Now that the House budget proposal has been out for a few days, we’re starting to see the extent to which the House contorted numbers and ideas to avoid having to support real reforms.

The budget does a couple of things that are not bad. It puts some much needed money into community health centers and services like Meals on Wheels, and starts to fund the Boni Bill, a bill that passed in 2007 to increase the protections of social service workers.  This funding is good and necessary.  But in addition to the cuts to higher ed, adult education, the school year and teacher pay, and services that we need, the budget does many things that show a lack of leadership by playing with our future instead of solving our problems of today.

The budget includes $74 million dollars that is the result of moving the one paycheck for state workers back one day, from June 30, 2012 to July 1, 2012.  This way, the $74 million dollars is technically part of the 2012-2014 budget cycle.  This little nugget was slipped in to the 238^th page of the House budget proposal.  It didn’t make any headlines, but was embedded in a Herald-Leader article about the House’s proposal to halve the salary of Economic Development Secretary Larry Hayes. 

It’s an important little nugget, though, because it shows the acrobatics that legislators were willing to perform to avoid taking up real solutions.  A budget that’s “balanced” because it pays state workers the day after the budget cycle?  It doesn’t inspire confidence, does it?

This shell game is also exactly the kind of game that jeopardizes Kentucky’s credit rating.  Kentucky is already on the watch list of some of these credit rating agencies, both because of our policy makers’ failure to pass sustainable revenue reforms, and because of our dependence on a manufacturing economy.  Moody’s is one such agency.  When their analysts look at Kentucky, they don’t see a credible borrower.  According to a memo from the Legislative Research Commission in September of  2009, Kentucky's leadership should be very concerned about what credit ranking agencies are seeing when they look at Kentucky. Here are the pieces of evidence they see:

Our lack of leadership predates the recession.  The LRC ehoes credit agencies' concern that Kentucky depends on one-shot, nonrecurring revenue sources to fund services and programs that we rely on every year.  Eventually, the smoke and mirrors aren’t going to be able to hide the ever-worsening real-world gap between the revenue the state brings in and the cost of the services that we need.

Kentucky is still bending over backwards to bring in manufacturing, which is not as good of an investment as it was fifty years ago, as we move toward a technology and knowledge-based economy.  This dependence, according to credit agencies, jeopardizes our standing as a worthwhile investment. 

Credit agencies and analysts maintain that states should evince some good faith effort toward keeping themselves financially secure.  Part of that effort is having a Rainy Day Fund, money reserved for emergencies.  Here, too, Kentucky falls short.  Leaders haven't adequately funded our Rainy Day Fund since 2001.  Our Rainy Day Fund is supposed to be between 3 and 5 percent of our General Fund revenue.  Kentucky’s is 0%.  We have no Rainy Day Fund.

These pieces of evidence aren’t good, and they've caused Kentucky's rating to slip from stable to negative. It's true that many states are in uncertain times.  But it's also true that thirty-three states have done something to raise the revenue they need to pull themselves through.  Oregon, for example, just passed a tax increase on income above $125,000. 

Kentucky, on the other hand, is going in the wrong direction.  The House budget would make Kentucky even more vulnerable.  If the debt in that budget passes—the debt that replaces the real revenue reforms that Kentucky needs—the credit rating agencies will also see these pieces of evidence:

• Kentucky will have taken on $2380 in debt for every man, woman, and child in our commonwealth, according to the Legislative Research Commission.
  
• According to the LRC, Kentucky’s debt as a percentage of our revenue will shoot up to 7.43%.  It’s supposed to stay below 6%.  When it gets too high, it sends another message to credit agencies that we’re not putting forth a “good faith effort” to generate revenue.
  

Why does this matter? 

Because when Kentucky doesn’t look credible to lenders, we pay higher interest rates. Those higher rates cost taxpayer dollars, dollars that most folks would rather see put toward smaller class sizes and clean water.  Kentucky's budget has had nine rounds of budget cuts since early 2008 for most public services, and these on top of chronic underfunding of these services and programs. 

We can't afford the borrowing in the House budget, but we can't afford the cuts, either.  Cutting school days from the calendar and adult education resources doesn't put Kentucky in a position to move forward. 

