Kentucky Roll Call

Williams' father-in-law donates $1 million

2011-08-01T15:49:00.001-04:00

The Kentucky Gazette reported this afternoon that Terry Stephens of Russell Springs, the father-in-law of Republican gubernatorial candidate David Williams, donated $1 million in June to the Republican Governors Association. The RGA said before the donation that it planned to be “aggressive” in the commonwealth this year, because the Kentucky governor's race is one of only four in the nation. On July 11, the RGA launched a TV ad on Williams’ behalf. To read more, go to the Gazette’s website at www.kentuckygazette.com.

The Julian Carroll Story

2010-09-03T10:22:00.009-04:00

Note to readers: This article ran in the September 2010 issue of the National Conference of State Legislature's magazine.

Smooth as a Flat Rock

The Kentucky senator has seen Bluegrass politics from the statehouse to the governor’s mansion and back again. September 2010

By Lowell Reese

When Kentucky Governor William Goebel was shot to death in 1900—the only American governor ever assassinated while in office—he was succeeded by Lieutenant Governor J.C.W. Beckham. As lieutenant governor, Beckham was also president of the Senate, and a month earlier he had been speaker of the House.

Since then, only one other person has held Kentucky’s top two jobs in the legislative branch and the top two jobs in the executive branch: Julian Carroll. He became speaker at age 37, lieutenant governor and Senate president at 40, governor at 43. Now at 79, he’s halfway through a second term in the Kentucky Senate. And unlike Beckham, no one had to die for him to achieve the milestone.

When Carroll, a Democrat, ran for lieutenant governor and governor in the 1970s, Kentucky’s diversity was a challenge for statewide candidates. There was coal in the east and cotton in the west. Cocktails were served before political rallies in the north, prayers were offered before rallies in the south. Old-fashioned stump speaking and wooing of local courthouse officials were the tools of the trade. In all of those dimensions, Carroll—attorney, orator and lay preacher—was capable and smooth as a flat rock.

Always a leader, Carroll was also often lucky. He was born in western Kentucky, called the “Rock of Gibraltar” in political circles because the region was the state’s largest enclave of Democrats.

Destined for Politics
In 1949, Carroll was elected governor of Kentucky Boys State, a mock-government program for high school students. When Carroll and the other Boys State governors met in Washington, D.C., Vice President Alben Barkley spoke to them. They also met President Harry Truman, who asked the 18-year-old Carroll where he was from. When Carroll replied, “Paducah,” Truman quipped, “Seems like I’ve heard of that town.” It was Barkley’s hometown.

Carroll’s public life reads like the fulfillment of a destiny. After earning a B.A. and then a law degree at the University of Kentucky, he entered the Air Force in 1956. He spent three years in uniform, most of it at Carswell Air Force Base in Fort Worth, Texas, where he was the attorney for the base commander, Brigadier General Nils Olman.
 The general was so impressed with Lieutenant Carroll that he held a going-away party for him when he left the service. Generals don’t usually do that. It became a tipping point in Carroll’s career.

When he returned to Paducah in December 1959 to practice law, the local newspaper ran a large article about the general’s party for Carroll. Soon afterward, a delegation of local business leaders came to his law office and asked if he would lead a community effort to pass a referendum to allow the city to buy the Kentucky Utilities facility in town and convert to low-cost electricity from the Tennessee Valley Authority.

Carroll agreed and voters approved the referendum by almost 3-to-1. His name became a household word. He was on his way to a long career in politics with a statewide base of support in the electric utility industry.

Carroll was elected to the Kentucky House of Representatives in 1961. When he arrived at the Capitol in January 1962, Democrats outnumbered Republicans in both chambers, and Democratic Governor Bert T. Combs, like other governors of the period, dominated the legislature. He named the leaders, including committee chairs, and told legislators how to vote, and they complied.

“I remember Governor [Edward T. “Ned”] Breathitt coming to the floor of the House in his first legislative session in 1964,” Carroll says. “Breathitt spoke. The floor leader introduced the governor’s budget. We recessed the House. The budget bill was referred to the Statutes 1 Committee. … which met in the corner of the chamber and reported the bill out while the governor was still on the floor shaking hands. The next day, the bill was voted on and passed out of the House.”

Change Comes
In 1967, Republican Louie B. Nunn won the governor’s office and brought a major change to Carroll’s political fortunes. The House Democrats, still a majority, were now free from gubernatorial control.

Carroll saw it coming. A group of House Democrats called the “Young Turks”—which included now Lexington attorney W. Terry McBrayer—backed him for speaker, a position he held during Nunn’s four-year term.

“We rallied around Julian. He was just a hair older and ahead of us politically,” says McBrayer, who was Carroll’s speaker pro tem in the 1968 session and majority floor leader in the 1970 session. “He was clean, articulate, extremely bright, and he came from the far west where the most Democrat votes were at the time.”

Speaker Carroll made significant changes in the House structure and procedures. Previously, out of 47 standing committees, only two really counted. Bills the governor wanted passed went to Statutes 1, and bills the governor wanted killed went to Statutes 2. There was no danger of reporting a bill out of Statute 2, Carroll says. “It never met.”

Carroll reduced the number of standing committees in the House to 18 and did away with the statutes committees. Most of the standing committees he established are still operating. And he wrote the House and Senate rules that are used today.

The Planets Align
The Republican governor’s term was up in 1971, and former Governor Combs announced he would seek the office again.

Carroll’s friend J.R. Miller, whom he knew from their effort to form the Big Rivers Electric Corporation, told Carroll he was going fishing with Combs in Canada. While they were together, Miller said he planned to ask him to choose Carroll as his running mate for lieutenant governor. Combs agreed, though in those days the governor and lieutenant governor were elected independently.

After the fishing trip, however, Miller switched his support from Combs to Lieutenant Governor Wendell Ford, who was from Miller’s hometown. In the primary, Ford defeated Combs. Carroll won his race and became Ford’s running mate in the fall. “It was not a very friendly relationship,” Carroll says, “but we ran together, and we were both elected.”  Ford was term limited, and his people didn’t want Carroll to succeed him. So in 1973, they tried to talk Carroll into running for the U.S. Senate in 1974 against incumbent Republican Marlow Cook.

Instead, Carroll called Robert Strauss in Washington, D.C., the Democrats’ national chairman, and explained how Ford could beat Cook in the Senate race. Strauss agreed and Ford ended up running against Cook and winning. The move made Carroll Kentucky’s 54th governor.

Carroll ran for a full term as governor in 1975 as an incumbent and won.

Defining Events
Carroll faced two momentous events a year and a half apart that helped define his governorship.

In the final weeks of the 1975 election, Louisvillians rioted over the racial issue of forced school busing.

Mayor Harvey Sloane, anticipating destruction of property and potential violence, called the governor, and Carroll sent in 500 state police and the Kentucky National Guard. That broke the riot.

Sloane, a physician and now director of public health for the Washington, D.C.-based Eurasian Medical Education Program, recalls how difficult the decision was for Carroll in context of the election.

“Had there been a poll, only about 10 percent would have favored it,” Sloane says.

Then on May 28, 1977, the Beverly Hills Supper Club fire in Southgate, the third deadliest nightclub fire in U.S. history, killed 165 people. The fire broke out around 9 p.m. Carroll was at the governor’s mansion with Kentucky native and movie star Lee Majors, “The Six Million Dollar Man.”

Carroll left Majors at the mansion and rode up the interstate in a state police car at speeds exceeding 100 mph. Throughout the night, he went from the scene of the tragedy to the hospital to the morgue.

“I watched them carry body bag by body bag out,” Carroll says. “I went down to the gymnasium where they were all laid out.”

Carroll fired the state’s fire marshall and immediately launched an investigation, which led to various reforms.

Roy Stevens, one of Carroll’s top staff officers, helped organize the investigation. He said the fire “brought into clear focus Julian’s finest qualities”—calm in a crisis, compassion for the victims, committed to getting the facts and doing what was needed in making changes.

Playing Each Role Well
While Carroll may have done more for legislative independence than anyone, as governor he exercised the full traditional powers of that office.

“A cockroach couldn’t crawl across the Senate floor without an OK from the governor stamped on its back,” says one observer in the book “New History of Kentucky.” 

Representative Jody Richards, former speaker of the House, says Carroll knew how to hold the reins of power tightly. “One quality that made him effective was he knew when to dispense authority and when to use it. He allowed certain members to take home largesse and exercise limited authority from time to time.”

Carroll was persuasive, too. “I was known as ‘the blackboard governor,’ ” he says. On major legislation, he invited legislators to the basement of the mansion where he had set up a large blackboard. “I made my presentations in detail, they asked questions, and when they left, they would be for my bills.”

Carroll is regarded as Kentucky’s last powerful governor. His successor, Democratic Governor John Y. Brown Jr., in the 1980 session, yielded to a rebellious band of Senate Democrats called the “Black Sheep Squadron,” who chose their own leaders. Other reforms to follow would make the legislative and executive branches equal.

In July 1978, the FBI launched an investigation of Carroll and others associated with his administration over leases and contracts. He testified before a grand jury, but was never indicted. He was called as a witness at the trial of another individual and took the Fifth Amendment, which made big news.

“My lawyers wouldn’t let me testify,” Carroll says. “They felt the Justice Department was trying to get me to testify in hopes I would commit perjury, and then they would indict me for that.”

The governors of five other states were being investigated at the same time; four were convicted.

In part, to restore his reputation, Carroll ran for governor again in 1987. Although he lost in the primary in a five-man field, “The thing that race did for me … it cleared my name,” Carroll says.

Eighteen years later, he ran for the state Senate and won.

Different Era
Carroll never returned to Paducah to live after serving as governor. Instead, he bought a 109-acre farm outside of Frankfort, and began practicing law in the capital. As a state senator, his district has some of Kentucky’s famed horse farms, but his constituents are primarily government employees.

His committee assignments line up well with his district. He serves on State and Local Government, Health and Welfare, and Banking and Insurance—committees with jurisdiction over most issues dealing with government employees. No other senator serves on as many working committees as Carroll. He is on eight committees, in part, because he lives close to the Capitol, he says.

In this final chapter of his political career, he is best known for his floor speeches on a wide range of subjects, especially education, health care and the budget.

The arena has changed strikingly, however, since Carroll began his political career. The governor no longer dominates the legislative process, nor does one party. Carroll is unaccustomed to being in the minority, in the Republican-controlled Senate, but he is nonetheless involved and persuasive.

“I think he’s effective because he is active,” says Robert Sherman, director of the Kentucky Legislative Research Commission, the staff arm of the legislature. “Julian likes to get into detail. He likes people. He’s an old-time politician in that way. You don’t see much of that now. He can talk. He’s a preacher.

“He has a blend of skills that make him a force, like a force of nature.”

Lowell Reese is the editor and publisher of Kentucky Roll Call, a newsletter on government, politics and business. He lives in Frankfort, Ky.

Five myths about Fancy Farm

2010-08-25T18:29:00.002-04:00

The 130th annual Fancy Farm political picnic held in that small Graves County community on the first Saturday in August is now in the books. Great theatre. It was fun and worthwhile. But much of the aura that surrounds it is mythical. My myth-count is five.

1. Somebody in the press always mentions that it kicks off the fall campaigns in Kentucky. That’s one of several exaggerations about the World’s Largest Picnic. If it kicks off the fall political season, why does the county seat of Mayfield not allow any candidate to put up a yard sign in the city limits until Sept. 3 — the Friday before Labor Day?

2. The image of the Fancy Farm Picnic is tightly bound to nostalgic old-timey political speech-making. But there are no Lincoln-Douglas style debates — no even a thoughtful speech. Quality plays second fiddle to theatre. The speakers are rushed through like cattle at a stockyard sale, with two to seven minutes each to put on a show. The politicians are expected to go on stage and act a little crazy — say some bad things they might not say in a normal setting. That can be fun and memorable, and puts a demand on creativity, which Sen. Mitch McConnell has been a master of over the years. But not this year. His scripted message was excellent, but his delivery was mild and perfunctory. All in all, Fancy Farm is a good church fund-raiser, but not much on inspirational speech-making.

