KyKurmudgeon

1. After losing to challenger Brandon Smith in the 2000 84th District House race, former Rep. Scott Alexander tried three times to get back to the General Assembly. On the third try, he succeeded (if only temporarily), winning back his old House seat in a March 18 special election to fill the vacancy created by Smith’s election to the Senate’s 30th District seat in an earlier special election. But a couple of days after being sworn in, Alexander took off on a trip to Costa Rica, acting as a chaperone for his daughter’s (and Smith’s son’s) high school Spanish, which caused him to miss most of this session’s closing days and crucial votes on such issues as the budget. This is the guy Gov. Steve Beshear chose to back in a losing cause in that 30th District Senate race. Geez, talk about throwing away all your momentum and political capital for nothing. (By the way, since both chambers of the General Assembly routinely excuse absent members, Alexander was drawing his normal legislative pay every day he was on the trip, including weekends. He was also receiving his normal expenses for legislative sessions.)

2. During this session, Senate Republicans proposed that the Kentucky Lottery Corp. return more of its profits to the General Fund and that the prison population be reduced by putting some non-violent in rehabilitation programs or on house arrest. That led some wags to opine that the Senate R’s wanted to balance the budget by relying on expanded gambling and putting convicts back on the street. The joke is a gross oversimplification, but there is a certain irony to this year’s proposals by a party that has long been tough on crime and opposed to expanded gambling.

3. We all know who’s behind the FBI investigation into Transportation Cabinet activities during former Gov. Ernie Fletcher’s administration. It has to be that partisan rogue Attorney General Greg Stumbo conducting another political witch hunt. But wait, Stumbo is back in his old House seat. And even if he were still AG, the FBI answers to the Justice Department, now run by appointees of a Republican president. So if this investigation turns up evidence of misdeeds, how are the Fletcher apologists going to explain it away?

Sunday's column:

FRANKFORT — Former Gov. Ernie Fletcher’s little buddy, the Efficiency Fairy, didn’t vacate the state Capitol when his master did. He hung around and found new friends on both sides of the aisle in the General Assembly.

Wednesday night, the little fellow’s legislative buds assigned him quite a task when they approved a budget that assumes tens of millions of dollars in annual savings from unspecified efficiencies that Gov. Steve Beshear’s administration must implement over the next two years.

To “balance” this budget, lawmakers relied on other shaky assumptions as well, such as the estimated $85 million in annual savings from not filling 3,400 vacancies created by eligible state workers making a mass exodus before the “high-three window” of enhanced retirement benefits closes Jan. 1.

This assumption ignores the possibility that a slew of these expected retirees look at the prospect of $4-a-gallon gas and a tanked economy that offers minimal opportunities for a second career and say to themselves, “You know, job security is a good thing.”

And if 3,400 retirement vacancies don’t materialize, well, the Efficiency Fairy may have to resort to layoffs and/or the suspension of certain amenities provided by the state in non-critical areas such as parks.

Assumptions of savings from efficiencies and retirement are just part of the problem with this budget. It also relies on restructuring debt that generates $50 million in the short term but increases the debt and extends payments on it in the long term. The title of The Moody Blues’ classic album To Our Children’s Children’s Children comes to mind in regard to this shifting of the debt burden.

Even with all the assumed savings and the cash withdrawal charged to the state’s credit card, this is such a nasty, pain-inflicting spending plan that it might have been voted down in the House had it not been for a separate package of projects cobbled together with a big assist from Senate President David Williams, who knows how to exploit the projects addiction that is as strong as a crack habit for many House members.

But the emergence of a projects package in a year when an austere budget stomps all over education and human services with old-fashioned metal golf spikes led to a weird, even bizarre, set of circumstances on the House floor.

Rep. Harry Moberly, the Richmond Democrat who chairs the Appropriations and Revenue Committee, voted against a budget for the first time in his 28-year career. He called the projects package “a diabolical deal with the devil” and said those who voted for the budget were “selling out the children of this state and the teachers of this state for water and sewer projects.”

