KyKurmudgeon

Sunday’s column:

FRANKFORT — As a short-term solution for the $456.1 million revenue shortfall the state faces this year, Gov. Steve Beshear’s proposed mix of spending cuts, tax increases and employee furloughs seems sensible and minimizes the pain.

Sure, lawmakers from both parties will object to one detail or another. Some started squawking immediately when they learned Beshear’s plan would use excess severance tax money that normally would go to coal counties to help balance the state’s bottom line.

And no doubt, Beshear’s proposal will undergo an extreme makeover before it emerges from the General Assembly. But he has provided a reasonable starting point for discussions about addressing this year’s revenue shortfall.

And therein lies part of the problem with Beshear’s plan. Its scope is limited to an immediate crisis largely created by a recessionary economy that most experts say hasn’t hit bottom yet.
So, if Beshear and state lawmakers deal only with the shortfall in this year’s budget, the state can expect to be staring at another gaping hole in next year’s budget six or eight months down the road. Indeed, one facet of Beshear’s plan could exacerbate any shortfall in next year’s budget.

When they enacted the two-year budget last spring, lawmakers balanced next year’s bottom line with the help of $144 million from the state’s “rainy day fund.” Beshear wants to pull that money out of next year’s budget and use it this year. He would replace it with proceeds from an increased cigarette tax.

But replacing that $144 million would eat up nearly all the annual revenue generated by 70-cent increase in the cigarette tax, leaving little or no new money to use in dealing with another shortfall.

And that assumes Beshear has the kind of powerful friends at 1-800-MIRACLE who can help him persuade lawmakers in a state with a substantial population of smokers to pass an increase of that size.

After Beshear made his plan public, Secretary of State Trey Grayson called it a “quick fix,” adding that Kentucky needs comprehensive tax reform. Although we may not agree on what that tax reform should entail, Grayson is right about the need for it.

Speaking at a recent Kentucky Association of Counties conference, Beshear told a gathering of local officials, “The bottom line is that I have absolutely no intention, no intention whatsoever, of surrendering or retreating from the mission of government … to improve the quality of life for each and every Kentuckian in each and every one of our counties.”

He has delivered variations on those comments often during his first year in office, a year marked by budgetary woes. It’s a recurring theme that suggests Beshear doesn’t want to settle for being a caretaker governor. Frankly, though, what he offered Thursday in response to the current shortfall was the plan of a caretaker governor.

If adopted, it would keep the engine of state government running — on idle, but running — for the next six months. But it would do nothing to prepare Kentucky for the next revenue crisis, which almost surely will come at the end of that period.

As noted often in this column, and in the Herald-Leader’s editorial columns, Kentucky needs a more stable revenue base that is better able to weather economic down times.

Though desirable for a variety of reasons, including the health of Kentuckians, an increase in the cigarette tax will not provide such stability. Even casino gambling, which Kentucky also needs for a variety of reasons, won’t provide any real stability because it relies on discretionary income, which gets a little harder to part with during economic downturns.

Extending the sales tax to services, while perhaps lowering it, can help provide stability to the revenue base. And never has there been a better time to make that argument than now, when people aren’t buying that many new “things” but still need to service their old ones.

Everyone expected Beshear to propose an increase in the cigarette tax. But it’s disappointing that he stopped with the expected proposal, the caretaker proposal, instead of using this crisis to make the case for putting Kentucky on more solid revenue ground and preparing it for future crises.

His reach ultimately might have exceeded his political grasp. But he at least would have reached.

Sunday’s column:

FRANKFORT — In year-end interviews last week, Gov. Steve Beshear told members of the media that expanded gambling is on the “back burner” heading into the 2009 General Assembly session. He should move it to a front burner.

Sure, the little matter of a projected $456.1 million revenue shortfall for the current budget year, which is almost half over, preoccupies Beshear at the moment. And the earliest a constitutional amendment, the only politically viable way of authorizing expanded gambling, could be approved is November 2010, which means it won’t do diddly to solve Kentucky’s short-term revenue woes.

