Loan paid by borrowing?

Late last night, Gov. Steve Beshear announced that the state has paid the $28 million interest payment that was due to the federal government by September 30, 2011. The state's loan has been used to pay for unemployment insurance benefits.

On one hand, Kentucky businesses dodged a big bullet. Without the commonwealth paying the interest, Kentucky businesses would have footed the penalty bill. They would have to pay roughly $400/worker, a cost totaling over $600 million.

The problem? How the money was paid. The commonwealth has again borrowed money from itself to pay the federal government. The governor took an "internal loan" to make up the difference needed for the interest pyament. While the governor has claimed budget surplus, how is it that the commonwealth continues to borrow funds from itself?

Sen. David Givens, R-Greensburg, questioned the governor's move: "I'm disappointed because basically what we've done in Kentucky is written a check for an account that doesn't have sufficient funds in it."

While in the short term, the problem has been addressed, how will Kentucky fare in the long run? Continuing to borrow more money we don't have doesn't seem promising to me.

Budget surplus!? Think again

The Beshear administration is touting a budget surplus for this fiscal year and claims that roughly $100 million will be deposited into the rainy day fund.

This is a bit misleading, no? When a state has billions of dollars in unfunded liabilities in public pensions and has to borrow $97 million from a future year's Medicaid budget to plug a hole in the current year's, an extra $100 million does not count as a "surplus".

Until the pension system is fully funded and Medicaid (which is currently on an unsustainable path) is on solid ground, claiming a surplus seems a bit premature.

Talking about pension reform is just the first step

With Kentucky House leader Greg Stumbo stating that pension reform for new hires is up for discussion, does this mean we may finally get somewhere with state pension reform in the next General Assembly?



While we need to do much more than simply open the discussion about public pensions, this is certainly a step forward from Gov. Beshear's believe that this problem will take care of itself.

Pension reform is not necessary?

At least according to Gov. Steve Beshear...



He seems remarkably calm about an issue that is actually very serious. We do need pension reform.

h/t: cn2 Politics

Hey, we could really use that $11 million!

Today the governor announced that he is directing the Kentucky Department of Transportation to spend $13.6 million of contingency funds to make emergency repairs to highways damaged in winter storms. $13.6 million from contingency funds.

A better idea to help fund these emergency repairs would be to not allocate $11 million for highway enhancements and tax incentives for theme parks. 

That $11 million would be a good chunk of the 13.6 needed.

State revenue is up...so now what?

Earlier today, Governor Steve Beshear mentioned on Twitter that he was excited about revenues being up this month:

According to the Courier-Journal article that the governor references, this amounts to roughly $62.1 million more than a year ago. That's pretty good. I think we all probably wish our personal revenue was up 8% over last year.

What are the odds that the $62.1 million will be spent toward Kentucky's budget shortfall?

With revenues up, what would be the responsible fiscal action our state leaders should take? Let us know in the comment section!

Meth plan would exacerbate prescription drug abuse crisis

Kentucky faces a prescription-drug abuse crisis that Gov. Beshear rightly described in his recent congressional testimony as “the fastest growing, most prolific substance abuse issue facing our country.”

That’s precisely why Kentucky lawmakers rightly resisted proposed legislation during the 2011 session of the Kentucky General Assembly to require prescriptions for purchasing cold and allergy products containing pseudoephedrine – an ingredient used to make methamphetamine, a highly addictive and terribly destructive drug.

Why do some law-enforcement officers vow to keep fighting for this misguided approach when, if passed, it would exacerbate one of our most serious drug-abuse problems? The proposed policy would also remove the current real-time tracking system known as MethCheck, which blocks 10,000 grams of potentially illegal sales of meth ingredients each month.

Pharmaceutical companies implemented and funded the MethCheck system, saving taxpayers hundreds of thousands of dollars. While we may not have “won” the meth war, we are containing it as law enforcement officials have the tools to find and shut down more meth labs than ever.

What other answers might the private sector come up with that could offer more success than the government solutions that have failed to curb the prescription-drug abuse crisis?