The job of making a positive case for the budget, normally handled by Moberly, fell to Rep. Robin Webb, D-Grayson, the first vice chair of A&R.

To put it politely, Webb’s defense of the budget often lacked enthusiasm. It seemed a struggle for her to find good things to say about it. And at times, she didn’t even try. “This is a hard vote for me,” she told her colleagues

Although Moberly’s speech got the most coverage, as it should because of his position, Rep. Derrick Graham, D-Frankfort, gave one of the more impassioned speeches.
“My state employees and my teachers are getting shafted,” he said. “But I’m standing up today because I’m sick and tired of being sick and tired (of) the way this budgetary process is taking place. It’s dysfunctional, it’s undemocratic and it’s dishonest.”

But it sure keeps the Efficiency Fairy busy.

Sunday's column:

FRANKFORT — Gov. Steve Beshear and Lt. Gov. Daniel Mongiardo put their young administration’s political capital on the line backing a two-time loser in the 30th District senatorial race.

Now, Scott Alexander is a three-time loser, and the Beshear-Mongiardo team knows what it feels like to wake up the morning after being on the receiving end of an old-fashioned butt-kicking.

Oh, well, that can happen when a governor forgets why he got elected and starts to think he’s back in an era when strong governors dominated Kentucky politics.

Beshear forgot what his predecessor forgot. He forgot that he was elected not because of who he is or what he promised voters. He was elected solely because of the scandals that plagued the previous administration. The only mandate voters gave him was the mandate to be anyone but Ernie Fletcher.

So far, Beshear is failing to fulfill that mandate. One of the constant themes in the hallway discussions around the Capitol and Capitol Annex these days is that we’re experiencing Ernie Fletcher II.

Same dumb mistakes. Same inability to learn from them. And if it continues down that path, the same one-term failure as a governor.

Another firing controversy with evolving excuses is the most recent example.

Let’s say the latest excuse — that there was just cause to can Fletcher holdover Eric Landis after his return from Air National Guard training  because he failed to keep appointments or submit a résumé for the administration’s review — is 100 percent accurate.

It doesn’t matter.

Whether or not the Beshear folks are on the side of the angels, this is another no-win situation for them. There is no upside to digging in their heels.

This is one of those times when you fess up to a mistake (even if you didn’t make one) and do whatever it takes to put it behind you. Otherwise, you not only evoke comparisons to Fletcher, you also look unpatriotic.

During last week’s hallway discussions, I heard one explanation for the 30th District fiasco that went something like this:

You think you’ve got an election that can be won. You think Mongiardo’s popularity in the district and Beshear’s kick-butt victory last fall can make all the difference in a tight race.

You take the first step and the second and the third. By the time you realize you were wrong, by the time you realize one person’s popularity can’t be transferred to another person, you’ve gone so far that turning back would be meaningless.

So, you keep moving forward until you walk right off the cliff. But that’s OK. If you learn from your mistake, you can still recover and have success.

I see some wisdom in turning around and walking away before taking that last step into thin air. But even if you buy this explanation, the key element is learning a lesson from your free fall.

I’m waiting for evidence that the Beshear folks are learning from their mistakes. I didn’t find it in the way they handled the Landis affair last week.

But now that the special election is over, Beshear needs to forget politics for a while and focus his full attention on policy – specifically, the policy issues being debated in the General Assembly.

Good policy decisions can help make people forget about one bad political decision. Besides, if he gets the policy thing right, the politics may be more likely to break his way in the future.

Even though he lost his bid for re-election, former Gov. Ernie Fletcher has a presence in this year’s General Assembly. It takes the form of legislation that would make it more difficult or impossible for future governors to repeat some his more egregious abuses of power.

For instance, House Bill 5 proposes to amend the state constitution to bar a governor from issuing the kind of blanket pardon Fletcher granted to all members of his administration during the BlackBerry Jam hiring scandal. It would also prohibit a governor from pardoning himself.

House Bill 134 would expand the state Personnel Board from seven members to nine by adding two additional classified (merit) employees. It would also require that any changes in the selection method for job classifications be approved by the board.