But one of the talents we expect in our governors — indeed, in all our political leaders — is the ability to multi-task, to think and plan in terms of both immediate crises and long-term needs. And nothing about the rough patch the state is going through at the moment undercuts the two compelling arguments for legalizing casino gambling: to capture for our own treasury the hundreds of millions of dollars in revenue Kentuckians are contributing to bordering states by gambling at their casinos and racinos, and to keep Kentucky’s signature racing industry competitive with its counterparts in states where purses and breeders’ incentives are supplemented with the profits from expanded gambling.

If anything, a recession that evokes comparisons to the Great Depression lends urgency to the arguments for expanded gambling. All the experts and all the indicators suggest our economy hasn’t bottomed out yet. If the worst is yet to come, Kentucky’s revenue problems will extend beyond one budget year and even beyond one two-year budget cycle. So, settling for a short-term fix to the present crisis would be, well, shortsighted. What’s needed is both a bandage to stop the bleeding now and a stable new source of revenue to help keep it from recurring.

While the oft-discussed increase in the cigarette tax can serve as a bandage of sorts, it is not a long-term fix. Over the course of a full year, a 70-cent increase per pack would produce about a third of the revenue needed to offset the current $456.1 million shortfall.

Expanded gambling wouldn’t completely cure the state’s perennial budget problems either. A real cure won’t be found until lawmakers tie the state’s tax structure to the service sector of the economy, the sector more resistant to recessions.

But the $300 million to $500 million in revenue legalized casinos could start generating as early as 2011, when the economy likely still will be recovering from its current malaise, would greatly expand the bandage applied by an increased cigarette tax and would be a more stable source of future revenue.

So, why push a casino amendment in 2009 if it can’t be on the ballot until 2010 and won’t start generating revenue (assuming voters approve it) until 2011?

Because it chances of passing the General Assembly will be better in the upcoming General Assembly that you could expect them to be in the last two sessions of Beshear’s first term.

If the amendment is put on hold until 2010, as some in the Thoroughbred industry apparently prefer, it runs up against election-year politics. Specifically, lawmakers would be asked to cast a tough vote in a year when half of the Senate seats and all of the House seats are on the ballot.

It should be noted that one of the seats on the ballot next year currently is occupied by Senate President David Williams. Who really thinks he’s going to let a casino amendment through the upper chamber while running for re-election?

The following year, 2011, is a gubernatorial election year. Assuming Beshear seeks a second term, who really thinks the Republican-controlled Senate will give him a victory during his re-election campaign?

Getting a casino amendment through the legislature, particularly the Senate, will be problematic anytime. But with no scheduled elections generating an increase in the normal level of political posturing during legislative sessions, 2009 offers Beshear his best chance to deliver on his main campaign issue.

This is no time to be timid. With the state in a revenue crisis, this is a time for a governor to lead for the short term (cigarette taxes) and the longer term (casino gambling).

Sunday’s column:

FRANKFORT — Leftovers from a transformational national election that bypassed Kentucky:

After Bruce Lunsford gave Senate Minority Leader Mitch McConnell a scare in the closing days of the fall campaign, some Democrats may be playing the “what if” game.

As in: What if U.S. Rep. Ben Chandler or state Auditor Crit Luallen had been the party’s candidate instead of the baggage-laden multimillionaire Louisville businessman?

But Democrats who let their minds wander in that direction ignore several important points.

At the time Chandler and Luallen opted out of the race last year, McConnell appeared farstronger than the vulnerable incumbent he became down the stretch.

And even though both Chandler and Luallen could have expected considerable help from national Democrats, it’s questionable they could have raised the kind of money Lunsford pulled out of his pockets and invested in his own campaign. It was that investment up front that put Lunsford in position to be competitive when the collapse of the financial markets put McConnell at greatest risk.

Of course, if this year’s events could have been foreseen, national Democratic organizations likely would have made sure either Chandler or Luallen had the kind of big bucks Lunsford spent on his own.

And under those circumstances, either of the two would have had a better shot at taking McConnell down because each feels far more love from the Democratic base than Lunsford does.

But absent that foresight, Chandler or Luallen might not have been able to make the kind of up-front investment necessary to be in position to take advantage when McConnell became vulnerable.

                                                         * * *

All of that said, if Lunsford had won, it would have been in spite of the campaign he ran rather than because of it.