3. The Fancy Farm Picnic is a media event, more than a political event. A handful of print and broadcast journalists from Paducah, Lexington and Louisville show up every year — about 15, maybe 20 — and file stories on Fridays and Saturdays that give the event its celebrity aura. The picnic is a creature of the media, more specifically, a creature of the Lexington and Louisville media. Even so, more than half of Kentucky’s 23 daily newspapers printed no stories — zilch — during the weekend of the event this year.

4. How many visitors stand in the August sun, around the Fancy Farm pavilion — or sit under the pavilion’s overhead shelter — to listen to the politicians? The media, unintentionally but dependably, repeat year after year an exaggerated count. For instance, this year a Paducah Sun story prior to the picnic estimated an overall attendance of 15,000, of which 2,000 would listen to the speakers; in a post-picnic story in the same paper, the same writer had 10,000 attending and 3,000 listening. Associated Press used the overall 10,000-attendance figure this year in its report on the event, but gave no estimate of the number who paid attention to the politicians.

I’ve been to more than 20 Fancy Farm picnics, beginning in 1973, and I’ve never seen anything close to 3,000 people listening to the speakers. This year, the crowd was the largest in many years. About 1,200 people stood or circulated around the pavilion, sat in lawn chairs or on table benches; another 300 or so were inside the pavilion, under its shelter.

The 10,000 or 15,000 number, the count of total visitors, has to be an accumulative number of people coming and going on Friday and Saturday. On Saturday afternoon during the political speeches, 5,000 would be a stretch, even this year with attendance up.

5. My conclusion is a bit milder. The Fancy Farm Picnic is a social, political and career opportunity. It’s a place to meet politicos and candidates, to spend time with professional colleagues and friends, and to network. One can make a political statement by simply showing up — or by not showing up. It’s all of those. But hardly to the degree it’s held out to be. Sure, a lot of junkies attend and count the years like notches on a gunslinger’s pistol in the days of the Old West. Elected officials and wannabes mingle with each other, and with donors and voters; and some end up in a news story. Fancy Farm does offer networking benefits. However, very few state legislators attend: maybe 15 or 20. Representatives of the media outnumber legislators. But one can easily have brief, meaningful conversations with 30 or 40 people — and be seen by others. But going to Fancy Farm for the networking? For me, marginal.

##

To read related stories, go to Kentucky Roll Call's main Web site at www.kentuckyrollcall.com. The site is password accessible, but we give free temporary passes to all visitors. Just send an e-mail to reese@kentuckyrollcall.com, and we'll e-mail back to you a free users name and password good for 10 days.

Koppel and Krauthammer on national debt

2010-07-18T18:13:00.002-04:00

The national debt of the United States today is $13.2 trillion and by some estimates that will grow in the next 15 to 20 years to $34 trillion. Ted Koppel, former anchor of "Nightline," speaking at a Kentucky Chamber of Commerce event earlier this week in Louisville, said, "I believe that the deficit in front of us is the greatest danger that the United States has ever faced."

How much is a trillion dollars? Koppel said, imagine a business that started the day Christ was born, and run by idiots (who worked hard, however), and the business lost $1 million the first day. And it lost $1 million every day for a year, and for a thousand years, and for two thousand years (today) -- it still would not have lost $1 trillion. It would be another thousand years before the business lost $1 trillion. Koppel's point: We cannot grow our way out of this. The four choices are: (1) borrow more, (2) raise taxes, (3) cut spending, or (4) print more money. which would fuel inflation.

While Koppel called the deficit (national debt) the “greatest danger,” nationally syndicated columnist Charles Krauthammer, in a column a few days after Koppel’s remark, wrote that the nation’s debt “will necessitate huge tax increases.”

Krauthammer noted that the real money in the federal budget goes to entitlements, most specifically Medicare and Medicaid, and “Obamacare freezes these out as a source of debt reduction. Obamacare’s $500 billion in Medicare cuts and $600 billion in tax increases are siphoned away for a new entitlement — and no longer available for deficit reduction.

“The result? There just isn’t enough to cut elsewhere to prevent national insolvency. That will require massive tax increases — most likely a European-style value-added tax. Just as President Reagan cut taxes to starve the federal government and prevent massive growth in spending, Obama’s wild spending — and quarantining health-care costs from providing possible relief — will necessitate huge tax increases.”

Kentucky Roll Call’s observation on what Koppel and Krauthammer are telling us: The people we elected over the years, Democrats and Republicans, have created a situation that ultimately will leave only one way to avoid the dismantling of America — a massive tax increase.

Tea Party slate for governor

2010-07-12T21:50:00.002-04:00

The climate and culture in Washington and the characters on Wall Street created a ‘condition’ for the Tea Party to sprout and grow like a plant that flourishes in one soil or climate and droops in another. It grew; it wasn’t manufactured.

Now some of the activists — in effect, leaders — of the Tea Party in Kentucky seem to think that condition also exists in Frankfort. They are putting together a gubernatorial slate to run in the governor’s race year. David Adams told Kentucky Roll Call today in an email that some Tea Party activists are “close to putting together a gubernatorial slate to ensure regular Kentuckians' voices are heard in the Commonwealth. … Details should be available soon."

Adams was replying to my inquiry to one of his fellow Tea Party activists, after I had gotten wind of the possible gubernatorial slate. Adams is chairman of Rand Paul’s campaign for the U.S. Senate. In a telephone interview with me following his email, Adams said his statement and details about the slate, which he will release soon, are from him as an “individual activist” in the Tea Party — and not in his capacity with the Paul campaign.

While we don’t know yet whether the so-called Tea Party slate would try to run under the Republican banner in the 2001 gubernatorial primary, that’s a reasonable expectation.

Adams said the Tea Party’s greatest strength “is its lack of formal organization.” So, how would they go about backing a gubernatorial slate? Apparently, they would do it the same way they got behind Rand Paul. Some of the Tea Party activists in the major cities, and a few other places, conferred and agreed to back Paul.

If the Tea Party remains as viable through next year’s primary election as it seems to be today, this could dramatically alter the governor’s race, especially in the GOP primary. Richie Farmer would not get the nod — he’s not philosophically driven. David Williams supported Rand Paul in the primary, and this could serious alter that relationship in the fall. And, given the media amplification, it could even have a much larger meaning, especially if Paul wins in November.

##

To read related stories, go to Kentucky Roll Call's main Web site at www.kentuckyrollcall.com. The site is password accessible, but we give free temporary passes to all visitors. Just send an e-mail to reese@kentuckyrollcall.com, and we'll e-mail back to you a free users name and password good for 10 days.

Hal Rogers made dent in Rand Paul's margin

2010-06-21T18:15:00.004-04:00

In last month’s GOP primary for the U.S. Senate, U.S. Rep. Hal Rogers, R-Somerset, dean of Kentucky’s Washington delegation, did more than just endorse Trey Grayson. The election results suggest that Rogers actually plowed the fertile R-soil in the 5th CD for Grayson — and made a difference, although not enough to overcome the Rand Paul wave. Of the 29 counties in Rogers’ district, Grayson won eight, while in the state’s other 91 counties, he won only three (Casey, Crittenden, Fulton).

Another telling statistic: while voter turnout statewide in the Republican primary for the Senate race was 33.7 percent, in the 5th CD, it was 42.1 percent. That was an anomaly. Mountain counties almost always trail the state in turnout. It highly suggests a strong get-out-the-vote effort by Rogers. Still, Rand beat Grayson on Rogers’ turf, 54.9 percent to 45.1 percent.

A total of 87,227 Republicans voted in the 5th CD, which was 24.8 percent of the statewide Republican vote (in the U.S. Senate race). This debunks the myth recently repeated more than once by the national media — that the 5th CD has half of the votes in a Kentucky GOP primary.

In fact, 5th CD is no longer the runaway leader in Republican votes. There were 207,193 registered Rs in Rogers’ district on May 18. The 4th CD — the Ohio River counties from Oldham to Boyd — is right on the heels of Rogers’ district with 195,236 registered Rs. The 4th CD is Grayson’s home region. Rand Paul won it in a landslide, 65.3 percent to 31.4 percent, winning each of the 24 counties. Turnout in the 4th CD was 32.4 percent, a little below the statewide average.

This brings to mind: Will Rogers really push hard for the election of Rand Paul in the general election? The intensity of Rogers’ efforts could make the difference in a close statewide race. The late Wendell Butler, the state agriculture commission and holder of other musical chairs of the day, once told me a story about the pioneers in the Conestoga wagons on the Oregon Trail: “When a wagon got stuck in the mud, and the men folks put their shoulders to it to push … just because you’re gruntin’ doesn’t mean you’re pushin’.” We shall see. Or, will we?

Rollback legislators’ uber-rich pensions

2010-03-10T15:12:00.007-05:00

In the 2005 session of the Kentucky General Assembly, legislators made a bold raid on the public treasury. In a planned maneuver during the chaos caused by the logjam of bills in the closing days of the session, they sneaked through a bill (HB 299) without a public hearing. It enriched their own pensions so much, it made the infamous 1982 “greed bill” look like chicken feed.

As a result of the 2005 bill, for example, Rep. Harry Moberly is guaranteed a legislative pension of at least $168,686 a year, former Rep. J.R. Gray, is drawing an equivalent of around $400,000 a year as secretary of the Labor Cabinet, and House Speaker Greg Stumbo is locked in to a legislative pension of $98,824 a year* — all for working part-time as a member of the state Legislature. These are a few of the richest examples. Other enrichments, and potential enrichments, courtesy of the public treasury, exist in abundance. A detailed explanation of how the legislator’s retirement plan works is posted at www.kentuckyrollcall.com, archive, September 2009.

Gov. Steve Beshear took advantage of the legislators’ run-away greed last year by using their pensions to lure two GOP senators out of their elected seats, so the Democrats could try to win them in special elections — and, from there, possibly capture control of the Senate. Beshear gave Sens. Charlie Border and Dan Kelly state jobs. Borders went to the Public Service Commission as a commissioner at $117,000 a year. Kelly was handed a judgeship at $123,384 a year. But more than the salary or career change, it was, seemingly, about their pensions.

Under the 2005 bill, legislators who were serving in the General Assembly at that time or afterward are allowed to base their legislative pensions on the salary of a government job held once they leave the Legislature — or, before they came.

Borders’ ‘high-3’ salary as a legislator was $43,594 a year, and Kelly’s was $55,238 a year. Using their state jobs to figure their legislative pensions, instead of their part-time jobs at the Legislature, Borders’ picks up an estimated $1 million or more and Kelly an estimated $2.3 million, depending on whether they purchased extra years of service (not revealed to the public by law) and live to their life expectancy age.

What Beshear, Borders and Kelly pulled off, future governors can repeat, unless the 2005 law is rolled back. As it now stands, any legislator approaching retirement can be incessantly tortured by a temptation to yield on principles and vote for controversial bills backed by the governor. It could lead to a high-paying state job and an extra million dollars, payable monthly in his Golden Years.

The governor’s plan with Borders and Kelly fell short. The Democrats took the seat Borders vacated, but not Kelly’s. In Kelly’s senatorial district, Republican Jimmy Higdon, a House member from Lebanon, defeated the Democrats’ nominee, Jodie Haydon of Bardstown. Higdon won big, despite Haydon’s huge advantages in both voter registration and campaign funds. Kelly was an element in the election, but not a high profile one, in part because Higdon in 2005 had voted against the greed bill — and he had pre-filed legislation to roll it back.

Once Sen. Higdon was sworn in, he followed up on his rollback pledge by introducing SB 51, which passed the Senate 21-17 on Jan. 13 on a straight party-line vote. Sen. Bob Leeper, the independent, voted with the majority.

Upon its arrival in the House, SB 51 was assigned to the State Government Committee, and the committee chairman, Rep. Mike Cherry, D-Princeton, is expected of hold a hearing on the bill after the budget clears the House. Cherry’s committee is expected to vote to rollback the 2005 law, but have it apply only to legislators elected in the future. That is, all members of the General Assembly who served from 2005 through 2010 would be grandfathered in.