House Bill 250 is a comprehensive reform of the executive branch ethics law. Among other things, it would give the state auditor and attorney general a say in who gets appointed to the Executive Branch Ethics Commission. It would also require any official who sets up a legal defense fund to file regular reports with the commission. (Reporting requirements for legal defense funds are also addressed separately in House Bill 47.)

Then, there is House Bill 446, which would prohibit an administration from spending more than half of the highway contingency fund in the first six months of a fiscal that begins during a gubernatorial election year. That is in response to the Fletcher administration spending all but $307,000 of the $65 million budgeted for this fiscal year before leaving office in mid-December.

Sunday’s column:

FRANKFORT — Grants seemingly awarded to influence an election. Jobs that appear to have been exchanged for political favors. The state plane used for a trip that was partially political.

This is not the kind of government Ernie Fletcher promised Kentuckians he would deliver. He vowed to do better than his scandal-plagued predecessor.

Wow. Did I just type Ernie Fletcher’s name in that last paragraph? I guess this feeling of deja vu all over again I’m experiencing confused me for a moment. I meant to say this is not the kind of government Steve Beshear promised to deliver when he vowed to do better than his scandal-plagued predecessor.

But here we go again, folks. And this time, it can’t be attributed to inexperienced youth dominating a governor’s inner circle.

Heck, no. Beshear brought in so many old hands (a term defined as being within shooting distance of my advanced years) that kiddie wouldn’t even come up in the nickname conversation. Geriatric might. Or geezer. But certainly not kiddie.

Maybe that explains how Beshear stumbled into a mess of his own making in the special election for the 30th District Senate seat, which was vacated when Lt. Gov. Daniel Mongiardo was inaugurated. Maybe all those old hands think they’re still living in a bygone era of old school politics. Or maybe they just suffered a collective senior moment.

Whatever the reason, the Beshear administration’s attempts at dictating the outcome of the Senate race have been clumsy, heavy-handed and embarrassing to watch from the outset.

Rigging the system to ensure that former Rep. Scott Alexander got the nomination over former Rep. Roger Noe alienated some of the district’s Democrats and made this a more difficult race to win.

Making the perception problem created by the rigging job worse, the administration gave Bell County Democratic Chairman Leo Haggerty a state job just days after he helped make Alexander the nominee.

Dumb is the most polite way of describing that decision. Truly dumb.

If there was no tradeoff, it’s dumb to create the perception that there was. And if there was a tradeoff, you wait until after the election to give the guy a job. You don’t do it before the election and give the angry members of your own party more reason to scream.

With the district’s Democrats united, the numbers would favor their candidate. Now, though, the election is such a tossup that Beshear has brought the power of the governor’s office into play, bringing handouts to the district Thursday in an attempt to tilt the race Alexander’s way.

Clumsy, heavy-handed, embarrassing.

Frankly, other than the symbolism of keeping Mongiardo’s seat in Democratic hands, I can’t see the gain that offsets the risk Beshear ran by getting so heavily involved in a political race so early in his term.

Sure, Beshear and his fellow Democrats want to retake the Senate. But this one election won’t get them there.

And as far as his own political capital is concerned, it appears to me that Beshear has walked into a lose, lose, lose trap in the 30th District.

Even if Alexander wins, it will come at the cost of the moral high ground Beshear occupied after beating Fletcher. It has been eroded by the raw use of power in this race.

If Alexander loses after getting so much help from the administration, Beshear will appear weak and ineffective, perhaps to the point of becoming the earliest lame duck governor in the history of Kentucky.

Then, there is that third possibility. Eastern Kentucky politics being Eastern Kentucky politics, if the Democrats try any shenanigans that attract the eyes of some people who report to superiors in Washington, D.C., the possibilities for a perception of “guilt by association” are limitless for a governor who’s taken such an active role in the race.

                                           * * *

That “non-endorsement” endorsement Beshear gave Bruce Lunsford in the Senate primary was also a mistake.  Lunsford’s wealth makes him the instant favorite in the race. All Beshear’s statement did was needlessly alienate supporters of other D candidates.

