Kentucky Senate President David L. Williams and Governor Steve Beshear are locking horns over Kentucky’s Medicaid budget. Beshear’s preferred plan is to simply borrow from next year’s Medicaid spending. The governor is confident that hundreds of millions of dollars in savings from the state’s new managed care plan will emerge and this year’s borrowing will be but a fleeting memory.
Even if those savings emerge, Beshear’s tactic might appropriately be called “The Wimpy Strategy.”
Popeye’s occasional sidekick, Wimpy, is known for offering to repay two hamburgers tomorrow in exchange for a mere one hamburger today. Wimpy is, in all cases, prepared to delay the day of reckoning in exchange for some temporary relief from his pronounced hamburger addiction.
For Beshear, it’s not hamburgers, it’s spending. And though this debate is about Medicaid, this isn’t the first time Beshear has found himself pushing off the difficult choices in favor of immediate gratification. Remember that in early 2008 he justified his bloated budget proposal by claiming that all would be well once the General Assembly legalized and taxed additional gambling in the commonwealth. Lawmakers rightly balked at Beshear’s insistence that the government needed that money more than the productive sector.
But before we declare David Williams a bold exemplar of fiscal conservatism in this struggle over Medicaid, ask this: Why is David Williams only content to cut $139 million out of state spending this year? Isn’t there a wasteful expo center, arena, industrial park, golf course or failing state park that should be on the auction block so the voluntary economy can have its capital back? The answer is clearly yes, but Williams seems content to let these issues fester … at least until after the election.
New Census data:
The Virginia counties of Fairfax and Loudoun and the city of Falls Church had the highest median income, according to the data, which spans 2005 to 2009. Falls Church was the highest at $113,313, up by 17 percent from 2000. The lowest median income was in Owsley County, Ky., at $18,869.
In 2009, 19 Kentucky counties had poverty rates above 30%. Kentucky has 120 counties.
Here’s how Kentucky’s state government attempted to sell the construction of the Eastern Kentucky Exposition Center way back in 2003-04:
Excitement is in the air as Pike County anticipates the limitless opportunities arising with the completion of the Eastern Kentucky Exposition Center. Situated in the center of downtown Pikeville, the Center is under construction with an anticipated completion in 2004. During construction, the $29 million project will have an estimated $30 million annual economic impact on the county and will create approximately 130 jobs.
Can you feel the excitement?! Well, it turns out that the center is about to close because of, get this, “lack of funding.” Apparently, having the state build and own the project wasn’t quite the boost that the operators thought it would be. To be fair, none of these people saw it coming. Let’s get some inconvenient truths out of the way that were brushed aside when those same people were pushing hard for the arena’s construction:
- The East (or Eastern) Kentucky Expo Center has a seating capacity larger than Pikeville’s population.
- When local officials were selling the idea to the public and state lawmakers, they predicted that the arena would compete with Louisville and Nashville for conventions.
- Huntington, WV sits 50 miles east of Pikeville which is a more natural venue for any of the concerts that Pikeville claims its arena could attract.
- The Bluegrass Institute’s Joel Peyton reported in 2005 or 2006 (the article linked is missing the publication date) that Pike County “Deputy Judge-Executive Karen Sue Ratliff told reporters that the county does not own the center and cannot afford to pay the cost of operating it.”
So the question has to be asked: Exactly why did no one expect precisely this kind of failure? From the Herald-Leader story:
Meanwhile, county officials are urging the state to take over more of the operation costs of the state-owned convention center and arena that opened in 2005.
The arena “is in danger of shutting its doors for good because of lack of funding,” Pike Judge-Executive Wayne T. Rutherford wrote in a letter to Gov. Steve Beshear on Nov. 29.
No, Mr. Rutheford. The arena is in danger of shutting its doors because there was never a market large enough to support it.
Here’s a modest solution for Kentucky to save some money. In exchange for giving the arena to Pike County (for free!), the Commonwealth of Kentucky will receive the naming rights to the facility: “Kentucky Public Works Failure #1.”
Illinois in 2009 had 50.6 percent of the assets needed to meet its pension obligations to retired state workers, according to data compiled by Bloomberg. The other worst-funded states were Oklahoma at 56.1 percent, Kentucky at 58.2 percent, New Hampshire at 58.5 percent and Louisiana at 60 percent.
It’s worth noting that any figure you see that details the holdings of states relative to pension obligations usually entails using a discount rate (an assumed rate of return on assets) that is likely unrealistically high. When you assume that your assets will earn steady returns over the years, then your liabilities seem smaller than they really are. Kentucky is not alone in using these methods. Most states use them.
Kentucky Governor Steve Beshear landed solidly in the middle of the pack on the Cato Institute’s report card on governors’ fiscal policies:
Governor Beshear pushed through a doubling of the state cigarette tax from 30 cents to 60 cents per pack and an increase in taxes on wine, beer, and liquor. He has focused on redesigning the state’s many tax credits, and he signed into law an expansion of those special interest giveaways in 2009. Beshear’s spending record is not particularly good. He proposed increases the past two years even though governors in many states were cutting spending because of the recession.
Here’s a related podcast.
Some of Beshear’s proposed spending increases depended on legalizing some forms of gambling in Kentucky. Beshear likely knew that the expanded gambling legislation was a dead letter before he proposed it, but he did it anyway. Kentucky does have a weak governor’s office, but that’s no reason to actively support new spending with no credible way to pay for it.
If you want to see Patricia Neal in a great movie, see A Face in the Crowd (Elia Kazan haters should avoid this). If you want to see a weak movie featuring her, see The Fountainhead.
She was from Packard, Ky.
For any politico, there may be nothing more refreshing and raw than the Fancy Farm picnic held each year in Western Kentucky. I’ve tried to describe it to people before, but experience it during an intense election cycle and you’ll see that the event defies clear explanation.
C-SPAN thankfully was able to attend this year. Have a taste.
Update: Via a commenter, I learn that C-SPAN used the KET feed.
Tyler Cowen needs your recommendations for food in Lexington, Ky. He’ll be visiting in April.
Not being particularly impressed with much of the food I’ve had in Lexington, my recommendation was the best mom and pop BBQ place he can find.
Your thoughts? I’m considering where to live when I return to Kentucky (someday) and good food is critical.