If Higdon’s bill passes the Democrat-controlled House, it would go back to the Senate for concurrence. That would likely throw the bill into a conference committee to iron out differences between the two versions. The most likely outcome is, the conferees won’t agree, the clock kills the bill, and legislators (with rare exceptions) go home happy about it.

The legislators’ retirement compensation right now is a big chocolate milk cow, which the public is feeding but is generally not aware of its existence. And shy of a public outcry, legislators will continue milking it, because the mainstream media, including Comment on Kentucky, has basically ignored the issue.

° Speaker Stumbo was Attorney General in 2005, and not in the Legislature when the pension-enrichment bill was enacted. However, when he returned to the Legislature in February 2008, he became eligible to calculate his legislative pension on his Attorney General salary, an estimated windfall of roughly $1.2 million. The Speaker would lose his windfall under SB 51, unless he rushed across town to the office of the legislators’ retirement plan and signed up to start drawing his legislative pension before the ink dried on the governor’s signature.

To read related stories, go to Kentucky Roll Call's main Web site at www.kentuckyrollcall.com. See Archives for July, August and September 2009. The site is password accessible, but we give free temporary passes to all visitors. Just send us an e-mail, to reese@kentuckyrollcall.com, and we'll e-mail you a free users name and password good for 10 days.

Major power grab by Legislature

2010-02-15T12:43:00.004-05:00

Following tradition, Gov. Steve Beshear last month presented to the Legislature his proposed biennial budget for the commonwealth. He proposed to balance the budget with nearly $800 million in revenue from slot machines at racetracks. But the slots issue requires separate legislation, a very long shot at best.

Therefore, House Speaker Greg Stumbo and Senate President David Williams, without hesitation, declared the governor's budget to be dead on arrival. And for the first time ever, the Legislature will write the state budget. This is huge! a sweeping shift of power to the Legislature.

The General Assembly began its quest for independence from the governor in 1980, a quest it has gradually achieved. With this latest development, the Legislature would rise considerably above of the governor on the power equation.

While lawmakers would balance the state's finances in ways yet undetermined, including likely major tax reform, they would undo the balance of power. Beneficiaries of the golden rule, "He who has the gold (or controls it), makes the rules," future lawmakers would rule state government.

The governor, Speaker Greg Stumbo said, has thus far made no personal efforts with members of the House to promote or defend his budget.

The governor was elected to set the priorities for the state -- a responsibility that Beshear seems willing to abdicate. If so, abdication of duty may very well be what defines him throughout history.

Stumbo calls what's happening a "defining moment for the General Assembly." Once lawmakers take control of the entire budget process, as CNHI News Service reporter Ronnie Ellis wrote in a story Friday, "they aren't going to give it back -- to this or to future governors." In an interview with Ellis, Stumbo said: "Once the genie is out of the bottle you can't put it back in."

To visit Kentucky Roll Call's main Web site, click here.

Democrats' executive director has resigned

2010-01-05T16:40:00.002-05:00

Kyle Cox, an Indiana native and former Obama campaign staffer, became the only paid full-time executive director of the Kentucky Democratic Party in the party's history who was not born in Kentucky. Cox resigned, effective Jan. 1, 2010. State Democratic headquarters will be sending out a press release about Cox's resignation late this afternoon or tomorrow.

Cox and the state Democratic Party (as well as the national Democratic Party and consultants) drew severe criticism from many inner-circle Kentucky Democrats in the wake of losing the special election last month in state Senate District 14 to Republican Jimmy Higdon. The complaints centered on charges of bad polling, bad TV ads, inadequate spending of the campaign's massive financial resources, and for establishing a tone for the campaign that did not reflect the personality and character of the party's nominee, Jodie Haydon, and did not adequately involve Democratic leaders at the grassroots.

To visit Kentucky Roll Call's main Web site, click here.

Democrats tap Mills for Feb. 2 special election

2010-01-05T15:23:00.005-05:00

Editor's note: The following is the full text of a press release Feb. 5, 2010, from the Kentucky Democratic Party.
Terry Mills, Lebanon, is the Democratic candidate for the House of Representatives in District 24, which covers Marion, Casey and part of Pulaski Counties. It is the seat formerly held by Jimmy Higdon who was elected to the State Senate last month. The special election will take place on February 2.

Mills retired after a 35-year career with the Social Security Administration serving Marion, Casey and six surrounding counties. This is his first run for public office. He was selected unanimously by the Democratic Executive Committee members of the three counties at a convention in Lebanon last night.

“I was overwhelmed by the support I received at the nominating convention,” Mills said. “We had an enormous crowd with some people driving 80 miles on a freezing night. I feel good and am working the phones today and am ready to hit the pavement and knock on doors.”

“I am seeking this office because I have a strong desire to serve my community. If elected, I will bring an objective, independent look to all issues,” Mills said. “I really believe the fact that I have never served in Frankfort will be an advantage for the people of this district. The only commitment I will have is to serve the people of the 24th District.”

Mills, 59, graduated from Western Kentucky University in 1973 with a degree in Business Administration. He and his wife Patty have been married for 39 years and have three children and four grandchildren. He retired as Acting District Manager of the Campbellsville Social Security office in 2007. ###

To visit Kentucky Roll Call's main Web site, click here.

Rudderless national debt

2009-11-21T15:05:00.000-05:00

Earlier in his tenure as vice president, Dick Cheney said, “Deficits don’t matter.” That’s like saying “the tax burden doesn’t matter.” Taxation is only one of three parts of the tax burden, the others being debt and inflation: the two big hidden taxes.

No wonder the Republicans lost control of Congress, given that kind of dumbness. They drifted from the party’s principles during the George W. Bush years, and, with Bush’s encouragement, went on a multi-year spending spree, after which, the voters kicked enough of them out of office to give the Democrats a chance run the zoo.

Talk about a transformation from the frying pan into the fire! Consider the following from an editorial Nov. 15 in The Paducah Sun: “The federal deficit for the month of October set a new record: $176 billion. That one-month addition to the nation’s massive debt load tops the deficit for the entire year of 2007. The October deficit holds another distinction: It is the first for which President Obama must bear full responsibility.”

More from the Sun editorial, “Just the interest on the October debt hit $18 billion.” That would run Kentucky state government two years.

The total deficit for FY2009 was $1.42 trillion, nearly a trillion over the record deficit of $454.8 billion set a year earlier … more than three times the most red ink ever amassed in a single year. It’s more than the total national debt for the first 200 years of the republic, and almost as much as Canada’s entire economy.
Harvard professor Kenneth Rogoff, the chief economist for the International Monetary Fund, told the AP last month that this “rudderless U.S. fiscal policy is the biggest risk to the U.S. economy,” and “as we accumulate more and more debt, we leave ourselves very vulnerable.”
Forecasts of red ink indicate that within a decade, of every dollar we send to Washington, 15 cents will go pay the interest on the debt, up form 5 cent this fiscal year. The government’s total debt, experts say, could quadruple to $17.1 billion by 2019.

Already, we paid $190 billion in interest in the last 12 months to finance the federal debt, and that could increase to $600 billion in the next decade, as the nation’s debt, as held by investors -- including a major chunk held by China -- increases. The Congressional Budget Office projects that the nation’s debt held by investors will increase by $9.1 trillion in the next decade.

An illustration of this problem surfaced this past week in a news story by McClatchy Newspapers on President Barack Obama’s four-nation Asian tour, which included a three-day visit to China. The Chinese gave no ground on major issues from the currency rate and human rights to global warming and nuclear containment, because Obama “has little leverage over China, in part because the U.S. depends on the Chinese to finance the U.S. government’s growing debt, and because of the perception in China — which for years was an economic nonentity — that the U.S. is troubled and China is ascendant.”

The McClatchy story, which ran Nov. 18 on the front page of The Courier-Journal, said, “China has helped keep the American economy afloat through the recession. Its huge trade surplus with the United States — and the $800 billion worth of American government debt that it holds — is economically unsustainable and leaves the U.S. dependent on Beijing’s financial favor, however.”

What difference does it make, the national debt? Here’s the point: Beyond the increased tax burden, no person can be strong and productive — not at his or her peak performance — under a heavy burden of debt. Nor can a nation.

Possible special session in December

2009-11-12T16:56:00.001-05:00

Gov. Steve Beshear has told legislative leaders to keep the week of Dec. 14 open for a possible special session, according to the The Kentucky Gazette, which reported the scoop this afternoon on its Web site (www.kentuckygazette.com). The paper quotes Senate President David Williams and Senate Minority Leader Ed Worley as sources.

After interviewing Williams and Worley today, Gazette Editor Laura Glasscock called the governor’s press office for additional information. The spokesperson for the governor, Jill Midkiff, would neither confirm nor deny the story.

The special session would come one week after the Dec. 8 special election in Senate Dist. 14 to fill a seat vacated by Dan Kelly, R, who was appointed circuit judge last month by the governor — a move to give the Democrats a chance to pick up an additional Senate seat.

Expanded gambling interests heavily support the Democratic nominee in that race, Jodie Haydon of Bardstown, who favors their issue. If Haydon defeats the Republican nominee, Rep. Jimmy Higdon of Lebanon, it would close the GOP’s advantage in the Senate to 19-18 (and one Independent).

The timing of the special session raises the question of the governor’s intent in calling it (if he does). Is it to push a bill through legislature to authorize video slots machines at racetrack before the General Assembly convenes Jan. 5? Slots may or may not end up on the agenda, but it’s not the out-front issue.

Sen. Worley told the Gazette the topic of the special session would be an economic incentives package for the possible relocation of a Harley-Davidson motorcycle plant to Shelbyville.

Harley-Davidson, based in Milwaukee, is considering relocating a manufacturing operation from York, Pa. and building a retail establishment in Shelbyville. Its board meets “the first of December,” and if they finalize the move to Shelbyville, it would “involve a large industrial revenue bond” that would be outside the scope of the executive branch, Worley said.

A source told Kentucky Roll Call that the timing of the special session relates to the situation with Harley-Davidson in Pennsylvania. By acting in December, Kentucky could possibly close the deal before year’s end — ahead of the Pennsylvania legislature convening in January and trying to block the move via richer incentives. The source said the governor does not intend to muddle up the special session with the gambling issue, which is too controversial to pass in December anyway.

Sen. Kelly morphing into Circuit Judge Kelly

2009-10-23T16:21:00.002-04:00

Later this afternoon, the Administrative Office of the Courts (AOC) will send out a press release announcing that Sen. Dan Kelly’s name — along with the names of two other attorneys from the 11th Circuit Court District — has been sent to the governor by a Judicial Nominating Commission to fill a judgeship. That’s a prediction.

If all goes as widely anticipated, within a few days, Gov. Steve Beshear will choose Kelly to fill a vacancy on the bench. The seat became open when Judge Doughlas George of Springfield resigned instead of completing his term, so he could draw the enhanced pension benefits of a senior status judge, one of 65 in Kentucky.

It is of interest that Kelly’s prospective appointment also has a pension aura. It could be worth more than $2 million to him, via extra pension benefits —it’s like winning the lottery and collecting it in monthly installments.

As a minimum, it would more than double Kelly’s legislative pension from about $30,000 a year to about $64,000, a lifetime increase estimated at $645,000.

The windfall for Kelly could be substantially higher if he has bought five years of “air time,” as he’s entitled to do after 15 years in the legislature, and also has bought credit for his military service. Then, he could draw 100 percent of the judge’s pay as his legislative pension after being a judge for three years. In that case, his legislative pension could be at least $123,384 a year, and a lifetime increase estimated at $2,333,191. He voted for HB 299 in the 2005 session, a bill that allows legislators to base their legislative pensions on government jobs they take after they leave the legislature.

Back to the moment. There is a process, of course, for filling a court vacancy. A seven-member Judicial Nominating Commission, chaired by the chief justice of the Supreme Court, which has six local citizens, including at least two attorneys, submits three names to the governor.

The commission meets at 3:00 p.m. today in Taylor County. They will decide on the three names for the governor. The make up of the commission tells us that one of the names will be Kelly.
Once the governor receives the names this afternoon, the AOC will release the names to the public, and the governor probably will take a few days to ponder his choice, at least giving the appearance of competitiveness in the decision.

