happens, I’d have no respect for the legislature.” Heller asked Beshear about Stumbo’s idea on Monday when the governor visited Paducah to announce the appointment of a task force to take a new look at education reform that started in 1990.

The governor said he’s talked with Stumbo but hasn’t made any commitments. He said he doesn’t know what he’ll recommend to balance the budget until he begins formulating the 2010-12 plan that he’ll present in January to lawmakers...