The House had a choice.  It could have chosen to invest in Kentucky's people by sending money back to the pockets of working families who are struggling with a state EITC, and by raising the revenue that we need.  Instead, it chose to play games with our future.

Take Action

• Write a letter to the editor supporting tax and revenue reforms that fix our broken system.  You'll find helpful tips and links to lots of local papers here, on an earlier blog entry. Writing these letters is valuable and easy!  Feel free to post your letter in the comments section so others can see your letter here.

• Call House and Senate Leadership, Senator Leeper, and your legislators and leave a message in support of a budget with fair and adequate reforms.

  Call the Legislative Message Line, 1-800-372-7181 (7am-11pm M-F of this week) and ask to leave a message for House and Senate Leadership and your own legislators (if you don't know their names, the operator can look them up for you). Leave a simple message like "This budget process is taking Kentucky in the wrong direction.  I support the fair and adequate tax reforms in HB 13 as solutions that will move Kentucky forward.”

• Contact Governor Beshear in support of a budget with fair and adequate reforms. Call him at (502) 564-2611, or email him through this link.  You can use the same message: "This budget process is taking Kentucky in the wrong direction.  I support the fair and adequate tax reforms in HB 13 as solutions that will move Kentucky forward.”

And feel free to share your thoughts about the House budget below!

The House budget proposal is getting its hearing today, to be sent to the House floor for a vote later in the week.

Written versions of the proposal *still* haven't been released, but here's what it does, as far as we know:

• Cuts higher education 2.5% over the next two years.
  
• Cuts adult education. Non-traditional students have already taken hits with previous cuts to the community colleges, and cuts that limited GED testing sites and programs and access.
  
• Cuts two days from the school year for elementary kids, which also cuts pay for teachers and staff.
• Cuts the health plan for state workers.
• Cuts funding for contracts with private companies. (What does this mean? The example offered at one Frankfort hearing was the Poison Control Hotline.)
  
• Depends on $256 million in federal Medicaid funding that might or might not materialize.
• Includes about $371 in revenue from HB 530, which passed the House last week. HB 530 would cap some tax breaks that the legislature passed last summer, suspend tax breaks for businesses that aren't making a profit, and have businesses pay the sales taxes they owe sooner rather than later. There were no revenue reforms. And this bill is unlikely to pass the Senate intact.
  

So there is $627 million in assumed funding.  That means that there's almost $900 million in cuts.  And yet, somehow this proposed budget includes a $10 million increase in funding for the Boni Bill (a bill that passed in 2007 to protect social service workers, but has never been fully funded), a host of projects to "reward" some legislators who voted for HB 530, and money to chip away at the waiting lists for Meals on Wheels.

(Edit: Oh! So that's how they did it! They borrowed about $2.2 billion--quite a hefty debt. For more information, here's the Herald-Leader article, and here's the Courier-Journal article.)

But after chronic underfunding of health services, education, environmental protection, and public safety, the House doesn't have much to be proud of.  They had better choices that would have allowed stronger investments in Kentuckians, better opportunities, and a more balanced and fair tax structure.  More details are expected to be released this evening, and a written version is expected to finally be released later this week.

Meanwhile, a report was released that says that out of every 100 Kentucky 9th-graders, only 44 will start college the fall after they graduate, and only six of those will finish in four years.  If this is all by choice, fine and good. But with tuition rates rising an average of 10% a year for the last decade, we suspect it isn't by choice.

Rowan County members held a Bake Sale for the Budget on the campus of Morehead State University yesterday.

It was great!  We got about 80 people to sign on in support of adequate budgets and fair taxes, had lots of good conversations about the tax/budget/tuition relationship, and raised about $70 for the state budget that we'll deliver to the Governor's office.

Rowan County members' baking abilities are legendary, and they sure didn't disappoint yesterday! 

Five members baked up plates of brownies, buckeyes, blondies, cookies, and lemon bars.  Another group of six came out to talk with folks about the implications of letting our budget needs fester, and the real solutions in HB 13.

The President of MSU even stopped by to talk about the effects of the budget cuts on Morehead.

Thanks to everyone who pitched in!