Beshear will choose Kelly, because putting him on the bench opens up a Senate seat held by a Republican that the Democrats are slightly favored to win.

Members of the Judicial Nominating Commission
(11th Judicial District, Division 1, for Washington, Marion, Taylor and Green counties)

John C. Minton Jr., chief justice of Supreme Court
James L. Avritt Sr. of Lebanon (Marion County), attorney
Robert Spragens Jr. of Lebanon (Marion County), attorney
Blanche C. Minor of Mannsville (Taylor County), retired state employee
Shiela W. Newcomb of Campbellsville (Taylor County), Kentucky Utilities Company office manager
David R. Carney of Springfield (Washington County)
Randall C. Sullivan of Greensburg (Green County)

The two lawyers are from the same town, and they probably will hold sway over the rest of the commission — all non-lawyers (except the chief justice, of course). After all, this is a process of choosing a judge.

One of the local lawyers on the commission, James L. Avritt Sr., recently sent a letter to the editors of news outlets across Kentucky, inferring that Senate President David Williams’ opposition to video slot terminals at racetracks was financial; Avritt said the Indiana riverboats that Williams frequently visited had a motive (keep expanded gambling out of Kentucky) and an opportunity to comp Williams. Avritt owns racehorses.

On the heels of Avritt’s letter, Williams, himself a lawyer, wrote a letter directly to Avritt, telling him, “You are on notice that I consider any suggestion that I have received a financial benefit for my opposition to expanded gambling to be malicious and made with a reckless disregard for the truth. I ask that you take action to retract this statement immediately. … Any suggestion that I gave engaged in a quid pro quo or received any sort of bribe … is 100% FALSE.”

Avritt said he had no plans to retract anything and that he would welcome a lawsuit. He said the gambling issue would have no sway on his vote as a member of the Judicial Nominating Commission.

Nonetheless, Avritt faces a certain level of public embarrassment if the commission fails to send Kelly’s name to the governor, because failure to include Kelly’s name on the list would deny the Democrats an opportunity to replace Kelly in the Senate with a pro-gambling vote.

It’s unknown whether fellow Lebanon lawyer and commission member, Spragens, shares Avritt’s views on expanded gambling — but Lebanon is a small town. So both lawyers are likely to vote the same way: for Kelly.

Another commission member, Blanche Minor, has been active in Democratic politics, making donations in local and state races. She donated $250 to Steve Beshear’s campaign for the U.S. Senate in 1996, a race U.S. Mitch McConnell won. She also contributed $1,000 to Beshear’s 2007 campaign for governor.

During the Patton administration, Minor held a job in state government with the title of “principle assistant” to the governor. Positions with that title were high-paying jobs, often with no real duties. All of which suggests that Minor is a political team member, and, therefore, would be inclined to vote for Kelly, especially knowing the governor’s wishes.

What’s next?

Within a few days probably, the governor will tell Kelly he has the judgeship. Kelly will then resign from the Senate, and the governor will call two special elections — one to fill the unexpired term of the Senate seat Kelly vacates, and one to fill the unexpired term of the House seat that Robin Webb, D-Grayson, vacated when she was elected to the Senate last month to replace Charlie Borders, R-Russell, who resigned, also for a gubernatorial appointment — not a judgeship, but as a $117,000-a-year commissioner at the Public Service Commission.

Once the governor calls the special elections — issues writs to the sheriffs in the districts — there must be a 35-day waiting period before an election can be held. That’s a constitutional mandate. It gives local officials time to prepare the election, and it gives the candidates time to campaign.

It’s likely the governor will call the special elections for the first week or two of December, and maybe not on the same day. Separating them a few days would give out-of-district political figures in both parties time to go into the districts and campaign for their candidates. The winners would be ready to serve on the opening day of the 2010 General Assembly on Jan. 5.

Capturing Kelly’s seat won’t be easy for the Democrats. Observers with whom we’ve talked expect the race will be competitive. The Democratic nominee, likely former Rep. Jody Haydon of Bardstown, will have “better resources, is better known, and the district is heavy Democratic in voter registration.” But the Republican nominee, likely Rep. Jimmy Higdon of Lebanon, also has some advantages: “the district has been voting Republican in recent years, he is a respected lawmaker, and is knowledgeable.”

Kelly’s resignation as majority floor leader about two weeks ago was perhaps to show a commitment to the governor, and the nominating commission, that he would accept the judgeship, if it’s offered. Also, he gave his GOP caucus in the Senate time to choose a successor for the leadership post ahead of Kelly leaving the Senate. The caucus met this afternoon at the capitol and elected Sen. Robert Stivers, a Manchester (Clay County) lawyer, as the Senate’s new majority floor leader.

Williams is safe

Part of the talk during the past few months has been on the horse industry’s efforts to oust David Williams as Senate president. If the Democrats win the seat Kelly vacates, could that lead to a coup against Williams on the opening day of the 2010 session? You can take it off the table. Williams is safe, at least through the next leadership election in January 2011.

A take-away of the Senate seat now held by Kelly would give the Democrats 18 seats, and drop the Republicans to 19 seats and one independent (who caucuses with them). That leaves the Democrats short — one vote for a tie, two for control.

Slots stalled on legislative front

Since the special legislative session this past summer, where the push by the horse industry and the governor to allow video slots terminals at racetracks failed in the Senate A & R Committee, the political spotlight in Kentucky has been alternately on the open U.S. Senate race (to replace Jim Bunning next year) and on expanded gambling. That’s how big the gaming issue is.

The governor and the horse industry have made progress in positioning themselves for the battle in the Senate over slots at racetracks. But the issue is no further advanced on the legislative front than it was that day in June when it died in committee. The playing field has shifted, and the Senate Republicans have adjusted their defense, but the issue has stalled. Both sides remain poised, however, like the cobra and mongoose, for the next strike.

Super Rich Pensions Root of Political Change

2009-09-22T20:10:00.007-04:00

What you are about to read may seem like an expose on greed, because it is, to a point. The Kentucky General Assembly in 2005 passed a little-known bill (HB 299) that allowed lawmakers to enrich their pensions. While some of the examples in this story may be disturbing, the essence, in total, is not the temporary gains. Above the greed is a larger concern: a shift of political power in the state’s capitol that is directly connected to the pension bill.

You may remember the funny bone song, “Dry Bones.” “The ankle bone’s connected to the knee bone, the knee bone’s connected to the thigh bone.”

Well, legislators’ pensions are connected to recent Senate resignations, and Senate resignations are connected to control of the chamber, and from there: legislation, redistricting and, possibly, one-party rule.

That 2005 pension bill has other unintended consequences. Legislators work part-time for the commonwealth. Nonetheless, the size of their pensions exceeds those of state and local government employees, all of whom work full-time. The gap is so wide and the greed is so great, legislators have seriously compromised their ability to fix the $29.7 billion (and growing) unfunded liability in the state’s other retirement systems.

In addition, the bill handed the office of the governor a powerful new tool that he and all future governors can use to sway legislators’ votes on important issues confronting them in future sessions. The carrot is a high-paying government job, which a legislator can hold for three years and boost his or her legislative pension, in some cases by more than $1 million. For state Rep. Harry Moberly, for example, that could mean at least $2.6 million; House Speaker Greg Stumbo, at least $1.2 million; former state Rep. J.R. Gray, probably $1.2 million; and state Sen. David Boswell has a shot at $1.1 million. If certain information wasn’t blocked from the public, we might add former state Sen. Charlie Borders and Sen. Dan Kelly to the “Million-Dollar Club.”

Here’s an example that illustrates what’s happening.

Former state Rep. Steve Nunn served about one year as deputy secretary of the Cabinet for Health and Family Services before he resigned in March. Nunn had served 16 years in the House of Representatives before taking the cabinet job at $125,000 a year.

On top of Nunn's salary – just for serving that one year in the cabinet, and because it’s a job where he participated in a government-administered pension system (KERS) – $244,062 was added to his legislative pension. You could say his total compensation for being the deputy secretary for one year was $369,062.

That’s an estimate, but it’s a sound estimate, based on information obtained by Kentucky Roll Call under Kentucky’s open records law, and based on the Social Security life expectancy table and a number of pension-related variables. What we don’t know, because the information is blocked from the public, is whether Nunn and other legislators mentioned throughout this story bought “air time” or time from other government jobs, which would also increase their pensions.

Nunn’s standard pension would have been $15,902 a year, but the state job almost doubled it to $29,187; and it increased the lifetime payout from $300,699 to $551,917 – an increase of $251,218, or 83 percent.

Had Nunn stayed on as deputy secretary for a total of three years, it would have increased his legislative pension to $55,000 a year – a hike that would have more than tripled his standard pension. Over a lifetime, it would have given him an extra $739,351. That would have been $246,450 a year (for three years), on top of his salary, only because he is a former lawmaker who was serving in the 2005 General Assembly when his colleagues passed the pension-enrichment bill.

Quitting the job cost Nunn nearly a half-million dollars ($488,133). Nunn voted against the bill.

Legislators can begin drawing their pension at age 65 without a penalty for early withdrawal. Nunn can begin drawing his at age 62 without a penalty, because legislators get one year reduced for each five years of legislative service or bought time. He will be 57 on Nov. 4.

By now, of course, you are aware that Nunn has been charged for allegedly murdering his ex-fiancé, Amanda Ross, in Lexington on Sept. 11 and could face the death penalty.

In the wake of BOPTROT, a scandal in the early 1990s that sent 10 percent of the Kentucky Legislature to prison, lawmakers enacted a law in 1993 that prohibits a legislator or an ex-legislator from drawing a legislative pension if he or she is convicted of a felony “related to his duties as a legislator.” That clause appears to mean that Nunn can draw his legislative pension, even if he’s convicted of a felony.

KRS 6.696 reads in its entirety, “(1) A legislator or former legislator convicted of a felony relating to his duties as a legislator, in any state or federal court of competent jurisdiction, shall forfeit rights and benefits earned after September 16, 1993, under the state administered retirement plan to which contributions have been made as a result of his service in the General Assembly, except for the return of his accumulated contributions and interest credited on those contributions. (2) The payment of retirement benefits ordered forfeited shall be stayed pending any appeal of the conviction. If the conviction is reversed on final judgment, no retirement benefits shall be forfeited.”

So, apparently whatever happens with the murder trial, Nunn can begin drawing in November 2014 a legislative pension estimated at $29,187 a year for the rest of his life.

Working in Government – Again

The number of lawmakers who have worked in other government jobs, which they now can use in calculating their legislative pensions, is pervasive

About one legislator out of three, roughly 15 in the Senate and at least 30 in the House, have held (or hold) a local or state government job. All those people are eligible to use their service in those jobs to enrich their legislative pensions. In some cases, they may not do so, because they may be drawing a higher salary as a legislator than they were at the government job.

Sen. Julian Carroll, for instance, can base his legislative pension on his salary as governor (1974-1979), although he may be making more now as a senator than he was then as governor. But you see the point. Former state Sen. Dan Mongiardo’s legislative pension will be based on his $105,744 salary as lieutenant governor, giving him an extra $232,995.

Senators: Denise Harper Angel was the PVA of Jefferson County; Johnny Ray Turner was a high school basketball coach; Ed Worley was the city manager of Richmond; Ken Winters was a dean at Murray State University; Carroll Gibson was a circuit court clerk; Jack Westwood was a school teacher; Perry Clark works for the University of Louisville; and the list goes on.

House: Derrick Graham is a classroom teacher; Hubert Collins, Rick Nelson, Charles Miller and Teddy Edmonds are retired teachers; Greg Stumbo was attorney general; C.B. Embry was a county judge-executive; Reginald Meeks and Mary Lou Marzian work for the University of Louisville; and the list goes on.

More important than who did work for government is who might. Future government jobs will bring higher salaries and have a great effect on the legislators’ pensions. Legislators, especially those with 20 years or more in the General Assembly, will be tempted to keep one eye on taking care of business in the House and Senate, and the other eye on placating the governor, in the hopes of landing a high-paying job to seriously enhance their pensions.