'Rewarding Failure', 'Operation: Open Records' are not baloney

In case you missed it, Kentucky's governor thinks the work of the Bluegrass Institute is baloney...

Gov. Beshear calls BIPPS baloney by Bluegrass Institute

• "Rewarding Failure" is a report released by the Bluegrass Institute earlier this year talking about the lack of accountability in the performance evaluations of Kentucky's school district superintendents.  It was based on the results of open records requests and features actual copies of performance evaluations of superintendents.
• "Operation: Open Records 2011" is a project that led to many records requests.  The requests were tracked on FreedomKentucky.org.  Here you can view the requests made to the governor's office.  

A lack of accountability when it comes to children's education, claiming that leadership is successful despite the academic failure of the district, the denial of open records requests by the governor's office...

...you decide what the real baloney is!

Show us the savings

Gov. Beshear claims his administration saved $86 million in Medicaid efficiencies last year. Enquiring Kentucky minds want to know: Where's the proof?

Click here to read the latest Bluegrass Bullet.

Now it's time to manage?

Now that the special session has ended, the governor and the Health and Family Services secretary have begun their work to move all Medicaid enrollees to managed care in the commonwealth.

Yesterday, CHFS Secretary Janie Miller released a statement announcing that her cabinet had issued a request for proposal (RFP) seeking proposals from managed care organizations (MCOs). The deadline for responses to the RFP is May 25, and the target date to have contracts in place is July 1.

Sec. Miller announced this was a "milestone" for Kentucky's Medicaid program. Miller stated, "We must aggressively pursue ways to better manage health care services and control rising costs. Managed care is a proven strategy that has been tested in both the public and private sectors."

But the question remains, if the secretary is so confident about the potential success of managed care, why did the governor veto an independent audit of managed care savings? Will the state be able to save enough to make up for this year's budgetary mess? Time will surely tell.

Governor cites Prichard nonsense

Governor Steve Beshear treated the Boone County Education Foundation to nonsense education statistics a few days ago.

As reported by the Kentucky Enquirer in “Beshear touts education,” the governor touted Kentucky’s supposed dramatic improvement in the federal National Assessment of Educational Progress (NAEP) testing program compared to other states.

Well, as we’ve pointed out before, those rankings of NAEP performance, which the governor got from the Prichard Committee for Academic Excellence – not a proper state agency – are mathematical nonsense.

Kentuckians deserve better data and a more reasoned evaluation of the performance of our education system.

Read more »

SEEK and ye shall find Medicaid money

What would happen to Kentucky schools' academic performance if Frankfort's politicians had the same degree of concern about low test scores and high graduation rates as they showed toward proposals to cut a minuscule amount of funding for one year to help shore up Kentucky's Medicaid budget?

Click here to read the latest Bluegrass Beacon.

There ain't no such thing as a 'free lunch'

For two weeks in a special session, Kentucky legislators have been debating what to do about the Medicaid budget shortfall. The Governor proposed borrowing money from next year's budget, not only to plug the budget hole but also so the commonwealth can reap more federal funding with the higher Federal Medical Assistance Percentage (FMAP) before the higher match rate from stimulus funds runs out in June of this year.

There are two problems with this approach.

For starters, borrowing money from next year's budget to fill a gap this year is a bad business move for anyone. Most Kentucky businesses and residents, like state government, have experienced the hardships of the economic recession. As a result, we've made due with less. We've trimmed our budgets, cut out excess spending, and worked to find more ways to save. Scaling back is not easy and often it's unpleasant, but it's reality. The commonwealth should take the same approach.

But beyond that, increased federal funding does more harm than good for state budgets. Yesterday, the Texas Public Policy Foundation released a paper analyzing just how damaging increased federal funds are to states. Increased funds not only lead to greater control of state programs by the federal government, but they also bloat spending to unreasonable and unnecessary levels.

By expanding programs with one-time funds that will run out, we are laying the groundwork for an economic disaster in the commonwealth.

House goes along with Senate's Medicaid plan; Beshear vows to veto spending cuts

The fact that the Kentucky House of Representatives voted tonight to accept the Senate Medicaid's plan is surprising. After all, Speaker Greg Stumbo said the House would not accept any spending cuts, particularly to education.

