1. It appears the House of Representatives underwent a major transformation while I was away. Democrats apparently picked up about 20 more seats, giving them a majority of 85 votes or so. At least, that’s the total when you add up the number of D votes incumbent Speaker Jody Richards and his challenger, Rep. Greg Stumbo, claim to have on their side going into Tuesday afternoon’s leadership elections. Someone is going to find out a few of their “friends” have been lying to them.

2. OK, back to square one on the little matter of the state pension plans’ $27 billion unfunded liability. Square one is the fact that a major portion of that unfunded liability accrued from, duh, 15 years of underfunding in a succession of budgets passed by the General Assembly. (Square two is the soaring cost of health care, but we’ll leave that for another day.) So, after lawmakers failed to enact pension reforms in the 2008 General Assembly, Gov. Steve Beshear calls them into special session and got a reform bill passed that included getting the state headed in the right direction (albeit with miles and miles to go) on adequate funding of the retirement systems. It was arguably the primary achievement of his first year in office.

Now, in what can only be described as something of a U-turn, Beshear has proposed giving cities, counties and school systems a break on meeting their funding obligations to the pension plans. Sure, cities, counties and school systems are struggling during these economic hard times, just like everyone else. But allowing them to stretch out their contributions over a longer period of time, as Beshear proposes, denies the systems not only a portion of the money they are due now but also the investment return that money would produce in the coming years. Although Beshear’s plan might ease the pain now, it would exacerbate the problem of unfunded liability by taking the same short-sighted, irresponsible approach to funding that caused a big portion of this mess in the first place. Bad idea. Very bad idea.

3. Beshear just doesn’t get the whole “public perception” thing in this Adam Edelen-Bob Babbage deal. What the public sees is a top-ranking administration official who is now the governor’s chief of staff maintaining a partnership with an influential lobbyist for at least a year after joining the administration. And even though Beshear, Edelen, Babbage and all their friends try to rationalize it from now until the cows come home, the public will still see exactly the kind of good-ole-boy croynism Beshear promised to eliminate from state government. That’s a damaging perception for the Beshear administration. And even if the Edelen-Babbage partnership produced no benefits from the state for Babbage, nothing is going to change that perception now. The time for eliminating that perception was prior to Edelen joining the administration. That was when the partnership with Babbage should have been terminated. And Beshear should have made it happen before bringing Edelen on board.

4. It didn’t take long after the elections for the remodeling of Senate offices to resume, albeit on a somewhat more modest scale that originally envisioned. Still, in the present revenue environment, even modest remodeling comes across as extravagance.

5. Count me with Rep. Tim Firkins, D-Louisville, on his proposal for a cut in lawmakers’ pay during this revenue crunch. Sure, it wouldn’t mean much in the grand scheme of a projected $456 million shortfall for this fiscal year. Like the cuts Beshear, Lt. Gov. Daniel Mongiardo and several top administration staffers volunteered to take, cutting legislators’ pay would be strictly symbolic. But there’s a lot to be said for such symbolism when others are feeling real pain from the budget reductions.

Mongiardo’s name is on any short list of potential Democratic candidates for the U.S. Senate in 2010, when Republican Sen. Jim Bunning’s seat will be on the ballot. It’s likely Derouen’s move will prompt speculation about what it means in relation to Mongiardo’s plans. I have no clue on that one. But I understand it was a voluntary decision on Derouen’s part.

Since I’m not doing a lot of traveling, earthshaking events might cause me to post from home. Otherwise, I’ll be back Jan. 5, just in time to greet the General Assembly’s return on Jan. 6 - and for me to report for jury duty at 9 a.m. that same day.

Happy Ho-Ho to all, and enjoy your New Year’s Eve/Day!

2. Speaking of casino gambling, the fact that a task force Beshear created to study the future of horse racing in Kentucky failed to include any recommendation on expanded gambling in the report it issued Monday is completely mind-boggling to me. How can a panel that supposedly has just a tiny bit of interest in making sure this state’s racetracks stay competitive with their counterparts around the country ignore expanded gambling when purses at tracks in several other states are supplemented with proceeds from that source? How does this panel expect Kentucky tracks to remain competitive without help from expanded gambling? By sitting with its own tin cup on the street corner opposite Beshear?

Well, no. According to a weekend story in The New York Times, Florida plays the public corruption game as well as its flagship university plays football. From 1998 through 2007, 824 public officials in the Sunshine State were convicted on federal corruption charges. New York came in second with 704, followed by Texas and Pennsylvania. California and Ohio tied for fifth. The rest of the Top 10 were Illinois, New Jersey, the District of Columbia and Louisiana.

Kentucky, with 242 public officials getting nailed by the feds during that time period, finished 14th. Respectable (or should that be disrespectable?) but no threat to win the national title. Oh, well, at least we made the Top 10, at No. 9, when the rankings were based on convictions per capita. So, there’s at least some reason to hold our head up, uh, down, uh, whatever.

Illinois Gov. Rod Blagojevich

What an appropriate picture from the Chicago Sun-Times. The photographer deserves a prize for capturing Blahgojevich and the “Target: Rats” sign so perfectly.

And if I weren’t your basic illiterate in the high-tech department, I would have had it up last week. After trying failing several times, I finally wised up and asked for help.

Kentucky has had its share of official corruption, but this guy’s plan to sell President-elect Obama’s Senate seat to the highest bidder tops anything I can remember in the Bluegrass State.

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.

Since Bruce Lunsford already has a residence in Chicago, he should have just tried to buy Barack Obama’s Senate seat. It would have been a lot cheaper for him.

2. Who woulda thunk we would see the day when U.S. Sen. Mitch McConnell, Kentucky’s fund-raising king of kings, would have to borrow money to stave off a challenger? But the Politico Web site reported last week that McConnell borrowed a total of $1.8 million in the closing days of his race against Democratic challenger Bruce Lunsford. The multimillionaire Louisville businessman may now be a three-time loser as a candidate, but give him credit for making the heretofore seemingly invincible McConnell work up such a sweat.

3. McConnell’s fellow Republican senator from the Bluegrass State, Jim Bunning, has said repeatedly that he will seek re-election in 2010. I hear he reiterated that stance during a teleconference with reporters Tuesday. But some of the recent whispers on the Kentucky political winds are starting to suggest otherwise. We’ll see. Assuming Bunning is the R candidate in ‘10, Democrats would be wise to get a name contender in the field shortly early in 2009 - unless they have another Lunsford on their bench who can self-fund a pricey campaign on short notice. Anyone else would have to start working early to raise the kind of money needed to pose a serious challenge to an incumbent senator.

Lassiter, a state employee for 25 years before retiring, returns at a time the state faces yet another budget crisis. Beshear currently is putting together a plan for dealing with a projected $456.1 million revenue shortfall in this year’s budget. He has said he will reveal that plan, which is expected to include a proposed increase in the cigarette tax, later this week.

No doubt, the administration will take some flak for rehiring Lassiter because of its “double dipping” aspect. But count me among those who think that double dipping can save the state money in such areas as health insurance and has often allows the government, and the people it serves, to benefit from the valuable experience a retiree can bring to the job. Lassiter, who was widely respected by members of both parties in the legislature, certainly has valuable experience in dealing with budgetary matters.