From the outset, his was a campaign of blown opportunities, starting with his failure to make Issue No. 1 of his pitch to the public McConnell’s joined-at-the-hip relationship with the most unpopular American president in the history of polling.

Lunsford should have pounded that issue on the stump and in his ads every day from Day One. He didn’t do a good job of that.

Then, when the financial markets tanked, McConnell’s vote for a $700 million bailout should have become Issue No. 2, again pounded into the public’s consciousness on a daily basis.

Even McConnell acknowledged, in a post-election media conference call, “It was the biggest issue in the country, but it was not the biggest issue in (Kentucky) people making up their minds.”

Of course, it wasn’t — because Lunsford never exploited it. Instead, he hemmed and hawed for weeks before taking a semi-firm position on the bailout.

Finally, when McConnell’s buddy Sen. Ted Stevens was convicted on seven felony counts, Issue No. 3  pounded on a daily basis should have been the numerous summer vacations McConnell and his wife Elaine Chao spent visiting Stevens in Alaska.

Lunsford’s response consisted of about three e-mail statements to the media. If a single ad aired on the McConnell-Stevens connection, I didn’t see it.

Three easily exploitable issues became three big-time blown opportunities.

In a wrap-up of Sen. Barack Obama’s successful presidential campaign, Sharon Cohen of the Associated Press described the scene in the middle of the September financial collapse when Obama staffers heard Sen. John McCain utter words he must certainly now regret: “The fundamentals of our economy are strong.”

Campaign manager David Plouffe and communications director Dan Pfeiffer knew immediately what they had, and the ad folks were at work within an hour on a spot that aired the next day depicting McCain as out of touch.

That’s the difference between winning campaigns and losing ones. Winners have instant “Aha!” moments. Losers never have them at all.

                                                        * * *

One of the bigger losers in Tuesday’s election wasn’t even on the ballot.

Kentucky Democrats underperformed at all levels, while the state’s Republicans defended well in a year when their national counterparts were taking their lumps. Nowhere was that more evident than in state legislative races.

In the federal races, a Democratic win would have been considered an upset. But the Democrats expected to pick up one Senate seat and had an outside chance at another. And they expected to add a handful of seats to their House majority.

Instead, the Senate numbers didn’t change at all. And House Democrats had a net pickup of one.

Since Gov. Steve Beshear’s party was unable to budge the numbers at all in an uncooperative Republican-controlled Senate, he has to be considered one of Tuesday’s losers.

                                                         * * *

Carroll Hubbard, the former U.S. representative who was convicted on several felony counts and sentenced to three years in prison in the 1990s, needs to give up his quest for political redemption. It ain’t gonna happen.

Sunday’s column:

FRANKFORT — This and that while wondering whether Nov. 4 will produce a transformational election:

On a national level, the election of America’s first president of color would be transformational in and of itself.

But the significance of such an election outcome would be enhanced if it marked a long-term change of course for the nation. In that event, it might one day be looked back upon as the end of the Ronald Reagan era in American politics.

At the very least, it might be seen as the point at which the nation turned away from the fiscally foolish neo-con agenda of tax cuts for the rich, massive deficit spending and deregulation of everything in the marketplace.

On the state level, the election could transform the political landscape if it marks the end of the Mitch McConnell era.

After watching him rise to the level of dominating Kentucky politics and maintain that dominance for so long, it’s difficult to imagine him losing to anyone, much less a candidate with Louisville businessman Bruce Lunsford’s baggage. But all the recent independent polls suggest it is a very real possibility.

Those polls contain some troubling signs for McConnell.

For instance, the Herald-Leader/WKYT Kentucky Poll gave McConnell a lead of just four points, 47 percent to Lunsford’s 43 percent. But the same poll gave Sen. John McCain, the Republican presidential candidate, a 16-point lead over Democratic Sen. Barack Obama. No doubt, the color of Obama’s skin is a factor in McCain’s lead.

But whatever accounts for the wide margin in the race at the top of the ticket, these disparate findings suggest that Kentucky voters may be willing to  hold McConnell accountable for enabling the Bush administration in all its missteps, including the misguided war in Iraq, while giving a pass to the presidential candidate who would continue President Bush’s failed policies.

