In his sixth State of the Commonwealth address, Governor Steve Beshear praised legislators for a new atmosphere of respectful discourse but challenged them to use that cooperative spirit to prevent Kentucky's schoolchildren from becoming "collateral damage" in ongoing budget battles.
Saying nationally recognized progress on K-12 education was being jeopardized by a weakened revenue stream, the Governor urged legislators to take substantive and bold action on pension and tax issues in the coming year -- issues he said needed to be solved together -- to protect vital services and create a stronger Commonwealth.
"We will not be able to invest in critical areas like job training and education, nor solve monstrous problems like pension liabilities, unless we think strategically and act aggressively and courageously," said Gov. Beshear. "The question for us in this room is simple but soul-searching: Are we courageous enough to invest in our children's future?"
The Governor championed tax reform as a critical component of long-term stability for the state, and explained why current anticipated economic growth won't provide enough revenue to meet the needs of its citizens. His legislative package includes bills to spur economic growth, support education and improve the long-term health and well-being of Kentuckians.
Substantive Tax Reform is Key
Tax reform and pension reform are inextricably linked, said the Governor. He encouraged legislators to use this legislative session as an opportunity to gather deep and specific knowledge on both tax reform and pension funding, and use that knowledge base to build consensus on practical legislation.
He acknowledged the challenge in accomplishing these tasks in a short session, but implored lawmakers to make the changes in this calendar year. Otherwise, he warned, further delaying action on pension and tax issues will gnaw away at an already weakened revenue stream, forcing limited state dollars away from education and job creation efforts to pay for underfunded pension liabilities.
"I am not going to allow our schoolchildren to be collateral damage as we work to make our public pension system whole again," he added. "We have to stop putting off uncomfortable decisions for future generations."
Expected Economic Growth is No Cure-all
Revenues have been predicted to grow about approximate 3 percent next year thanks to the expanding economy. Some have suggested that growth alone could restore stability to the state's pension system, fund previously passed mandates, and shore up critical services like education and workforce development. Gov. Beshear rejected that notion.
"Anticipated revenue growth will not be rigorous enough to transform this state. That's not rhetoric -- that's math," he said.
New, anticipated growth will be more than eaten up by obligations approved in previous sessions, including:
structural imbalances already in the budget;
legislatively mandated increases in health care for retired teachers and pensions;
inflationary growth in Medicaid; and
health insurance for teachers and state employees.
"The projected growth in revenues -- and more -- is already spent and that doesn't leave a single penny for addressing critical investments in our future," Gov. Beshear said.
Education Will Fall Behind Without Action
Kentucky has made enormous progress in education reform in the last few years. Last month, the national publication Education Week, in its annual "Quality Counts" assessment of public schools, ranked Kentucky No. 10 in the country for school achievement and progress -- up from 34th just two years ago.
But in the area of funding "adequacy," Kentucky received a low "F." More than 88 percent of Kentucky students attend schools in districts where per pupil spending is lower than the national average.
Gov. Beshear emphasized that persistently under-funding education now will hamper Kentucky students for years to come, and by extension, the state's future workforce and quality of life.
"Money doesn't solve every problem, but when we don't spend even a dime on textbooks, progress is difficult," said Gov. Beshear.
Substantive tax reform can help ensure that education funding will not be threatened by future economic downturns or unchecked pension liabilities, he said, paving the way for accelerated progress for Kentucky schoolchildren.
Legislative Agenda Supports Education, Improves Health
Strengthening Tomorrow's Workforce through Education: The Governor called on legislators to pass the "Graduation Bill" that would incrementally increase the legal dropout age from 16 to 18. Every education group in the state supports the bill, and a recent survey showed 85 percent of Kentucky parents favor the legislation.
Protecting Children: Gov. Beshear will propose the "Child Protection Act of 2013" that includes legislation to expand booster seat use, toughen penalties for texting while driving, and enhance prenatal screening, among others.
Practical Improvements to Fight Prescription Drug Abuse: The Governor will support common-sense tweaks to last year's House Bill 1 (HB1), which provided comprehensive strategies to fight prescription abuse and shut down pill mills. These changes will not reverse the intent of HB1, and the Governor pledged that Kentucky will never return to the pre-HB1 "prescription playground" days.
Supporting University Projects: The Governor recently joined a bipartisan group of legislators to endorse letting public universities self-fund 11 building projects on their campuses which will require no money from the General Fund.
Improving Health: The Governor voiced his support for statewide smoke-free legislation, noting that nearly half of Kentucky's citizens now live in communities with protections for workers and residents.