A Strategy

The pension strategy is working for the Democrats. Sen. Charlie Borders, R-Russell, resigned from the Senate in July to take a $117,000-a-year job at the Public Service Commission, the agency that regulates utilities. Borders gets the salary and at least $737,516 extra, payable monthly through his legislative pension. It was a win for Gov. Steve Beshear, too. He called a special election to fill the vacant Senate seat, and state Rep. Robin Webb, D-Grayson, won it – a take-away for the Democrats, who closed the Republican advantage in the Senate to 20-17-1. State Sen. Bob Leeper of Paducah is an independent, but he caucuses with the Republicans. So, in reality, the Republican advantage remains at 21-17.

It has been widely reported that Majority Floor Leader Dan Kelly, R-Springfield, is in line to receive a gubernatorial appointment to a $123,384-a-year job to fill an unexpired term of a circuit judge. A decision on the appointment could come in October. If Kelly gets the judgeship, the Democrats are favored to win the Senate seat he would vacate. That would narrow the Republicans’ advantage in the Senate to 20-18 (still counting Leeper in the R camp) and create a precarious situation for Senate President David Williams, R-Burkesville, because it could bring Sen. Tom Buford, R-Nicholasville, to the forefront as a wildcard in deciding which party controls the Senate.

Buford is known as a maverick in Williams’ camp. At the age of 60, he has served in the Senate 19 years, and he’s on the governor’s side in favor of allowing slots at the state’s racetracks. It would not come as a surprise if Buford were to be appointed to a state job during Beshear’s first or second administration (if there is a second one, which at the moment seems likely).

If Buford were to side with the Democrats, and a Democrat were to win Kelly’s vacated seat, a floor vote to oust Williams could throw the Senate into a 19-19 tie on Jan. 5, the first day of the 2010 session (for now, it appears unlikely there will be a special session this fall). On a tie vote, Williams stays president. But it could force some changes, including shared power of some sort.

History

The lawmakers created their pension system in 1980 and modeled it after the judges’ pension system. In creating their own system, the lawmakers made it richer than what state and local government employees’ have, but not quite as rich as the judges’ plan, which has been in place since 1960. However, at their very next chance, in the 1982 session, lawmakers enriched their pensions, creating bonanzas for the bulk of sitting members, an act that is remembered to this day as the “greed bill.”

How the Pension Bonanza Came About

The Senate Republican leadership in March 2005 inserted the pension language into an innocuous bill that came over from the Democrat-controlled House.

Sen. Damon Thayer, R-Georgetown, was chairman of the State Government Committee, where the switcheroo took place. Four of the five Senate Republican leaders – David Williams, Dan Kelly, Richie Sanders and Dan Seum – voted for the bill on the Senate floor that day. Sen. Katie Stine, president pro tem, did not vote when the bill came up, one of six senators who did not cast a vote. The bill passed the Senate 30-2, and then passed the House the same day, 48-36.

In the bill they enacted, HB 299, legislators made five major changes to their pensions.

1. They lowered from 30 to 27 the number of years they must serve before they can start drawing their pension prior to age 65 without an early withdrawal penalty.
2. They fixed it so that any member who was not in the legislative retirement plan could join, by a certain date, and be eligible for the bonanzas to come.
3. They lowered the salary multiplying-factor used in figuring their pension to make it a “high three” instead of a “high five” — the only pension system with a “high three” among the six systems administered by the state.
4. They eliminated their $27,500 “assumed” salary as a multiplying-factor and replaced it with their real salary so that change No. 5 below would make sense.
5. They bestowed upon themselves a pension privilege called “reciprocity,” which means all legislators serving in the 2005 session, when they passed these changes, and all legislators elected in future years, could calculate their pensions NOT on their part-time salary as a legislator but on their full-time salary at another state or local government job after they left the legislature or before they came. The only restriction being, the pre- or post-legislative job must be covered by one of Kentucky’s other government-administered pension systems.

Reciprocity is what allows lawmakers to convert their standard pensions into super pensions. Judges don’t have reciprocity, but all others in the state retirement systems do; and it’s on that point that some legislators rationalize it for themselves. There is a big difference, however. The service credit rate (the percentage figure used in calculating pensions) is greater for legislators — in a few instances, much greater – than it is for other government employees, except judges. In 1982, lawmakers lowered their percentage rate — and the judges’ — to make them equal at 2.75 percent.

Lawmakers are considered part-time employees, while judges and other government employees work full-time.

Second Pension

In 1998, legislators voted themselves an automatic second pension, this one in the same retirement system as county and state employees. The second pension takes effect when their legislative pensions max out. The authority for this double dipping is KRS 62.680(3), written by former state Sen. Albert Robinson, R-London.

\Today, seven serving legislators have second pensions – Sens. Walter Blevins and David Boswell, and Reps. Tom Burch, Danny Ford, Jody Richards, Tom Riner and Greg Stumbo. An eighth legislator, Rep. Harry Moberly, dropped his second pension at KERS so he could enroll in the teachers’ retirement system through his employer, Eastern Kentucky University, which will substantially increase his legislative pension.

Rep. Harry Moberly

Rep. Harry Moberly entered the legislature with the Freshman Class of 1980, and has served 29 years. Members of the 1980s class were assigned a service credit rate (SCR) of 4.15 percent. Only Moberly and Speaker Stumbo today have that rate. (Only four legislators, currently serving, have the highest rate, which is 5.0 percent: Sen. David Boswell and Reps. Tom Burch, Jody Richards and Tom Riner; and three legislators have 3.5 percent: Sens. Walter Blevins and Dan Seum, and Rep. Danny Ford. All others have 2.75.)

Moberly’s employer is Eastern Kentucky University, where he’s vice president of Administrative Affairs at $168,686 a year. On Dec. 31, 2004, after 25 years of legislative serve, he maxed out on his legislative pension — meaning he can draw 100 percent of his salary when he starts his pension.

Moberly’s current “high-three” salary from his legislative service is $41,035. He’s 59 years old and can start drawing his legislative pension next year without an early retirement penalty. So Moberly can draw 100 percent of his salary. However, thanks to reciprocity, his salary won’ be what he earned in the legislature, it will be what he’s earning at the university, which is four times greater than his legislative pay. And, presumably, the EKU pay will increase each year, so the longer he waits to start his legislative pension, the larger it will be.

As of right now, Moberly’s legislative pension would be about $168,686 a year for the rest of his life. That’s $127,651 per year more as a result of the 2005 legislation; that’s a lifetime windfall estimate at $2.6 million. He voted for the bill.

Sen. Dan Kelly

If Sen. Dan Kelly is offered and accepts the judgeship, it could more than double his legislative pension from about $30,000 a year to about $64,000, and a lifetime increase estimated at $645,000. That’s a minimum. It could be substantially higher if he has bought five years of “air time,” as he’s entitled to do after 15 years in the legislature, and also has bought credit for his military service. Then, he could draw 100 percent of the judge’s pay as his legislative pension after being a judge for three years. In that case, his legislative pension could be at least $123,384 a year, and a lifetime increase estimated at $2,333,191. He voted for the bill.

In other words, if Kelly is appointed circuit judge and then serves three years in that capacity, it’s like someone offering him $2.3 million to take the job (collectible monthly when he starts drawing his legislative pension). And that doesn’t count his salary as a judge or his second pension as a judge.

Labor Cabinet Secretary J.R. Gray

When Beshear was appointing his cabinet secretaries right after the November 2007 election, he picked then-state Rep. J.R. Gray, D-Benton, to head the Labor Cabinet. Gray came to Frankfort as a lawmaker in 1976. Therefore, his pension percent rate is 5 percent. His salary as a cabinet secretary is $136,500 a year, according to The Courier-Journal salary Web site. If he stays on at the Labor Cabinet through December of next year, that would give him three years and, therefore, his “high three” would be his cabinet secretary pay.

The 2005 legislation enriches Gray’s legislative pension by an estimated $1.2 million – a bonus, so to speak, of more than $400,000 a year (for three years), on top of his $136,500-a-year salary. Said another way: The systems are giving Gray more than a half-million dollars a year (salary + enhanced pension for three years) to head the Labor Cabinet. That’s four times more than any other cabinet secretary is paid (and, yes, that’s a fair assessment; it’s just that the bulk of this compensation is channeled through his legislative pension). He voted for HB 299.

House Speaker Greg Stumbo

Speaker Greg Stumbo is also a big winner with the legislative pension bonanza, even though he was not serving in the legislature when HB 299 was enacted in 2005: at the time, he was attorney general. Nonetheless, he will reap an estimated $1,244,694 extra as a result of the bill, because he returned to the legislature. The 2005 legislation, you will remember, applies also to legislators elected in the future.

Within a month after Beshear was sworn into the governor’s office, Stumbo met with him and almost immediately afterward, freshman state Rep. Brandon Spencer, D-Prestonsburg, who held Stumbo’s old House seat in District 95, suddenly resigned. The governor called a special election to fill Spencer’s unexpired term, and Stumbo won that special election on Feb. 5, 2008.

Three weeks later, on Feb. 29, 2008, back in the legislature, Stumbo maxed out on his legislative pension at 24 years and two months. In summary, returning to the legislature made him eligible to draw his legislative pension figured on his salary as attorney general; to max out his pension made him eligible (he otherwise would not have been eligible) to draw 100 percent of his AG salary (high three averaged); and it triggered the 1998 law that provided him with a second pension to succeed the one he maxed out on – the second pension is not in the Legislators Retirement Plan, but in the county and state employees’ plan, where he already has a pension account from being a state employee during his four years as AG.

Stumbo will draw 100 percent of his AG salary, $98,824 a year, every year for the rest of his life once he starts drawing his legislative pension, which could only have occurred if he returned to the legislature.

Without the reciprocity provision in the 2005 law, and without him returning to the legislature, Stumbo’s legislative pension would be around $39,792 a year. So, his decision to return to the legislature was more than it appeared at the time. It gave Stumbo an extra $63,311 a year for the rest of his life once he starts to draw, which could be at age 61 – that’s when he can begin his pension without a penalty for early withdrawal. It’s a lifetime windfall estimated at $1,244,694, a nice reward for winning one election (which really wasn’t much of an election at all – Stumbo won 80 percent of the vote).

As Stumbo’s return to the legislature shows, a break in service has no bearing on service years previously accumulated. In tallying Stumbo’s total years of service, for the purposes of calculating his legislative pension, his four-year absence was a non-factor.

Sen. David Boswell

Sen. David Boswell entered the legislature as a member of the House in 1978, so he has a 5 percent service credit rate. He had been in the House six years by 1983 when he was elected commissioner of Agriculture – serving in that capacity during the administration of Gov. Martha Layne Collins.

In 1990, Boswell was elected to the Senate, where he has served continuously. This year marks 26 years he’s been a lawmaker. Because his percentage multiplier is high, he maxed out in his legislative pension on Dec. 31, 2004, and immediately began a second legislative pension in the KERS.

Boswell will be 60 on Nov. 20. He has not started drawing his legislative pension, so he has options. If he were to start drawing his pension in November, which he can do without penalty, the pension would be figured not on his salary in the legislature but on his salary as commissioner of Agriculture. His “high-three” in that job was $53,757, which would give him a $69,880-a-year pension instead of $50,161 a year if it were based on his legislative income. Over a lifetime, his four years as ag commissioner guarantees him an extra $402,676.

But his higher pension from being Ag commissioner may not be the final job that would increase his legislative pension. Boswell is considering three options for next year: (1) a re-election bid to the state Senate; (2) a rematch with Congressman Brett Guthrie in the 2nd U.S. House District; or (3) a run for county judge-executive in Daviess County. The latter would boost Boswell’s legislative pension an estimated $1.1 million – above his standard legislative pension.

In Daviess County, the judge-executive’s annual salary is $100,548, plus an annual $3,600 stipend from the Kentucky Transportation Cabinet. The stipend is taxable income, so it’s included in the pension formula. (All 120 judge-executives receive the stipend in the same amount.)