McConnell also can find cause for concern in the poll results from Western Kentucky.

In recent elections, that has been a fertile region for Republicans. In 2004, for instance, then-state Sen. Daniel Mongiardo built a lead over U.S. Jim Bunning  in early returns from the eastern part of the state only to see it evaporate as the votes in Western Kentucky were counted.

In the Herald-Leader/WKYT survey, McConnell led Lunsford by just six points, 48 percent to 42 percent, in the 1st Congressional District. That’s statistically within the margin of error.

So, if Lunsford were to emulate Mongiardo in building an early lead, McConnell may have more trouble than Bunning did in snatching victory from the jaws of defeat in Western Kentucky.

                                                                * * *

At the urging of the Bush administration, Congress recently voted to nationalize the nation’s financial markets.

OK, that’s an overstatement. But it’s overstated to stress a point, that point being that McCain voted (as did Obama) for the biggest example of government socialism this nation has ever seen — and, it is to be hoped, ever will see.

Yet McCain has the gall to point a finger at Obama and accuse him of being a “socialist” who wants to use taxes to redistribute wealth.

First, all tax policies redistribute wealth one way or the other. McCain just favors a tax policy that redistributes it up the income ladder rather than down.

Second, after being complicit in redistributing more than $1 trillion of this nation’s wealth to Wall Street, McCain needs to look in the mirror, say hello to his own inner socialist and stop embarrassing himself.

                                                                * * *

It should surprise no one that the $150,000 extreme makeover Gov. Sarah Palin and her family received after she joined the McCain ticket was paid for by others — in this case, the Republican Party.

After all, Palin bills the state of Alaska for her children’s travel expenses and collects per diem for the many days she spends at home in Wasilla.

All of which makes one wonder: Is she the hockey mom she claims to be or a welfare mom?

Sunday’s column:

FRANKFORT — Much has been written and said in recent weeks about Rep. Greg Stumbo’s run at Speaker Jody Richards, a confrontation that has some folks using phrases like “political bloodbath.”

But it’s conceivable another major leadership shake-up could overshadow the fight among House Democrats in January. True, a number of “what ifs” must become done deals before it can happen. But it is conceivable.

The most important “what if” is this: What if Democrat Bruce Lunsford really does take down U.S. Sen. Mitch McConnell?

And if he does, could there be collateral damage for state Senate President David Williams?

It’s a given in Frankfort that Williams didn’t ascend to his current position by virtue of winning a Mr. Congeniality contest in his party’s caucus.

On the contrary, his often abrasive style can alienate Republicans and Democrats alike. There are at least a handful of Republican senators who would welcome the chance to oust Williams, and not just because he keeps putting them in a position of having to defend excesses such as the $17,000 media center with the 60-inch plasma screen in his office.

But Williams was handpicked by McConnell to be president because of his political acumen. And so far, the restless members the Republican caucus haven’t revolted against the choice of the man who molded the party into the competitive force it is today and who still rules it.

However, McConnell’s control of all things Republican in Kentucky could be weakened quite a bit if he loses his clout in Washington and his aura of invincibility in a defeat by Lunsford.

So, let’s move on to some more “what ifs.”

Democrat Steve Newberry, brother of Lexington Mayor Jim Newberry, is favored to win the 9th District seat being vacated by Republican Sen. Richie Sanders. If nothing else changes, that moves the Senate numbers to 21 Republicans, 16 Democrats and one Independent who tends to side with the R’s. That’s still a comfortable margin for Republicans.

But what if Democrat Kathy Groob, the second time around, succeeds in ousting Republican Sen. Jack Westwood in Northern Kentucky’s 23rd District?

What if former U.S. Rep. Carroll Hubbard beats Republican Sen. Ken Winters in Western Kentucky’s 1st District?

What if Republican state Sen. Brett Guthrie wins the 2nd District congressional race and a Democrat wins a special election for his 32nd District seat?

If any one of these “what ifs” becomes a done deal, the numbers could move to 20-17-1. A second done deal makes them 19-18-1.

(If all three were to occur, the Democrats probably would take control of the Senate. But I’m not into selling pipe dreams today.)