The Northern KY KFTC group had it's second meeting last week, and got a good start on planning local actions. 

The group broke into functional issue workteams focusing on tax justice, voting rights, and mining issues, planning local events including a letter-writing day and a Budget Bake Sale on NKU's campus. 

Since the meeting, the group held its first fundraiser at Joe Gallenstein's home - a Euchre for Justice tournament.  That same day, they held their first Chapter Development Workteam meeting to plan out next month's big meeting and to better spread out leadership roles in the organization.

On December 15, House Speaker Greg Stumbo was told by a reporter that many legislators don't have an appetite for tax reform.  He said this, as quoted in the Lexington Herald-Leader:

So what happened?

Speaker Stumbo and Senate President David Williams have agreed to ignore the revenue shortfall and instead chose to close the budget gap in the first year of a two-year budget with cuts to health and human services, layoffs and more one-time fixes. What happened to the real revenue solutions that we need and that Speaker Stumbo seemed to promise early in the session?

Some of these cuts are called "contracted positions."  This is a vague term for lots of services that most of us would agree are not only necessary, but smart.  The poison control hotline, for example, is funded largely by its contract through the Kentucky Department for Public Health.  On average, their handful of staff get 192 calls a day from doctors, parents, child care workers – anyone who gets that sick feeling when they realize that someone they love could be in serious danger.  What will it mean if this service is cut?   

More cuts come from Medicaid, even though Medicaid enrollment continues to grow.  Just as Governor Beshear proposed a budget that assumed money from non-existent expanded gambling, House Speaker Stumbo and Senate President Williams are putting forth a budget that assumes that there will be increased federal funding for Medicaid.  Advocates say that this is far from a safe bet.  Asking legislators to spare health services from cuts, a representative from an agency that offers disability services explained that if their agency gets further cuts, they'd need to start rationing the adult diapers.  This, instead of letting people who use limos pay a sales tax on their joyride?

What do you think of the choices that our elected officials are making?

Related story: Human services cuts still possible, key lawmaker says

Take Action

Action #1

Call Speaker Stumbo and your legislators and leave a message.

Call the Legislative Message Line, 1-800-372-7181 (7am-11pm M-F of this week) and ask to leave a message for Speaker Stumbo and your own legislators (if you don't know their names, the operator can look them up for you). Leave a simple message like "Please support the comprehensive tax reforms in HB 13.”

A message might be: 

"On December 15, you were quoted in the Lexington Herald-Leader:  "I don't have an appetite to turn my back on the needs of our state....I'm willing to do whatever it takes."  We haven't seen much evidence of that in the budget that House leadership is talking about.  There are none of the revenue reforms that you have said were so very necessary, and no policies to make taxes fairer for working-class families. 

It's not too late.  Please support the comprehensive reforms in HB 13"

Action #2

Write a letter to the editor in support of HB 13.

You can find a great how-to here.  It includes links to many of the state and local papers.  Tell your own story of why we need to protect health departments, or the poison control hotline, or Meals on Wheels, or environmental protection, or after-school programs.

Thanks!

To correspond with KFTC’s statewide “Bake Sale for the budget” in Frankfort, the Madison County Chapter of KFTC held a “Berea Bake Sale for the Budget” last Wednesday. The event was held on Berea College’s campus.

In just two hours of selling baked goods, almost twenty dollars was raised, and over 55 action cards were signed and ready to be sent to the Governor’s office. One might think that twenty dollars does not a good bake sale make, but the awareness that KFTC generated around tax reform was worth more than any pennies to go into the states depleting coffer.

By definition Berea College students come from families who live at the end of the regressive tax system, they make less money and pay a high percentage of that money back into their taxes. An average Berea student makes $200 a month- so to collect nearly twenty dollars from those at the end of the state’s food chain was heartwarming. The students were given recipe cards that described House Bill 13, and some were shocked to find that the state was 1,500,000,000.00 dollars in debt.

Maren Hudson, a senior at Berea College stated, “How can a state be $1.5 billion dollars in debt when I am feeling the pinch of student loans breathing down my neck in a few months. Soon I am going to be graduating and going off into the “real world” so I guess I should start paying attention because maybe Kentucky really is not the place I want to settle my family.”