But wait, don't get your hopes up...

The House accepted the Senate plan only after Gov. Steve Beshear promised, apparently in a letter read today on the House floor today, to use his line-item veto authority to axe out spending and accountability measures is, unfortunately, not.

Apparently, the governor doesn't believe he can achieve the savings he promised. Otherwise, he would have gladly embraced the Senate's call for independent verification of what are sure to be future claims he will make about the great savings accrued from his managed-care approach to Medicaid.

Currently managed-care contracts are not even in place, and there is little chance the governor will be able to find the nearly $425 million in savings needed to plug Medicaid's budget by the end of next year.

Rep. Jim DeCesare, R-Bowling Green, praised the Senate substitute for House Bill 1, passed largely along party lines on the Senate floor today (this after earlier versions had picked up bipartisan support).

"It is a responsible plan that trusts, but also verifies," DeCesare said in a statement. "The plan, which credits the Governor for savings already achieved, fully funds Medicaid services this year while protecting the taxpayer and holding the Governor accountable through independent evaluation of his actions."

The Senate plan would have enacted small spending cuts over the next fiscal year -- 1.74 percent, across-the-board reductions next year -- but did allow those cut funds to be reinstated once an independent accountant and representatives from the state's Consensus Forecasting Group had certified his claimed savings. In return, it allows some borrowing from next year's Medicaid budget to balance this year's checkbook. At least $139 million is needed to plug the hole.

The cuts would have amounted to $23.5 million for K-12 education and $23 million for higher education.

Also, it would have restricted the amount of debt restructuring (delaying payments on the interest, or, as this governor has even done, the principal payments on loans) to the amount originally agreed to by legislators in last year's budget session -- about $202 million.

Ignoring the wishes of the people's representatives, the governor not only has restructured nearly the entire amount, but the House version of the Medicaid fix would have allowed him to keep those monies.

Apparently, the governor thinks he can get by with this. However, the November election indicated voters were wary of "borrow-and-spend" policies in Washington. The question: Will the same folks who sent fiscal hero Sen. Rand Paul to Washington catch on in Kentucky?

Beshear's letter indicated that he planned to veto all of the legislation's safeguards, leaving him with the all the money and no accountability," DeCesare said.

"Besides being a cynical move, it leaves the people of this Commonwealth holding the bag again, because come next year even deeper cuts will have to be made," he said.

Of course, those cuts won't occur until after Election Day.

For more on Kentucky's Medicaid program, visit the Bluegrass Institute's transparency site here.

Independent auditor needed to verify Beshear's future Medicaid savings claims

One of the problems with the Medicaid "compromise" coming out of the Kentucky House of Representatives is that it lacks the strength of accountability needed to ensure that the savings promised, and then no doubt touted by the governor, actually are delivered.

Members of the state Senate Appropriations and Revenue Committee were right today as they "peppered (Cabinet for Health and Family Services Secretary Janie) Miller (right) with questions about how those savings will be documented."

The House is proposing allowing Beshear to stick to his original plan of borrowing $166.5 million from next year's Medicaid spending plan to balance the program's budget this year.

However, as the Lexington Herald-Leader reported, there's a caveat: "If the state can not demonstrate that it has generated more than $116 million in savings through managed care and other efficiencies by Aug. 15, there will be across-the-board cuts in most areas of state government by Oct.1."

But who will determine if these unlikely savings actually are achieved? It will be Miller and the administration's budget office, who have hardly been interested in stepping into the sunshine with all the information lawmakers -- much less you and I, the lowly taxpayers -- deserve to know.

Since it is our money, after all, shouldn't the plan demand an independent entity determine whether or not real savings have been accomplished?

Where is that efficiency study?

Whatever happened to that "comprehensive efficiency study" of state government that was promised by Governor Beshear?



I had high hopes for that.

A Bluegrass Institute records request found that an efficiency study hadn't been done BUT the governor did conduct a survey of state employees on how the state can save money.  You can find those results separated by area of government here. I wonder if the governor has implemented any of those suggestions.