At either 20-17-1 or 19-18-1, with McConnell weakened to the point of no longer being able to enforce his will on the Senate Republican caucus, Williams becomes vulnerable.

A few disgruntled Republicans could cut a deal with Democrats and oust him, just as a few disgruntled Democrats led by former Sen. Larry Saunders cut a deal with Republicans and ousted then-Senate President Eck Rose in the late 1990s.

Will the dominos fall in this pattern? Who knows?

But even the remote possibility that they might gives extra meaning to several races up and down the November ballot.

Sunday’s column:

FRANKFORT — This and that as we try to force our minds to accept the possibility that Bruce Lunsford might actually do a Tom Daschle number on Senate Minority Leader Mitch McConnell:

Who woulda thunk it?

Just a few weeks ago, this didn’t look like much of a contest. Now, with independent polls showing it’s a very tight race indeed, the Democratic Senatorial Campaign Committee has jumped into the fray on Lunsford’s behalf and Roll Call has run a story speculating about who McConnell’s successor in leadership might be.

But such things can happen when you add a financial meltdown laid on the doorstep of deregulating Republicans to McConnell’s joined-at-the-hip status with the most unpopular president in recent memory.

Kentuckians who are angry and frustrated over the war in Iraq and the unstable condition of the national economy have to take it out on someone. And the polls suggest they won’t take it out on Republican presidential candidate John McCain, a circumstance that can be attributed in some part to Democratic nominee Barack Obama’s race.

McConnell is the next target on the Republican ticket, and the same polls that show McCain with a relatively comfortable lead in Kentucky show him in a virtual dead heat with Lunsford. So, McConnell may be the someone angry and frustrated Kentucky voters decide to punish.

Mind you, Lunsford still has a ways to go to pull off the upset. And there has been little about any of his campaigns for statewide office that should make Democrats feel overly confident he can seal the deal.

Still, who would have thought the political stars would align themselves in a way that puts him this close to doing so?

                                                                * * *

After listening to four hours of arguments in Franklin Circuit Court Tuesday, I am even more doubtful that Gov. Steve Beshear’s administration will succeed in its attempt to seize the domain names of 141 on-line gambling sites, force the owners of those sites to block access by Kentuckians and recover restitution for past illegal on-line gambling in the state.

To this non-lawyer, the attorneys representing the owners of gambling sites made a good argument that, even though illegal on-line gambling clearly is occurring in Kentucky, the state’s courts don’t have jurisdiction to approve seizure of the domain names because none of the registrars that register the domain names nor the registrants that own the names are located in the state.

They made a similarly cogent argument that, rather being “gambling devices” as the state’s lawyers claim, these domain names are more akin to your local bookie’s phone number or street address.

Ironically, although numerous lawyers from Kentucky and around the country are involved in this case, the firm that appears to be taking the lead in opposing seizure of the domain names is Stites and Harbison.

That’s the firm where both Beshear and J. Michael Brown, the secretary of the Justice and Public Safety Cabinet, worked until recently. It is Brown’s cabinet that is pursuing this case.

Ultimately, I suspect Beshear’s and Brown’s former colleagues may well be on the winning side in a case that has drawn national and international attention because some see it as an unprecedented attempt at censoring the Internet.

                                                               * * *

Among the many assumptions lawmakers used to produce a supposedly balanced two-year budget was an assumed revenue growth of 2.6 percent in the first year.

However, the revenue growth for the first quarter was just 0.9 percent. And revenue actually declined by 4.6 percent in September.

With the national economy in free fall, the odds of the state’s revenue picture getting a lot worse before it gets better are good.

Anyone want to revisit the cigarette tax as a means of softening the impact revenue shortfalls may have on state services?

If so, it would be easier to pass in a post-election special session where it wouldn’t require the super-majority (60 percent of the votes of each chamber) that would be necessary in next year’s short legislative session.

Sunday’s column:

This and that as the taste buds salivate for the fresh veggies at Saturday’s 128th Annual Fancy Farm Picnic:

Having busted Gov. Steve Beshear’s chops for taking three planes to Pikeville for the first stop of his listening tour of the state, I now will give him a bit of credit.

Sometimes, a “listening” tour means the audience spends a lot of time listening to the person on the tour.