During an update briefing on the status of the Road Fund Thursday, Transportation Cabinet officials showed a legislative subcommittee a chart of monthly spending from the highway construction contingency account from July 2001 through December 2007. Between July 2001 and April 2007 the spending topped $10 million in only one month, April 2004, when it reached $11.8 million.

But in May 2007, former Gov. Ernie Fletcher’s administration $12.3 million from the account. In September, they topped that by spending $12.8 million. They nearly doubled that in October, spending $25.3 million.

In May, Fletcher faced a contested Republican primary against former U.S. Rep. Anne Northup and Paducah businessman Billy Harper. In September and October, he was trailing Democratic challenger Steve Beshear by a wide margin in the polls.

A total of $65 million was budget to the account for this fiscal year, which began July 1. Transportation Secretary told the committee there was $307,000 left when he arrived in December.

Today's column:

FRANKFORT — When the economy goes south, people tend to buy fewer new things. Instead, they try to make their old ones last longer.

They call that lonely Maytag repairman rather than springing for new appliances. They ask their mechanics to keep aging clunkers running a while longer. They use their old coats for one more winter, after a trip to the dry cleaners of course.

They spend on services instead of things.

As a result, states with a major revenue stream that relies solely on the sale of things may find themselves with a $289 million shortfall in the current year and $500 million short of being able to pay for a continuation budget next year.

Leaders of those states may be talking about “worst-case” scenarios involving a 12-percent cut in next year’s appropriations for some agencies.

And double-digit increases in tuition may be in the offing for post-secondary students.

That’s why Gov. Steve Beshear needs a new Plan A.

Mind you, his current Plan A (casino gambling) remains a sensible idea because it will help Kentucky’s thoroughbred industry stay competitive and because it will capture hundreds of millions of dollars Kentuckians now contribute to the treasuries of neighboring states.

But casino gambling, if and when it comes, won’t add stability to the state’s revenue stream, at least not the kind of stability that can help soften the landing the next time the economy tanks.

Besides, getting a casino gambling amendment through the General Assembly remains an iffy proposition. Its success or failure this year depends largely on whether U.S. Sen. Mitch McConnell and state Senate President David Williams think its presence on the ballot will bring conservatives out in force to help McConnell win another term and Williams retain control of the Senate.

So, Beshear should move casino gambling to Plan B and come up with a new Plan A for providing the real tax reform that was missing from his predecessor’s “tax tinkerization” package.

Real reform would link Kentucky’s revenue stream to the fastest-growing sector of the economy by extending the sales tax to selected services – the kind that can’t be exported. Real reform should also do Kentuckians’ lungs a favor by including a hefty increase in the cigarette tax.

In today’s political climate, Beshear obviously can’t propose such increases solely as a means of extricating himself from the state’s current bad financial patch. If he did, he could forget about getting re-elected.

These days, tax reform must be “revenue neutral.” Increases must be offset by decreases – at least until the public finds the pain unbearable. Although the current situation suggests we may reach that point soon, we’re not there yet.

Offsetting a sales tax on services and a higher cigarette tax shouldn’t be difficult. An obvious first choice would be repealing the state’s portion of the personal property tax on such things as motor vehicles and boats.

Kentuckians have been waiting for that repeal since 1998, when they approved a constitutional amendment giving the General Assembly the authority to do so. But lawmakers have yet to deliver on the implicit promise they made when they put that amendment on the ballot.

Need more cuts to offset the increases in the sales and cigarette taxes? Take more lower-paid Kentuckians off the income tax rolls, or reduce the sales tax rate a penny or so. The possibilities are limitless.

So, do the math that makes real tax reform revenue neutral on Day One. By Day Two, though, tying the state tax code to the service sector of the economy will start paying dividends by giving the state a growing, more stable revenue stream that not only hastens the recovery from the current financial crisis but also softens the impact of future economic downturns.

At the moment, our new governor may feel like Old Mother Hubbard when she opened that empty cupboard. But turning today’s trials and tribulations into tomorrow’s opportunities fits rather neatly in the definition of leadership.

And isn’t leadership what Kentuckians expected when they elected Steve Beshear?