Email the governor and ask him

Listen in today as WLAP's Leland Conway shines light on gov's 'baloney' (comment)

Long-awaited transparency bill signed by governor

Listen in today during the 4 p.m. (EDT) hour as WLAP's Leland Conway, host of "The Pulse," no doubt will have some fun with Gov. Steve Beshear's opinion of the Bluegrass Institute.

In an interview with Louisville's 84 WHAS morning talk show host Tony Cruise earlier this week, the governor called the Bluegrass Institute a "right-wing think tank" and its research "a bunch of baloney."

That was in response to Cruise's question about whether the governor's plan to address the Medicaid budget gap this year was just a "Band-Aid," especially considering the fact that Beshear had failed to achieve $250 million worth of promised savings in the current budget.

Beshear followed with his attack on the institute, but never answered the specific question.

The governor's probably not too happy with the fact that he had to sign Senate Bill 7, sponsored by Sen. Damon Thayer, which amazingly passed the House on March 8 with a 95-0 vote and was signed by Beshear on Thursday, the day after he attacked the institute.

SB 7 requires all three branches of Kentucky government -- executive, legislative and judicial, to put their checkbooks online so that taxpayers can see just how quickly the commonwealth is running out of Band-Aids.

Hmmmm. I wonder why the Beshear administration didn't make as big of a fanfare about the signing of this bill as they did the other fluff, mostly meaningless -- or liberty destroying - legislation that usually gets most of the attention? Of course, the governor knew that not signing the bill would be the equivalent of political suicide.

Wasting money to argue about money

Frankfort is a mess right now.

The General Assembly's "special" session carries a price tag of $63,000 each day.

Governor Steve Beshear is traveling the state by plane to defend his plan to borrow $166 million from next year's budget to cover this year's Medicaid budget shortfall. Traveling by plane is not cheap.

Kentucky's citizens, taxpayers, are tired of politicians spending more and more money to argue about money. The first place the Governor and General Assembly should look for funds to fill the Medicaid gap is the money they are wasting in special session and the travel, security, and staff costs associated with flying all over the state.

What is more frustrating is that the governor believes he is doing his duty by traveling around. When asked to defend his state sponsored travels, the governor replied:

"The government is paying for the governor of this commonwealth to do his duty to go out in this state and inform the citizens of this state on what the state senate is attempting to do to the children of this state and the folks who need health care in this state"

I don't remember reading anything about going out in the state to barnstorm in the state constitution. In a time when citizens are required to tighten their belts, so should the government.

Special session short

While Kentucky's state legislators remain embroiled in a conflict over the Medicaid budget deficit, commonwealth taxpayers are footing the bill. The special session runs a tab of $63,000 per day.

The Bluegrass Institute has covered the debate in our weekly column here and on the Bluegrass Blog here. To stay updated on the special session, follow our live tracking on Twitter.

For a quick summary, watch this recent video CN 2 put together highlighting the current debate.

Governor optimistic about the state of the Commonwealth

Tuesday evening, Gov. Steve Beshear addressed a joint session of the General Assembly in his State of the Commonwealth address.

The governor remained optimistic about the future of Kentucky. While acknowledging the difficult times the Bluegrass State has endured during the last few years, Beshear said the economy is improving and cited examples from his administration.

He distanced himself from Democrats in Washington, touting his commitment to cut spending while fairly assessing: "Kentuckians are rightly disgusted by a federal government that defines fiscal management as the speed at which you can print money."

The governor took a strong stand for Kentucky's coal economy, vowing to protect the industry from federal regulations and overreach.

The address was not without party politicking, as Republican gubernatorial candidate and current senate president, David Williams, looked on.

The governor noted that he supported Williams in Senate Bill 8, an electronic portal to help reduce complexity for Kentucky businesses. However, Williams did not conceal his feelings about the Beshear administration: "The man has no agenda."

He said the governor is not adequately addressing pressing fiscal issues in the commonwealth, referring to Medicaid costs, the pension crisis, and the tax code.

Watch the entire speech archived here.