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How to Spend 20 Billion Dollars

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Wednesday, April 2, 2014   

FRANKFORT, Ky. - While a two-year, $20.3 billion spending plan won overwhelming passage in both chambers of the state Legislature, an economic analyst says it falls short of what it will take to make needed progress in Kentucky.

Jason Bailey, director of the Kentucky Center for Economic Policy, said the state's new budget is just enough "to tread water." While the spending sounds large, he said, the budget contains many cuts.

"We're on a track in Kentucky through these budget cuts that is setting us back," he said. "We're failing to invest in our schools and our health and our human services in the ways that we need to really move forward."

Sen. Bob Leeper, I-Paducah, chairman of the Senate budget committee, said the agreement "sets us on a good stead for the future." Medicaid is protected, and there is more money ($189 million) for basic education funding. Small raises are built in for teachers and state workers, but many state agencies are cut another 5 percent.

Bailey said the 14th round of budget cuts since 2008 illustrate the need for tax reform, something lawmakers continue to shy away from.

"Our revenue base is eroding over time because there are too many holes in the tax system; it's not been modernized," he said. "We're not taxing those high-income individuals and corporations that can pay their fair share."

Bailey was a member of the governor's Blue Ribbon Commission on Tax Reform, which in 2012 recommended an overhaul of the tax system. The panel proposed changes which would have produced an estimated $700 million in new revenue.

Instead, Bailey says things such as higher education continue to get cut - 1.5 percent in the new budget - which piles the cost onto students.

"We have the 11th-highest community college tuition in the country, yet they keep doing this year after year after year," he said. "The average graduate of EKU has graduated with $23 thousand in debt."

Bailey said a bright point in the budget is $18 million to expand access to preschool in 2016.

Details of the budget bill, House Bill 235, are online at lrc.ky.gov.


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