Mrs. Hudson is originally from Tennessee and lives off campus with her husband, a Kentucky native and fellow Berean. By signing individual cards that acted as a personal letter to the governor, Berea students were able to get their voices heard while they got their stomachs filled. The money, as well as the action cards will be personally delivered to the Governor’s office while KFTC continues its lobbying efforts in Frankfort.

Remember I Love Mountains Day is Feb 11th

On Thursday, the Central Kentucky chapter spent its meeting reviewing legislation that KFTC endorses, and also learned from our allies at Lexington Fairness which bills they're lobbying for during the 2010 General Assembly.

Central Kentucky members Katie Meyer, Martin Mudd, Jenn Myatt, and Susan Williams each led a breakout session on one of KFTC's legislative priorities. Members then broke down into small groups and spent ten minutes at each "station."

In Katie's group members celebrated our work on Wednesday during the "Bake Sale for the Budget" big lobby day. They also learned about the progressive tax reform legislation proposed in House Bill 13.

Susan Williams led a group on sustainable energy policies. She shared information about the Kentucky Sustainable Energy Alliance (KySEA), and how the policies proposed by the alliance will

benefit all  Kentuckians by saving ratepayers money in the short and long-term, creating local jobs and businesses, improving our health and environment through cleaner electricity sources and by helping families struggling with rising energy bills.

In the voting rights break-out members had a chance to learn about where we are with the restoration of voting rights legislation (HB 70) and to prepare for our big voting rights lobby day on March 4.

The fourth break-out group, led by Marty Mudd, focused on the history of the Stream Saver Bill. There were several first-timers at the meeting who kept Marty on his toes by asking important questions like, "How do you make an issue like protecting streams in Appalachia important to someone who lives in Lexington or Louisville?"

KFTC also has a history of supporting ally organizations' work in Frankfort as well. The chapter invited Joey Rose from Lexington Fairness to share with them which bills they are working on right now. Lexington Fairness is a local LGBTIQ (Lesbian, Gay, Bisexual, Transgender, Intersex and Queer) organization. There are four bills that they are lobbying for during this session;

1. Statewide Fairness Bill (House: HB 117): This bill would prohibit discrimination on the basis of sexual orientation and gender identity throughout Kentucky in employment, housing, public accommodations, insurance coverage, and credit. The House bill also includes sexual orientation and gender identity provisions in the powers of state and local human rights commissions. Right now only residents of Metro Louisville, Lexington/Fayette County, and Covington are protected by city ordinance against discrimination.

2. Hospital Visitation Bill (House: HB 118): This initiative would allow any adult hospital patient to designate another individual to be treated as a member of the patient's family with regard to visitation.

3. Fair Marriage Bill (House: HB 17): This bill would repeal the 2004 anti-marriage amendment by returning the issue to Kentucky voters.

4. Dual Parent Adoption Bill (House: HB 95): Allows non-married couples to adopt.

There will be a fairness lobby day on Wednesday, February 24. Starting at 9 a.m folks can gather in room 131 of the capitol annex for training.

To learn more about these bills and how they're coming along, visit the Kentucky Fairness Alliance's Legislative Action Center at http://kentuckyfairness.org/getinformed/legislation.htm

The Central Kentucky KFTC Chapter meets the third Thursday of every month from 7-9 p.m. at the Episcopal Diocesan Mission House at the corner of 4th Street and Martin Luther King. If you're interested in helping to plan our chapter meetings, please contact the CKY Organizer Ondine Quinn at ondine@kftc.org

KFTC members came to Frankfort yesterday to raise money for after-school programs, mental health services, clean water, and Meals on Wheels – one cupcake at a time.

Members from across the state baked up all sorts of goodies in the name of justice – Kentucky shaped sugar cookies, Depression Bread (which uses no eggs or milk), fudge fresh from Cave City, loaves of dill bread, and from McKinley Sumner, his famous no-bake peanut butter cookies.  The money raised was turned into the governor's office.