But after brief opening remarks at a stop in Winchester on Thursday night, the governor and first lady Jane Beshear fielded questions and comments for more than an hour. And the crowd of about 200 at George Rogers Clark High School seemed genuinely appreciative that Beshear (and his staff) came to them to hear their concerns.

In response to Wednesday’s column about the plane trip, one reader suggested in an e-mail that leadership is about finding solutions to problems and persuading people to buy into those solutions. The e-mail went on to say the only time a governor should go to the people the way Beshear is doing now is when he has such a solution to pitch to the public, which isn’t the case on this tour.

Former Gov. Paul Patton took that approach on higher-education reform back in the 1990s. He came up with a concept of what reform should look like and toured the state selling the concept to the people. Then, he called a special session and got the reform enacted.

(Beshear might be wise to conduct such a “sales pitch” tour before his next attempt at getting a casino gambling amendment on the ballot.)

But Patton, as did other governors before him, also took government to the people to hear about their concerns and their problems on their home turf. Different governors have taken different approaches to conducting such tours, and they have been spurred by different motivations.

No doubt, Beshear’s tour is motivated in part by a desire to raise his sagging approval ratings. But that doesn’t mean it is without merit because, sometimes, the road to a solution begins with leaders taking the time to listen to people describe the full extent of the problem.

So, as long as he avoids multi-plane flyovers of the state, Beshear will get no more grief from me about his listening tour. Besides, it might get him in the habit of listening when his aides offer good advice.

                                                             * * *

At the Winchester stop, the woman the governor called “the boss” may have outshone him.

Jane Beshear’s command of such issues as education, tourism and the greening of Kentucky was impressive — so much so that some in the audience might have wondered if they elected the wrong Beshear.

                                                            * * *

Traffic tie-ups on the interstate delayed Beshear’s arrival. As Democratic state Sen. R.J. Palmer started to explain to the crowd that the governor would be late, someone jokingly asked, “Is he flying in?”

                                                          * * *

Earlier Thursday, Beshear created a task force on the future of horse racing and charged it with studying “the economic soundness of the industry, the effectiveness and quality of drug testing, the oversight role of the Kentucky Horse Racing Authority and the adequacy of state laws and regulations.”

In recent weeks, Beshear reorganized the Kentucky Horse Racing Commission and appointed a new chairman for the Equine Drug Research Council. Both of those agencies seem intent on addressing some of the leading drug and safety issues in quick fashion. If they do, the new task force may find little to deal with in those areas.

That leaves the oversight role of the commission, which needs a new source of funding if it ever hopes to adequately regulate racing, and that interestingly phrased “economic soundness of the industry” topic.

Is it possible this task force might provide a forum for making the case that expanded gambling is needed to supplement purses at Kentucky tracks?

I hope so because you can’t begin a discussion of the economic soundness of this state’s racing without talking about supplemented purses in other states putting Kentucky at a competitive disadvantage.

Sunday’s column:

When lawmakers adopted the two-year budget that went into effect July 1, they made certain assumptions about proposed “savings” to make the spending plan balance. One of the big assumptions involved the 5,463 state workers who would be eligible for a “27 and out” retirement this calendar year.

Since the “high-three window” that has enhanced pension benefits for several years will close Jan. 1, 2009, lawmakers assumed that most, if not all, of those 5,463 workers would walk into their boss’ office at some point this year and burst into a chorus of Take This Job and Shove It.

The basis for this assumption was the belief that these workers wouldn’t miss the opportunity to have their benefits figured on the average of their high three salary years (rather than the normal high five) and have their years of service multiplied by 2.2 (rather than the normal factor of slightly less than 2) to determine the percentage of that average salary they would receive as a pension.

Indeed, the House thought this assumption was such a no-brainer the version of the budget it passed ordered Gov. Steve Beshear to leave unfilled 3,418 of the vacancies created by this mass exodus and projected the resulting savings to be $85 million.

While the final version of the budget did not designate the number of these retirement vacancies that must go unfilled or put a price tag to the savings, the basic assumption remained: tens of millions of dollars would be saved because virtually every eligible employee would jump through that high-three window before it slammed shut.