Sunday's column:

FRANKFORT — New year. New administration. Same sad blues song: “The No Money Blues.”

It’s a simple tune. Just a single line repeated at whatever length the singer desires:

“We got the no money blues.
“We got the no money blues.
“We got the no money blues.
“We got the no money blues.”

OK, that’s enough for this singer.

Kentuckians have heard this song before, most famously from Wallace Wilkinson, the late governor, who, shortly after taking office fumed, “Those bastards (unnamed members of Gov. Martha Layne Collins’ administration) ran around here the last three weeks. If they could find a dime, they gave it away.”

Other incoming governors have suffered from the blues as well.

On the campaign trail last year, then-Gov. Ernie Fletcher claimed he inherited a $1 billion deficit when he took office. Late in the fall campaign, he was still claiming that he had turned that deficit into an existing surplus. Both were rather large exaggerations.

Fletcher did inherit a substantial budget shortfall, but it was nowhere near $1 billion. And we now know the “surplus” was, in reality, a $289 million shortfall — a shortfall that, in its closing days, prompted the Fletcher administration to deny nursing-home inspectors reimbursement for their travel costs.

But even though we’ve heard “The No Money Blues” often in the past, and even though incoming governors have a tendency to paint a scary fiscal picture so as to reduce expectations (and future blame for painful budget decisions), the magnitude of the current crisis seems particularly daunting.

(“Stunned” was one description of the reaction when officials in Gov. Steve Beshear’s administration learned the extent of the bad news.)

Start with that $289 million shortfall in this year’s budget, which, by the way was cobbled together with $500 million in one-time money. Add the fact that next year’s projected revenues fall $525 million short of this year’s budgeted expenditures. Throw in the promises already made for such extras as raises for teachers.

And let’s not forget that other minor financial problem: the $25 billion or so of unfunded liability in the various pension plans for public employees (about $20 billion of it on the state’s tab, $5 billion or so on local governments’ bill).

All things considered, it’s not surprising that “The No Money Blues” tops the Capitol hit parade these days.

Who put it there?

Well, it appears Fletcher may have helped in regard to the current shortfall by spending so much of this budget’s discretionary funds in the first few months of the fiscal year to bolster his re-election campaign.

He can also be faulted because his tax tinkerization plan failed to include the kind of real reform — i.e., tying Kentucky’s tax code to the growing service economy — that might have prevented this crisis.

But Fletcher’s responsibility is minimal compared to that of the General Assembly.

Part of its responsibility stems from the fact that lawmakers — in both parties and both houses — lately have grown more addicted to pork than a stoner is to his weed.

But they haven’t had the courage to pay for feeding their habit honestly by raising sufficient revenues to produce a structurally balanced budget that does justice to needed services while giving them the projects they crave.

Instead, they beg, borrow and steal from any pot of one-time money they can find to pass structurally imbalanced budgets that are always just an economic blip away from the kind of ugly crisis they’ll face when they return on Tuesday.

1. One of the major accomplishments attributed to former Gov. Ernie Fletcher’s administration by even his critics was reform of the Medicaid system, a change that he claimed saved Kentucky taxpayers $120 million. Turns out, though, that proof of the savings couldn’t be found in an audit of the system by state Auditor Crit Luallen’s office. Maybe the savings were real. Or maybe the claim of $120 million in savings was just a different form of Medicaid "fraud."

2. I think Gov. Steve Beshear may be making a mistake by not personally addressing the personnel issues Finance Cabinet Secretary Jonathan Miller had when he was state treasurer.

Gov. Steve Beshear told reporters today his administration would not be using the hidden door to a conference room on the first floor of the Capitol that was installed early in Gov. Ernie Fletcher’s administration. He referred to the door as being symbolic of a government that is not open to the public. "We plan on closing that door and accessing that room through the hall."

No decision has been made on whether the door is taken out and replaced with a wall or whether it is simply locked. But "the end result is we won’t be using that door."

Beshear also members of his Executive Cabinet at their swearing-in ceremony, "This may be the happiest day we have."

I suspect he’s right.