Beshear's Dickensian budget aims to create good times for some, rough times for others

01/21/2014 06:50 PM

In introducing his fourth two-year budget plan, Gov. Steve Beshear could have just quoted the first line of “A Tale of Two Cities.”

For some programs — most notably K-12 education — it was the best of times, at least in recent years. For most other agencies, not so much.

“It is a plan that — to be honest — fills me with both immense pride and with intense regret,” Beshear said in his budget address Tuesday night. “Regret because the choices reflected in this document do great harm to many state programs and services needed by Kentuckians.”

He said he was proud because “those same choices empower us to make bold investments in the intellectual capital and economic competitiveness that Kentucky’s future demands.”

Beshear said he still plans to push for a tax reform package, which he will unveil “soon” and a measure to allow expanded gambling.

In the meantime, he’s handing legislators a good-news-bad-news budget, depending on one’s perspective.

THE HAVES

K-12 education

Per-pupil funding would be the highest ever at $3,911 in Fiscal Year 2015. That would go up by $70 per student the following year.

It also adds $47.7 million each year for school districts to spend on textbooks, tablets, professional development and after school programs.

And it expands preschool funding by $18 million each year. Increasing eligibility of preschool services from those making 150 percent of the poverty rate to 160 percent is being proposed by the governor to expand those services to 5,125 more 4-year-olds in the state.

Other education programs would get additional money, including $2 million for college-level programs in high school and $2 million to add 80 more spots to the 200 at the Gatton Academy of Mathematics and Science for high school students at Western Kentucky University.

Teachers

Beshear’s plan would add $188.9 million over the next two years to the main K-12 funding formula, mostly to cover teacher raises: 2 percent in Fiscal Year 2015, 1 percent the next year.

Plus, the plan would cover 2 percent increase in health insurance for teachers — a cost of $21.7 million in 2015 and $35 million in 2016.

Economic Development

Unlike most agencies, the Economic Development Cabinet wouldn’t get cut under Beshear’s budget proposal. He said it is running as efficiently as possible and is crucial to creating jobs.

Related to that, Beshear is proposing $100 million for expansion of broadband internet. He said that will start in Eastern Kentucky as a first way to invest in that region to help it diversify its economy. Of the $100 million, $60 million would come from selling bonds, $20 million from the federal government and $20 million from private investment.

“This service is now essential for businesses no matter where they are,” he said.

Also included in funding is $24 million for an advanced manufacturing training center in Central Kentucky that was a promise to Toyota in Georgetown that helped persuade the company to pick that plant to make its Lexus ES 350. That center will be attached to the Bluegrass Community and Technical College.

Kentucky Community and Technical College System

The community college system would see a 2.5 percent decrease in funding like other universities (see the HAVE NOT section). But recognizing that the community college system is “busting at the seams,” Beshear has proposed allowing the colleges to sell agency bonds to cover three-quarters of the costs of constructing new buildings on each of the 16 campuses. The other 25 percent of the funding would have to come from private donations. The goal is to finance nearly $200 million in projects.

“The leaders assure me that the debt service would not add to the cost” of tuition, Beshear said.

In addition, Beshear has proposed $2 million funding a new program, called Commonwealth College, for students to finish their degree through distant learning and tutoring.

State employees

For the first time in three budget cycles, Beshear is proposing state workers should get raises. They would be on a sliding scale with 5 percent raises for state workers making less than $27,000 and 3 percent for those making between $27,001 and $36,000. That’s about half of the state workforce, Beshear said.

Here’s what else he said on that:

Low income parents

Beshear has proposed restoring cuts to a program aimed at helping low-income parents pay for daycare. The governor cut back eligibility levels for this program last summer to cover only those making below the poverty rate. He made the cut to fill in a gap in the Health Cabinet.

Beshear wants to move $57 million a year to restore those cuts.

“They cannot afford to be employed without this program,” Beshear said in his speech of those low-income families.

Quasi-governmental organizations and retirees

Beshear also is proposing covering the full cost of increasing pension contributions for many quasi-governmental agencies, such as domestic violence shelters and rape crisis centers.

And the proposal includes fully funding the state’s contribution into the Kentucky Retirement System, as the new law the General Assembly passed last year demands.

THE HAVE NOTS

Most state agencies

Under Beshear’s plan, most state agencies will have to absorb 5 percent cuts. Those cuts, combined with $1.6 billion in slashed funding over the last six years, means a 41 percent cumulative cut for many of them.

The consequences over the next two years, Beshear said, could be losses in federal funds and potential closures of “some facilities.”

Public universities

Beshear said one of the toughest decisions was proposing a 2.5 percent cut to public universities and colleges. That funding level will flat line in 2016.

But he said they have other ways to make up those losses:

Kentucky State Police

While many lawmakers have warned against cuts to the Kentucky State Police, Beshear proposes a 2.5 percent cut. That’s less than many other agencies, but still a cut.

Kentucky Teacher Retirement System

Leaders of the retirement system have warned that the system needs nearly a half-billion dollars a year in new funding to help shore it up.

Beshear proposed $0. But he said there is language in his budget bill that would include more money to that system as it becomes available, noting that it is a “real problem.”

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