How unfair it was for former Gov. Steve Beshear to claim he was leaving the commonwealth’s bank account in much-better shape than he was handed when, in reality, the incoming Gov. Matt Bevin administration found itself staring at a shortfall of hundreds of millions of dollars.
This scenario resulted in the new governor’s first budget proposal containing across-the-board spending cuts of 4.5 percent during the current fiscal year and 9 percent in the next budget.
Bevin’s budget pays the bills, adds an additional $1.1 billion in funding to the pension system and tucks away nearly $1 billion in savings to address future pension payments in a Kentucky Permanent Fund—$500 million of which is coming from surplus funding in the state’s public employee health insurance fund.
State retirees, despite being largely a Democratic party constituency in elections, have given an increasingly enthusiastic “thumbs up” to Republican Bevin’s plan.
But House Democrats forced a budget through on Wednesday that dramatically reduces Bevin’s proposed cuts and uses the $500 million in surplus health insurance funding to pour more money into the commonwealth’s Kentucky Teachers’ Retirement System rather than save it for the future or at least put it toward the Kentucky Employees Retirement System (KERS), which is in much greater danger of going belly-up.
The difference is KERS can’t match the campaign-contributing ability of teachers’ unions.
Still, it’s not as if Bevin neglected the teachers’ fund as evidenced by his proposal to pour an additional $660 million into the KTRS pension plan.
Even some of the governor’s supporters question the need to save when there are pressing funding needs.
But it’s like the family being able to pay for a repair if the car breaks down or someone has to make an unexpected trip to the emergency room without totally busting the budget.
The state has itself taken a few such “trips” recently, including a shockingly high bill from Kynect, Kentucky’s Obamacare-style health insurance exchange. The tab was more than $60 million for this duplicative and wasteful program despite the fact that Beshear claimed his administration would operate Kynect for less than $34 million.
There’s also the matter of finding revenues to cover Kentucky’s portion of the bill generated by Beshear’s unilateral expansion of Medicaid eligibility resulting in a half-million Kentuckians being added to the taxpayer-funded health insurance program, which now includes 400,000 enrollees with household incomes between 69 percent and 138 percent of the federal poverty level—many of whom could purchase private insurance if they weren’t being encouraged to attach themselves to the government dole.
Part of Obamacare’s promise was to cover a major portion of the expanded Medicaid costs now and into the foreseeable future. Still, even the best scenario requires Kentucky to pick up 10 percent of the expansion’s cost by 2020.
So the Democrats pass a budget that keeps most of the spending but refuses to tuck away badly needed savings, even though they have no clue what that cost will be.
What if it’s a lot higher and requires taking more General Fund money to pay those bills?
Not a single one of the House’s 47 Republicans voted for the Democrats’ irresponsible spending plan, which is dead on arrival at the Republican-controlled Senate.
The GOP’s unity is especially satisfying and significant as it’s directed at arch enemies of changing the direction of our commonwealth from poverty to prosperity: outdated political relics in charge of the House’s majority party who refuse to cut spending, save for the future or even represent their own constituencies.
Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at [email protected] Read previously published columns at www.bipps.org.