But the anticipated mass exodus has been slow in developing, so slow one must begin to wonder if the assumption of huge savings from unfilled retirement vacancies might have been a legislative “Oops.”

Half the year has passed. And according to figures provided by the Personnel Cabinet, just 800 executive branch workers retired between Jan. 1 and June 30.

That’s not indicative of a retirement rate that can achieve the assumption of several thousand vacancies. Nor is it a significant increase over last year, when 652 employees retired during the same period. (In all of 2007, 1,413 workers retired.)

Sure, it can be argued that the relatively low (in terms of the assumption) number of retirements in the first six months of the year is no big deal, that there remains plenty of time for state workers to flee in the numbers lawmakers anticipated. And I’ll grant a little leeway on that – but not much, because this is not a normal year for folks nearing retirement from state government.

In a normal year, Aug. 1 is the important date for many retiring workers because even one month earning the raise that kicks in every July 1 can bump up your high-three salary average. And Aug. 1 may still be a significant date this year.

But the pay raise that went into effect this July 1 was just 1 percent. By contrast, people who retired before July 1 got a 2.8 percent cost-of-living adjustment in their pension benefits that day. So, there are financial considerations that could have caused some workers to decide the COLA was of more value to them than the raise.

Regardless of which month sees the most retirements this year, the fact remains that way more than 800 workers should have left the executive branch in the first six month of the year if total number of retirements is going to produce anything near the assumed savings in the budget.

However, it would be understandable if state workers confound lawmakers’ assumptions by holding onto their jobs. With the economy flushed to the bottom of the septic tank and few opportunities for second careers to be found in the private sector and with double-dipping made nearly impossible by the budget’s demand for savings through personnel attrition, public employees (particularly those with children still in school) may find they can’t afford to retire now.

And that could pose a dilemma for the Beshear administration down the road. If the retirement rate doesn’t increase rather dramatically the last half of the year and those assumed savings don’t materialize, layoffs remain a possibility.

For now, though, it’s a matter of “waiting and seeing,” according to Budget Director Mary Lassiter, who thinks the August and September retirement numbers will provide a clearer picture. Lassiter says, “It’s very difficult to tell” if layoffs will be necessary. “How many retire is really going to be what drives that.”

Sunday’s column:

FRANKFORT — They came. They passed a pension bill in the minimum number of days. They left.

But not without a couple of sideshows.

First, Senate President David Williams used a Transportation Committee meeting to cross-examine administration officials about the road plan they implemented after Gov. Steve Beshear vetoed a highway projects bill passed by the General Assembly. At times, it seemed as if he were conducting a deposition for the suit he filed challenging Beshear’s veto.

By the end of the week, though, the grilling the Transportation Cabinet officials received seemed mild in comparison to what some members of the House Appropriations and Revenue Committee had to say about former Chief Justice Joseph E. Lambert and Jason Nemes, whom Lambert appointed as executive director of the Administrative Office of the Courts.

Neither Lambert nor Nemes were present to hear the lawmakers vent their anger in regard to Lambert’s decision to ignore the recently enacted judicial budget in regard to pay raises for court employees and some subsequent communications between Nemes and circuit clerks.

That unfortunate task fell to new Chief Justice John D. Minton Jr. on the day before he was sworn in. He handled it with aplomb.

Aside from these two dust-ups, this was a session in which most everyone joined hands and sang Kumbaya about reforming the various pension programs for public employees. (“Most everyone” is a disclaimer made necessary by state Sen. Tom Buford, R-Nicholasville, casting the lone vote against the legislation.)

While the changes lawmakers made in pension rules fall well short of doing all that is necessary to address what is now a collective $27 billion unfunded liability in the various retirement systems, they are still significant in scope.

After Sept. 1, future public employees (excluding teachers) will have to work longer to qualify for full benefits and will have to contribute more of their earnings to the pension plans during their careers. And the annual cost-of-living adjustment in pension benefits will be capped at 1.5 percent for everyone (including current workers and retirees) effective July 1, 2009.

These and other changes will help, but much remains to be done.

For instance, about half of that unfunded liability stems from the cost of health care. Addressing that issue will be far tougher from a political standpoint than the changes Beshear signed into law Friday, because it most likely will require current workers and retirees to pick up more of the costs through higher premiums and co-pays.