Perhaps making the judge-executive’s race even more attractive for Boswell, the current officeholder, Reid Haire, has announced he will not seek re-election. If Boswell were to win that race and serve at least three years (it’s a four-year term), it would raise his legislative pension to $104,148 a year. He could quit after three years and still walk away with a million dollars (lifetime), added to his legislative pension. He voted for HB 299.

Lt. Gov. Daniel Mongiardo

Lt. Gov. Daniel Mongiardo, 49, was a member of the Senate in 2005 and, therefore, can draw his legislative pension – when that time comes – based on his lieutenant governor’s salary. He served seven years in the Senate, during which time his high-three salary was $33,397. When he reaches age 64, he could begin drawing his legislative pension without an early withdrawal penalty, and, based on his Senate salary his legislative pension would be $6,429 a year. However, his pension won’t be figured on his salary in the legislature, as we’ve said; it will be figured on his salary as lieutenant governor, which is $105,744.

So, being lieutenant government increases Mongiardo’s legislative pension to $20,356 a year, or an extra $232,995 lifetime total. He did not vote for or against the bill.

Frank Rasche

Ex-legislator Frank Rasche, D-Paducah, served 15 years in the House before resigning in 2008 to accept an $80,000-a-year position in the Beshear administration in the Education and Workforce Development Cabinet. That state job increases his legislative pension to $33,000 a year from $14, 841 – a gain of $18,159 a year for the rest of his life. The lifetime gain is estimated at $329,949. He voted for the bill.

Jon Draud

Ex-legislator Jon Draud served nine years in the House before resigning to become state Education commissioner at $220,000 a year. He held that job only one year, but it counts as one of his “high three” in calculating his legislative pension, and it moved his legislative pension up from $9,247 to $22,876 annually, a gain of $13,629 a year, or, over a lifetime, $172,545.

Had Draud stayed on the job three years as Education commissioner, he would have received – through his legislative pension – a bonus of $572,270. With that, his monthly pension would have jumped to $45,203. He voted against the bill.

Joe Barrows

Ex-legislator Joe Barrows, D-Versailles, missed out on more than $700,000 because he began drawing his legislative pension before he started his state job this summer in the Office of Homeland Security. Once a legislator, or ex-legislator, begins drawing his or her legislative pension, it closes the door forever on the reciprocity provision in the 2005 law for that particular legislative pension. He voted for the bill.

What if ...

What if all legislators with 20 years of service became county judge-executives?
To further reveal the magnitude of the rich benefits that legislators bestowed upon themselves through enactment of the 2005 law, Kentucky Roll Call filed open records requests with the Legislative Research Commission and obtained the taxable income for the most recent six years on all current legislators who have served 20 years or more in the legislature, or will have served 20 years at the end of next year. From the taxable income information (that’s the income the legislator reports to the IRS), we did the math and came up with each legislator’s “high three” salary (average of the highest three years), which we then used to figure the legislator’s legislative pension, based on a hypothetical scenario where he or she leaves the legislature on Dec. 31, 2010.

We expanded the hypothesis to have each of these 25 legislators run for county judge-executive in 2010 – rather than seeking re-election to the legislature. In Fayette and Jefferson counties, which have city-county consolidated governments, we replaced judge-executive in the formula with the metro mayor, and applied the formula to the legislators who live in those two counties. The mayor’s job in Lexington pays $120,574 a year; and the mayor’s job in Louisville pays $105,746.

How much would this enrich these selected legislators’ legislative pensions, if they were elected county judge-executive, or mayor if they live in Fayette or Jefferson counties? On average, it would enrich each legislators’ pension by $610,776 over the lawmakers’ lifetimes. Boswell would strike the Mother lode – an estimated $1,192,425.

The Legislative Ethics Commission said there was no violation of the ethic code when legislators voted in favor of the pension-enrichment bill and then benefited from it directly. The agency’s rationale: The opportunity applies to all members. Of course, the agency is only interpreting the ethics law as written by those who are drawing the pensions.

Frankfort Culture

Frankfort is a culture of pensions. It’s common to find people drawing two, even three government pensions. Legislators have joined the parade, and the magnitude of it on the legislative process and Kentucky politics should not be underestimated.

We don’t know if the governor is keeping a list. What we do know is, Beshear has received many requests for state jobs from members of the House and Senate – not jobs for their constituents, but for themselves. For the pensions! You see what lies ahead.

By Lowell Reese
Kentucky Roll Call
Sept. 22, 209

A Primer: KY Lawmakers Pension System

2009-09-22T19:07:00.007-04:00

What’s At Issue?

The pension and health insurance benefits paid to Kentucky’s legislators and ex-legislators have taken on a substantial financial and political air, especially since the 2005 enactment of HB 299, a pension-enrichment bill. The legislators voted themselves richer pension opportunities and gave the governor a powerful tool that may change the dynamics of the Kentucky General Assembly – and lobbying.

Why It’s Important

Three reasons: (a) Legislators have bestowed government-paid pension benefits upon themselves far in excess of the retirement benefits available to other government employees – especially when considering that being a legislator is a part-time job; (b) legislators’ retirement benefits outpace those of state and local government employees to such an extent that the legislature has seriously compromised its ability to tackle the $29.7 billion unfunded liability of the state’s other retirement systems; and (c) the 2005 legislation that opened the gate to these super-rich pensions for legislators has a serious unintended consequence – it handed the office of the governor a new tool that he and all future governors can use to sway legislators on votes and even to resign their seats. The carrot is a gubernatorial appointment to a government job that a legislator can hold for three years and boost his or her legislative pension, in some instances, more than $1 million over a lifetime.

Background

Members of the General Assembly created a retirement system for themselves in 1980. All other government entities, including judges, already had a retirement program by that time. The lawmakers modeled their plan on the judges’ retirement system, which began in 1960 with a 5 percent service credit rate (SCR), or benefit factor, as some call it.

The SCR percentage is one the three factors used in calculating the size of the pension check, the other two factors are years of service and salary.

In 1976, voters approved a constitutional amendment to re-structure the court system. That’s when the Kentucky Supreme Court was created. It also resulted in an adjustment to judges’ pensions, among which the service credit rate percentage was lowered from 5 to 4.15.

Four years later, in forming its own pension plan, the legislature chose 3.5 as its percentage factor and based its annual salary – for purposes of calculating a pension – on $27,500, which was an “assumed” figure, not actual. Legislative salaries in real dollars were considerably lower at that time.

At their very next chance, the 1982 session, legislators made their pensions richer by giving everyone who had served more than four years a 5 percent service credit rate, up from the 3.5 percent. That significantly enriched the pensions of everyone who entered the legislature during or before 1978, which, of course, included the bulk of those who voted for the change. The action became widely known as the “greed bill.”

In that same 1982 session, the legislature set the pension percentage rate for the freshman class that year, and all years to follow, at 2.75 percent – and they applied it to judges. So, right now the judges and legislators who entered service in 1982 or later have the same 2.75 percent rate.

In 1998, the legislators voted themselves an automatic second pension – not as legislators but as employees of the commonwealth – once they reached 100 percent of their legislative pension. The second pension is in the Kentucky Employees Retirement System.

Then the really big one came: In the 2005 session, the legislators made five major changes to their pensions.

1. They lowered from 30 to 27 the number of years a legislator must serve before he or she can start drawing a pension prior to age 65 without a penalty for early withdrawal.
2. Legislators who heretofore were not enrolled in the Legislators Retirement Plan, but were in another government-administered plan, were given a window in which they could transfer to the LRP by Aug. 31 of that year, making them eligible for the pension bonanza to come.
3. They lowered the salary component used in figuring a legislator’s pension, making it an average of the legislator’s best three salary years instead of the best five salary years.
4. They changed the salary component used in figuring a legislator’s pension by replacing their annual “assumed salary” with their real salary, meaning their taxable income as reported on their W-2 to the IRS.
5. Items No. 2, 3 and 4 above set the stage for the granddaddy of the changes – the reciprocity language, which says legislators who were serving in the 2005 session, and all future legislators, could now base their pension NOT on their part-time salary as a legislator but on their full-time salary from another state or local government job after they left the legislature (or before they came). The only restriction being, the pre- or post-legislative job must be covered by one of Kentucky’s other government-administered pension systems.

Judges have no such reciprocity, now the only government employees who don’t.

Anatomy of the Plan

The retirement system for state legislators, called the Legislators Retirement Plan, is one of our state’s six government-administered retirement systems.
1. Legislators Retirement Plan
2. Judicial Retirement Plan
3. Kentucky Teachers Retirement System
4. County Employees Retirement System
5. State Police Retirement System
6. Kentucky Employees Retirement System

The legislators’ and judges’ retirement systems are administered jointly under what’s called the Kentucky Judicial Form Retirement System. The funds are not co-mingled. Likewise, the county, state and state police retirement systems come under the umbrella of the Kentucky Retirement Systems, and the funds there are not co-mingled.

Each system has two funds – a pension fund and a health insurance fund.

Further, the Kentucky Retirement Systems, which is primarily for city, county and state employees, has two categories of retirees: those who work in hazardous jobs, such as police and firefighters; and those who work in non-hazardous. The rules are somewhat different for hazardous and non-hazardous jobs. Teachers, legislators and judges do not have hazardous categories.

KERS serves the vast majority of state employees, but not the state police, legislators and judges. CERS serves employees of city and county governments, including school boards, and its funding comes from the budgets of local governments (and from investments and employee contributions).

The Kentucky Teachers’ Retirement System includes teachers, of course. But it’s more than K-12. Also included are university professors and some university employees – the requirement is a four-year degree. Some legislators – those who work or have worked in the school systems or for a state university – may opt to be in KTRS instead of the legislators’ plan.

No person, however, can be enrolled as a contributing participant in more than one retirement system at the same time. A key word in that sentence is “contributing” – a whole lot of government employees have second and even third government pensions.

By the will of the legislature, knowing who is enrolled in a particular government pension system, and also who is drawing one, two or three pensions is one of Frankfort’s greatest secrets. There’s no specific law that prohibits the release of information on legislators’ pensions; instead, the Legislators Retirement Plan acts from an attorney general’s opinion and releases enough information so the public can reasonably figure out (but not exactly) what a legislator’s pension would be.

Available Information

There are a number of exemptions to the Kentucky Open Records Act, the most notable being virtually the entire judicial branch of government. Some court records, nonetheless, are open to the public. The Administrative Office of the Court provides this explanation:

Kentucky Judicial Branch and Open Records Policy

Court records are under the control of the Supreme Court of Kentucky and as such are not subject to the Open Records Act, KRS 26A.200; KRS 26A.220; Ex parte Farley, Ky., 570 S.W. 2d 617, 624-625 (1978). However, the Administrative Office of the Courts (AOC) does release information as a matter of comity when possible. These requests are considered on a case-by-case basis and are usually granted unless to do so would compromise the business of the court system. We consider many of our records public and release them accordingly when requested.

The judges’ pension plan also is somewhat of an exception here. It’s governed by the same attorney general opinion as the legislators’ in releasing pension information.

Don’t bother to ask who is enrolled or drawing a pension(s) in the teachers’ retirement system or the Kentucky Retirement Systems – the staff won’t tell you, on grounds the information is protected by state law.

The Legislators Retirement Plan and the Judicial Retirement Plan are a little looser, but they still keep such simple information as “who’s drawing a pension and when did they start” confidential.

Other information that the Legislators Retirement Plan withholds from taxpayers is, whether (and when) a legislator buys “time,” such as years served in the National Guard, government jobs, and, believe it or not, “air” time – which is exactly what it says, out of the air. After serving 15 years in the General Assembly, a legislator can buy five years of “air time,” which can’t be used until he or she reaches 20 years of actual service.

There are four parts of a legislator’s pension, however, that are subject to the Open Records law, in accordance with a 1999 Attorney General opinion (99-ORD-209), which the LRP uses as its guide.
1. The LRP can tell us whether a legislator is enrolled in its plan.
2. The LRP can tell us a legislator’s or an ex-legislator’s serve credit rate.
3. The LRP can tell us a legislator’s or ex-legislator’s high three salary.
4. The LRP can tell us the period (years) a legislator served.