It was great day. Here's a recap from Jefferson County member Beth Bissmeyer, shown here (right) with Jefferson County member Becki Winchel, who contributed the Kentucky-shaped cookies

Our bake sale booth caught a lot of people on the way to the cafeteria

"Yesterday, the day after Gov. Beshear gave his budget address, KFTC held a Bake Sale for the Budget at the Capitol to emphasize the need for progressive tax reform and to raise a little bit of money to help reduce the state's projected $1.5 billion budget shortfall. Citizens from all across the state turned out to the Capitol donned in aprons and with baked goods in hand to lobby for the Kentucky Forward Plan, HB 13, sponsored by Rep. Jim Wayne of Louisville.

"Whereas Gov. Beshear's proposal to address the budget crisis (crossing his fingers and praying his gambling bill passes and makes tons o'cash, which it won't) doesn't actually begin to tackle the problem. Kentucky's tax system is flawed. Period. Right now, the highest tax share falls on the working class and low-income households. I fall under the second-lowest income bracket, so I pay a higher percentage of my income in taxes than the wealthiest 20%. Sound ridiculous? A bit backwards? It should.

"HB 13 would raise $300 million in new revenue while also asking $100 million less in taxes from Kentucky's working poor families. This bill would do this by:

• Balancing our income tax---Giving a modest tax raise on income more than $75,000. It's so small that folks will hardly notice, but it will bring in $234 million a year.
• Reforming our sales tax---Limousine rides, chartered plane flights, golf club memberships, landscaping, and other luxury services aren't taxed right now. Expanding the sales tax to include luxury services would raise $100 million annually.
• Lowering taxes for working families with a state EITC---Establishing a state Earned Income Tax Credit for working parents of families making up to $40,000 would put about $100 million annually back into the pockets of those who are struggling.
• Restoring our estate tax---This tax would exclude farms and would only apply to those who have more than $1 million in assets, like trust funds and inheritances. This would generate $22 million annually.

KFTC Chair KA Owens delivering the proceeds from the bake sale to the Governor's office

We've been urged to tighten our belts. We've been told to cut back in these tough economic times, but what about the working poor who have been trying to survive on tight budgets for years? What about the first-generation college student who is forced to work full-time to pay for tuition that increases several percent each semester? What about the working mother? What about people who have benefited from important social services? Enough is enough. It's time we have real progressive tax reform in Kentucky."

What can you do?

Please call your legislator and urge them to support HB 13!  Calling the legislative message line (1-800-372-7181) is a quick and easy way to tell your legislators what you think.

Don't know who your representatives are? Just check out this site.

Press coverage

We managed to get a fair amount of press coverage of the Bake Sale for the Budget. Check out the links!

• Coverage from Louisville's FOX 41. Video highlight: Greg selling a Bowling Green brownie to Rep. Jody Richards!
  
• Great coverage from WAVE 3 that features rock stars Jerry Moody, Greg Capillo, and Dana Beasley Brown.
  
• Channel 36 in Lexington.
  
• WHAS 11's story
  
• WKYT's coverage
  
• "Advocates sweeten state’s sour financial woes with bake sale" from the Bluegrass Politics blog.
  
• Ronnie Ellis's news story.
  

On Tuesday evening, Governor Steve Beshear gave his state of the budget address, presenting his vision for Kentucky's budget over the next two years. The most pressing issue needing to be addressed in this budget is our $1.5 billion dollar deficit, but the only solutions offered by the Governor were the unlikely passage of a broad gambling bill or 10% to all state services across the board.  Is this the best we can hope for?

We are encouraging members who watched the State of the Budget Address to take a moment to write a letter to the editor of their local paper about what they thought about the Governor's speech.  Newspapers across the state will be looking for people’s reactions to the budget address. Use this opportunity to build support for HB 13 as a forward-looking tax plan that is fair and that creates the public dollars we need for quality services that we can count on.

KFTC Members are in Frankfort right now for our Budget Bake Sale, talking to legislators about our $1.5 billion budget deficit, and trying to make up the difference one cupcake at a time.  Here are some of the first pictures of the day.  We're about to start our press conference at 12:30pm, then take our earnings for the day over to the Governor's office and ask him to add it to the treasury.  Expect a larger story soon.

           

Coverage on the Bluegrass Politics blog
Ronnie Ellis' story for Community Newspapers