Improving the systems’ return on investment is another big concern. And the question of which system classified school employees should be in remains unanswered.

A working group created by Beshear will studying these and other pension-related issues in the coming months.

But the 900-pound gorilla in the room, the one that even makes solving the health insurance conundrum look like a stroll on the beach, is whether lawmakers in the future will live up to the commitment contained in this bill to achieve full funding of the pension plan for state workers by 2025.

Fulfilling that commitment will take serious money, more than $1 billion a year down the road a ways. Money the state doesn’t have now. Money the state won’t have then, absent a substantial increase in revenue or a devastating cut in services.

So, instead of joining hands and singing Kumbaya last week, it might have been more appropriate if lawmakers had raised their voices in a chorus of We’ve Only Just Begun. Because there is still a long way to go to fix the state’s pension crisis.

Sunday’s column:

FRANKFORT – State Rep. Greg Stumbo wants to bring Slots Bill out of the retirement pasture and enter it in the 2009 Legislative Derby.

Bad idea on multiple levels.

Stumbo, the former attorney general and former majority floor leader who has returned to the House, proposes to send Slots Bill off as a statute rather than a constitutional amendment.

Stumbo long has maintained that no constitutional amendment is necessary to expand gambling in Kentucky. An attorney general’s opinion issued during his term in that office took the same position.

I agree. Technically, lawmakers probably could approve the slots at racetracks Stumbo is proposing or even free-standing casinos by statute and have it withstand a constitutional challenge.

Politically, though, it would be a disaster for lawmakers to do so.

A recent Herald-Leader/WKYT Kentucky Poll found that 81 percent of respondents want to vote on expanded gambling. That means a vote for Slots Bill would be a harder one for lawmakers to cast than, say, a vote for Gov. Steve Beshear’s unsuccessful 2008 Legislative Derby entry, the constitutional amendment Full Casino.

Lawmakers could justify a vote for Full Casino by saying they were just giving Kentuckians what they want, the opportunity to vote up or down on the issue.

But lawmakers who vote for Stumbo’s Slots Bill would have no such cover. Not only would they be denying eight out of 10 Kentuckians what they want, they would have a pro-expanded gambling vote on their own record in a state where support for that issue is at best a 50-50 proposition.

In addition, Stumbo’s Slots Bill would do nothing for the economies in areas of the state that don’t have racetracks, some of which could get free-standing casinos from a Full Casino victory. That could cost Slots Bill some votes from lawmakers representing those areas.

Although still a long shot, particularly as long as the situation continues where the majority of one legislative chamber is disinclined to give more money to a governor of the other party, Full Casino is a better bet politically than Slots Bill.

Besides, even if Slots Bill could win its race, it would address no more than half of the problems those riverboat casinos along our border are causing for Kentucky.

Sure, slots at our racetracks would cut into the traffic, the economic benefits and the revenue (which some estimates put as high as $500 million annually) that now flow across the Ohio River to the gambling boats.

But they wouldn’t come close to cutting off the flow completely because of the number of gamblers who like to combine a visit to the tables with some other activity, such as a round of golf or a show. To keep those folks at home, Kentucky needs its own destination casinos.

Destination resorts also would do a better job than racetrack slots of enticing visitors from other states (particularly to the south) to spend some of their discretionary income here.

Kentucky needs to expand its gambling options. Keeping our signature racing industry competitive with states where purses and breeding incentives are supplemented by revenue from casinos and racinos is one of the big reasons such expansion is justified. Slots Bill could do that. But staying competitive at our tracks and on our breeding farms isn’t the sole reason we need expanded gambling.

Kentucky needs more revenue, at both state and local levels, to pay for education, health care, social services, public protection and all the over services we expect our government to deliver.

And our governments don’t need just a little more revenue. The current round of  painful cuts in services, layoffs of public employees and tuition hikes at public institutions of higher education clearly show a need for a lot more revenue to provide adequate funding for government programs.

So, when we do get around to expanding Kentucky’s gambling options, we need something better than a Slots Bill that may keep our racing industry competitive but cannot do as much as a Full Casino victory would do in generating additional revenues for state and local governments.