That’s it. No information about “bought time,” no information that would identify who is drawing a pension or when they started drawing it.

Figuring a Lawmaker’s Pension

Pension payouts, from government-administered retirement systems, are distributed according to a three-factor formula: The number of years and months of service, average salary and a percentage figure, which for most legislators – those who came in 1982 and afterward – is 2.75 percent. Simply multiple the three factors: years x salary x percent. For example, a legislator with 20 years of service, a high-three salary of $40,000 and a percentage multiplier of 2.75 percent would draw a pension of $22,000 a year. After 36 years and about four months of legislative service, the pension is 100 percent of the $40,000 salary.

The legislators’ pensions are based on years and months of service, and each new service year begins on July 1, a date that’s only coincidental to the state’s fiscal calendar.

The salary part is the average of the highest three years, and that’s why it’s called the high three. That’s not limited to the last three years – it’s any time during the legislator’s service, even after they have reached the 100 percent threshold, or “maxed out,” and quit contributing to their legislative pension plans, or, in some cases, have started a second pension. It’s their high three in government service, which now includes positions held before, during or after service in the legislature.

Service Credit Rate for Legislators

The percentage used in figuring pension payout is a crucial element. The slightest change in the percent can meaningfully alter the pension check.

Judges and legislators who entered service in 1982 or later (the bulk of those now serving) have a service credit rate of 2.75 percent. A state employee’s rate is around 2.0 percent; there’s a slight range, and it’s lower for those employed Sept. 1, 2008 and later. County employees have a rate of 2.2 percent.

A few members of the current legislature were serving in 1978 and earlier; they have the highest SCR of all at 5 percent: Those who came in 1980 have 4.15 percent, and for those who came in 1981, it’s 3.5 percent. The rest are at 2.75.

Thresholds

There are designated years of service markers along the pension path.

1. Five years: For each five years of service, a legislator may reduce by one year drawing his or her pension before age 65 without an early withdrawal penalty. For example, after 20 years of service a legislator can retire at age 61.
2. Fifteen years: After 15 years of service, a legislator may purchase “five years of air time,” but can’t use it until he or she reaches 20 years of actual service.
3. Twenty years: After the completion of 20 years, the retirement plan pays 100 percent of the health care insurance costs for the lawmaker, his or her spouse and dependent children.
4. Twenty-seven years: After 27 years of service, legislators may start drawing their pensions at any time before age 65 without an early withdrawal penalty.
5. Thirty-six years: After 36 years and about four months, a lawmaker with a SCR of 2.75 can retire at 100 percent of his or her high three salary. (Those with a 5 percent SCR reach that milestone in 20 years; those with a 4.15 in 24 years and about one month; and those with a 3.5 in 28 years and about seven months. By comparison, a state employee with a 2 percent SCR would have to work 50 years for his or her pension to be 100 percent of their salary.)

Retirement Age

At age 65 legislators may start their legislative pension without an early withdrawal penalty. They can begin drawing their pensions any time after they leave the General Assembly, but the dollar value of a pension is reduced 5 percent for each year that’s early – except, there is no early withdrawal penalty for those who have 27 years of government service. After 27 years of government service, which includes service in any of the state’s six government-administered retirement plans, there are is no age restriction on legislative pensions.

The Second Pension

Once a legislator completes enough years in the General Assembly to max out (draw 100 percent) of the legislative pension, a second pension is started automatically for him or her in the Kentucky Employees Retirement System. The authority for the automatic double dipping is in KRS 62.680(3), written by former state Sen. Albert Robinson, R-London, in the 1998 session.

Today, seven lawmakers have a second pension going: State Sens. Walter Blevins, D-West Liberty, and David Boswell, D-Owensboro; state Reps. Tom Burch, D-Louisville; Danny Ford, R-Mt. Vernon; Jody Richards, D-Bowling Green; Tom Riner, D-Louisville; and Greg Stumbo, D-Prestonsburg. An eighth legislator, state Rep. Harry Moberly, D-Richmond, dropped his second pension at KERS so he could enroll in the teachers’ retirement system through his university employer, a move that will substantially increase his General Assembly pension, in accordance with the 2005 session changes.

Post- or Pre-legislative Jobs

In the 29-year history of the pension system for legislators, no amendment to increase benefits has been more substantial than the “reciprocity” provision that legislators adopted in 2005. They changed the law to allow themselves to base their General Assembly pension not on their salary as a legislator but on their salary at a job they held before or after they came to the legislature – the caveat being, the external job must be in government.

Since being a legislator is part-time and the other government jobs are full-time, the math is pretty simple: the annual salary at the full-time job is greater and, therefore, the legislator’s pension check is larger. In some cases, it’s really larger.

100 Percent Health Care Coverage

Health care cost is a major concern for citizens, except for citizen-legislators once they reach the threshold of having served 20 years in the General Assembly. Beyond that time, for the rest of their lives, the legislators’ retirement package pays 100 percent of the health care insurance premiums for legislators – and for their spouses and dependent children – except when Medicare starts at age 65 for the legislator. Then, the retirement plan pays only the supplement insurance premiums.

And legislators are not bare on the front end. The insurance premium payment is graduated. After the completion of four years in the legislature, the retirement plan pays 25 percent of the legislators’ health insurance premiums; after 10 years, it goes to 50 percent; and then coverage increases in increments of 5 percent each year, reaching 100 percent at the end of 20 years. This is related to buying five years of “air” time after a legislator has served 15 years, but can’t use until after 20 years.

Only lawmakers and the state police have this 20-year health care insurance benefit.

Restrictions

1. A legislator cannot be enrolled in two government-administered retirement systems at the same time.
2. A legislator’s pension from service in the General Assembly cannot be greater than 100 percent of his or her high three salary.
3. A legislator cannot begin drawing his or her pension prior to the age of 65 without an early withdrawal penalty, except it can be drawn anytime if the legislator has 27 years of government service. Also, the start date is reduced one year for each five years of service.
4. Once a legislator starts drawing a General Assembly pension, he or she is no longer eligible to enrich the pension from employment in another government job.

Other Points

1. Of the 138 current legislators, nine have had a break-in-service. One served a term as commissioner of agriculture (state Sen. David Boswell, D-Owensboro), another as attorney general (House Speaker Greg Stumbo, D-Prestonsburg), and so on. A break itself does not disrupt any retirement benefits for service in the legislature. The pension is based on the total number of years served in the legislature. Even if there were a break in service, the enhancements enacted in 2005 would still apply, because the pension is based on the number of years accrued in the Legislators Retirement Plan as a contributing member.
2. A legislator becomes “vested” (can thereafter draw pension benefits) after five years of legislative service or eight years of total government service. That is, a legislator with only two years of legislative service – one term in the House of Representatives, for instance – will draw a pension if he or she had at least six years of total government service, but the pension would be figured only on the two years in the legislature.
3. Legislators who have had a break in service and worked in a government job during the interim and who later are re-elected to the legislature may transfer the years of service in the interim government job to their legislative retirement plan, but they may have to pay a stiff penalty based on an actuarial assessment of the liability of the transfer – the amount it would cost the Legislators’ Retirement System in higher pension payouts to the individual. Ex-legislators cannot transfer years of service, but they can, however, make the transfer once they are re-elected and are contributing to the Legislators Retirement System.
4. Each of the state’s retirement systems calculates its pension benefits based on the number of years of service in its own system.
5. Only legislators have a high three. Judges and all other government employees have a high five.

Liability

About 20 percent to 25 percent of the payout for retirement benefits for legislators comes from funds appropriated to the Legislators Retirement Plan by the General Assembly. Legislators contribute 5 percent of their salaries, which comprises roughly 5 percent to 10 percent of the retirement fund’s annual $45 million budget. The rest comes from investments. As of July 1, 2008, the LRP had a $1.8 million surplus. However, this past year has been a difficult one for return on investments; an actuarial report on FY 2009 is expected to show an unfunded liability.

By Lowell Reese
Kentucky Roll Call
Sept. 22, 2009

Legislators' Great Pension Bonanza

2009-08-19T11:50:00.009-04:00

When labor unions tried to organize state government workers in 2001, thousands of state employees resisted on the grounds they didn’t need to be paying union dues because their salaries and fringe benefits were already the “best in the nation, second to none,” the leader of a state employee organization told The Kentucky Gazette.

That’s borne out in part by a survey conducted by a secretary of the Personnel Cabinet during the Fletcher administration, which found that state employees are paid better, on average, than employees in the private sector in 117 of Kentucky’s 120 counties.

The state and local government retirement systems as of June 30, 2008, had a $29.7-billion unfunded liability, which must be paid. The Kentucky Constitution requires it: public employees have an inviolable contract with their government employer, which means retirement benefits in place on the first day of employment cannot be reduced and must be paid. The choice: raise taxes or crowd out other services, such as education.

The legislature last year reduced the retirement benefits for new hires in state government, but it enacted no provision to avoid benefit-creep. Within two or three decades, if not sooner, legislators will have gradually added enough new retirement benefits to bring the systems back to today’s crisis. You can almost count on it, because a majority of legislators love public employee pensions — especially their own.

Members of the General Assembly created a retirement system for themselves in 1980. At their very next chance, in the 1982 session, they made their pensions richer by giving every legislator who had served more than four years a 5 percent “service credit rating,” instead of the 3.5 percent in the original plan. The SCR is one of three factors used to calculate the size of a pension check.

That action became widely known as the “greed bill.”

Then, starting in 1998, legislators who had “maxed out” on their General Assembly retirement plan, and who continued to serve in the legislature, began drawing a second pension, this time in the state employees’ retirement system, KERS.

Eight lawmakers have reached the “max” on their legislative pension, and seven of them have a second pension: Sens. Walter Blevins and David Boswell; and Reps. Tom Burch, Danny Ford, Jody Richards, Tom Riner and Greg Stumbo.

The eighth legislator, Rep. Harry Moberly, had a second pension at KERS, but he dropped that plan so he could enroll in the Kentucky Teachers’ Retirement System — not as a legislator — but as an Eastern Kentucky University employee.

This means Moberly’s legislative pension will be based on his university salary, not his legislative pay. As a result, his legislative pension from serving part-time as a member of the General Assembly for 25 years will be at least $168,000 a year, a lifetime increase of around $2.4 million.

His case is an example of how legislators enriched their pensions through a little-known law they passed in 2005 without any public hearings, in seemingly a planned maneuver to take advantage of the confusion during the mad rush of bills in the closing days of the session.

The main element of the bill allows legislators to base their legislative pensions on the average of their highest three years of taxable income in local or state government jobs after (or before) their legislative service.

Other examples

• House Speaker Greg Stumbo’s four years as attorney general boosts his legislative pension about $1.1 million
• Sen. David Boswell’s four years as commissioner of agriculture boosts his legislative pension about $700,000
• Former Rep. Joe Barrows' Homeland Security job, which he started last month, will boost his legislative pension about $850,000
• Former Rep. J.R. Gray’s $136,000-a-year job as secretary of the Labor Cabinet boast’s his legislative pension about $1.8 million — all for working three years.

The above examples are payouts based on a life expectancy table and on an assumption the legislator has not previously started his legislative pension.

The 2005 “reciprocity bill” enriches legislators so much it makes the 1982 “greed bill” pale in comparison. And it handed the office of the governor a new tool that he and all future governors can use to sway legislators on votes and even to resign their seats, as former Sen. Charlie Borders did last month.

In short, the bill has changed the dynamic of legislative politics — and lobbying. Recently, a source told me, “A lot of legislators have asked the governor for jobs.”

Governor offering senators enriched pensions and state jobs in exchange for open seats

2009-07-31T13:59:00.005-04:00

And what is giving “slot machines at racetracks” its extra zip right now and causing a buzz around the capitol about a possible special session before year’s end? The enabler is enriched pensions for legislators!

Saving Kentucky’s signature industry and finding good people to serve in government has been the governor’s spin on slots and on a Republican senator’s departure from the Senate. But in reality the taproot, which has given rise to the new zip and buzz, is lawmakers’ pensions.

It’s a new twist that has embolden the pro-gambling forces — leading them to think the Democrats could, possibly, gain control of the Senate and, therefore, the Legislature could enact a slots bill before Christmas.

The governor can now bestow government jobs worth $1 million or more in extra pension benefits in exchange for a lawmaker’s resignation from the Senate, creating an open Senate seat that Democrats might win in a special election.

In fact, the governor did just that with Sen. Charlie Borders, R-Russell. Borders was chairman of the Senate A & R Committee where the slots bill died in the June special session. He resigned earlier this month from the Senate to take a $117,000-a-year job in the Beshear administration.

And that was the first use of a new tool the 2005 General Assembly handed to the office of the governor. Without it, slots would be on hold until the regular session of the General Assembly convenes Jan. 5.

The 2005 law was introduced in the legislative process by the Senate Republican leadership. Gov. Ernie Fletcher recognized the magnitude of the bill, apparently; he could have vetoed it, signed it, or it let it become law without his signature — he chose the latter.

The bill lets all lawmakers who were serving at the time of its enactment (and all future lawmakers) to enrich their own pensions, not in small potato amounts but whoppers. They did it in the formula used to calculate their monthly retirement benefits as part-time legislators. In a nutshell, they fixed it so that henceforward they would draw a pension for the years they served in the General Assembly, but it could be based on pay they received from government jobs after they left the legislature (or before they came) — and not on their pay as legislators.

For example, Sen. Ken Winters’ legislative pension, once he retires from the legislature, would be based not on his pay as a senator but on his pay as a dean at Murray State University. The difference can be substantial, obviously.

Back to Borders: His appointment, as one of the three commissioners at the PSC, is a four-year job. He can apply his PSC salary, which is three times higher than what he earned as a senator, to the formula used to determine his Senate pension. Instead of his Senate pension being based on $43,594 a year (his “high-three” as a senator), it will be based on at least $117,000 (his “high-three” as a PSC commissioner) — a gift of at least $737,516 for playing ball with the governor. And that’s not counting the salary at the new job and a second government pension from the PSC. And if he “bought” extra years of service, which he likely did, then the $737,516 would be low ... maybe add another $200,000.

Borders’ appointment does not necessarily mean the Democrats will pick up the Senate seat he vacated — he felt comfortable with that before taking the state job. The special election, which the governor set for Aug. 25, will be competitive.

Rep. Robin Webb, a Carter County lawyer, is the Democratic nominee. Dr. Jack Ditty, a Greenup County dermatologist has the Republican banner. And, an Independent from Greenup County, Guy E. Gibbons Jr., has filed.

The larger point is, the GOP-controlled Senate handed the office of the governor a very powerful tool that Beshear and all future governors can use to lure lawmakers out of their duly elected seats, and moderate their voting behavior on important legislation by dangling the bait of $500,000 to $1 million or more in extra monthly retirement checks, accessed through a high-paying state job for three years, a la Borders.

As we’re seeing, this practice could lead to the undoing of a party, although it’s doubtful that will occur this year. And someday there will be another Republican governor and the table will turn. Further, it erodes the legislative independence that legislators have fought to gain, beginning in 1980 during the Brown administration.

A funny thing happened on the way to enriched pensions

Talk about unintended consequences! The 2005 bill empowers the office of the governor over the legislative branch in ways unimagined when the GOP Senate leadership inserted the self-enrichment pension language in an innocuous bill that came over from the Democratic-controlled House, HB 299. Four of the five Senate Republican leaders — David Williams, Dan Kelly, Richie Sanders, and Dan Seum — voted for the bill on the Senate floor. Sen. Katie Stine, president pro tem, was one of six Senate members who did not vote.

It passed the Senate 30-2, and later that same day it passed the House 48-36. Four of the five House Democratic leaders — Jody Richards, Larry Clark, Rocky Adkins, and Joe Barrows — voted for it; Bob Damron, majority caucus chair, was one of 16 House members who did not vote when the bill was called up.

Mixed together, slots for the horse industry and higher monthly pension checks for lawmakers, they have created a concoction, which is making the GOP wobbly. If continued, it could put the Republicans’ 10-year dominance of the state Senate at risk and affect the party’s viability after the next round of legislative redistricting, likely in late 2011, once the numbers from next year’s decennial count of the population have been crunched.

Governor’s options with GOP senators are narrow

When the governor looks at all of the GOP senators and asks, who, in addition to Borders, could I offer a state job in exchange for an opportunity to turn their vacated Senate seat over to a Democrat, the focus has to be on the freshman class of 1991 — four new faces: Republicans Charlie Borders, Dan Kelly, Tom Buford and Democrat Bob Leeper.

It’s no secret. The governor and his allies want a slots bill enacted prior to January, before the 2010 Legislature convenes. The reason they want it now instead of trying to get the question on the ballot for a vote of the people next year is speculative, but it’s also plain: (1) on the ballot would risk being voted down; (2) on the ballot would risk spreading the locations beyond racetracks; and (3) on the ballot would likely bring out the kind of voters who tend to favor Republicans. So the push is on to do it now.

The governor has broad powers, spelled out in the constitution, to make appointments in every local and state government entity — except the General Assembly. Only the people can fill a vacancy in the House and Senate. The governor, however, decides when a special session will be, and only he can sign the writ to hold a special election. First, in accordance with his slots strategy, he dangles the pension-carrot to lure certain lawmakers out of their seats.

Presently, the Republicans hold a 20-16 advantage in the Senate, and there’s one vacancy (Borders) and one Independent (Bob Leeper of Paducah, who caucuses with the Republicans). So the Dems would need a pick-up of four seats to take control. Four take-aways, in four special elections, before January? That’s not likely; nor is three for a tie.

In practical terms, the governor’s options in helping the Democrats take over the Senate by January are limited. Pensions can be attractive at the moment for only a handful of GOP senators, those who would have served 20 years or so when their current term expires (some senators may have “bought” extra years’ credit, but that information is unavailable to the public); further, only those in districts where voter performance suggests there could be a Democratic take-away in a special election would be on the governor’s pension gift list.

A review of the Senate roster reveals that the twin tests of tenure and voter performance indeed narrow the field exclusively to the 1991 freshman class of Borders, Buford, Kelly and Leeper.

Borders is gone, and Kelly is next (it’s widely believed). The governor will appoint him to the bench maybe as early as two or three weeks after the Borders special election, some believe. Kelly would become a circuit judge.

That narrows the field to Buford and Leeper. Buford will stay in the Senate, because his replacement would likely end up being another Republican, possibly Rep. Stan Lee of Lexington. Buford votes occasionally with labor and the Democrats, and he is a firm “yes” vote for slots; Lee is a staunch conservative, perhaps the most hard-right member of the Legislature.

Rep. Bob Damron, D-Nicholasville, lives in Buford’s district and could possibly win the seat in a special election, but sources say Damron “absolutely” won’t give up his leadership post in the House (he’s majority caucus chair) to run for the Senate. Besides, Damron recused himself from voting on the slots bill during the June special session because his employer, Ross Sinclair & Associates, is an owner of Thunder Ridge, a racetrack in Prestonsburg.

Sen. Leeper won’t resign either (that’s the latest scoop). He came to the Senate in the ’91 Class as a Democrat, the only new Democrat in the Senate that year. Since then he has switched party affiliation not once but twice. In 1999, he joined the Republican Party, and he was re-elected as a Republican in 2002. Three years later he left the GOP and became an Independent; and he won re-election under that banner in 2006.

A source said, “There are only so many times you can switch parties.” Nonetheless, Leeper has won elections as a Democrat, Republican and Independent — and he is believed to be the only person in the history of the Senate to do that. His re-elections have been tough, however, and next year could be equally grueling. He voted against slots in the June special session in the Senate A&R Committee, which he now chairs, following Borders’ departure from the Senate.

Leeper’s re-election prospects remain iffy, in part because of party affiliations. In his district, 69.0 percent of the voters are registered Democratic — the seventh highest among the 38 Senate districts. So, the slots industry would be expected to bring in the howitzers, the big guns, in this district next year, especially if Leeper’s on the ballot.

Facing all of that, Leeper seems ripe for a state job offer, and he has had discussions with the administration about that, we’re told. But the discussions are no longer about Leeper resigning from the Senate. The focus with Leeper now by the slots advocates is to try to sway him to switch his caucus attendance — stay an Independent but join the Democrats’ caucus; and, of course, they want him to change his vote on slots to a “yes.”

On paper at least, it has to be tempting for Leeper. He could leave the Senate now and take a state job, such as deputy secretary of the Health and Family Services Cabinet, the same $125,000-a-year job that former Rep. Steve Nunn left a few months ago, which is still open; and Leeper’s decision on whether to take it, weighed against the uncertainty of next year’s election, could be a tough choice — about $800,000 extra in his monthly retirement checks, maybe around $1 million (figured on life expectancy).

That’s for working in the Democratic administration just three years, not counting the salary that would come with the job and also a second government pension. Said another way, without the state job, if Leeper, 50, resigns from the Senate (or leaves involuntarily when his current term ends on Dec. 31 next year), his pension for 20 years of service in the General Assembly would be about $1,600 a month vs. about $5,300 a month if he were to take the state job, a difference of $43,952 a year from age 61 through the rest of his life. If he “bought” extra years of service, then the total could be around $1 million.

How a legislator’s retirement draw is determined
The formula for calculating a legislator’s pension has three components: (1) years of service, (2) a thing called the “service credit rate,” which for most legislators is 2.75 percent, and (3) salary, the average of the legislator’s highest three years. For example, 20 years of service x the SCR of .0275 percent x $40,000 annual salary, averaged over three years, equals a $22,000-a-year pension.

Except, there’s more. Any legislator who was serving in the General Assembly in 2005 when HB 299 was enacted, and all future members of the Legislature who participate in the Legislators Retirement Plan, are granted reciprocity with Kentucky’s other five public employee retirement systems — teachers, judges, city employees, state employees and the state police — which means, in effect, that when a legislator retires from the General Assembly and takes a local or state government job, and works at the new job a minimum of three years, his or her General Assembly pension is calculated not on the their legislative salary but on their salary at the new job, using their “high-three” (highest annual salary for three years, averaged). And the ex-legislator begins a second government pension at the new job.

Senate may lose two GOP members

2009-07-10T17:12:00.012-04:00

Hotter right now — and more important in the long-term — than the impending U.S. Senate race, is the battle over slots at Kentucky racetracks. The quest for expanded gambling has evolved into a powerful political storm that threatens the continuation of the Republicans’ 10-year control of the state Senate. The end of an era is in the air, but also up in the air. Only a fool would count out Senate President David Williams’ ability to parry this bayonet thrust by the governor on behalf of the horse industry.

It’s that serious. Sen. Williams’ political life and the relevance of Republicans are now at risk because they oppose — they stand in the way of — allowing video lottery (slot) machines at Kentucky’s racetracks. The horse-people can’t get the bill past Williams, and they can’t go around him, so with the governor orchestrating, they’re trying to knock him out.

Gov. Beshear is on the verge of appointing two Republican state senators to jobs that would take them out of the Senate: sources say it’s virtually a done deal that within days Sen. Dan Kelly of Springfield will become a Circuit Court judge, to fill an unexpired term that would keep him on the bench through 2014; and Sen. Charlie Borders of Russell will become one of the three commissioners at the state Public Service Commission, replacing John Clay, whose term expired June 30.

When asked about the talk of him leaving the Senate, Borders’ reply was, “Any statement pertaining to my future will be made in a public statement at the appropriate time.”

Soon after these appointments, the governor will issue a writ for two special elections to fill the unexpired terms of the senators. The odds are substantial that the Democrats will win both elections.

A former judge-executive in Nelson County, Jodie Haydon of Bardstown, who also is a former member of the state House of Representatives, is prominently mentioned as the Democratic nominee for the Senate seat now held by Kelly; also, mentioned as a nominee is Nicky Rapier of Bardstown, whose father, the late Kenny Rapier, was a former Democratic House leader.

Rep. David Floyd, R-Bardstown, reportedly was interested in making the race, if Kelly takes the judgeship. But Floyd has since made a decision not to run, preferring to stay where he is as minority whip in the House. Rep. Jimmy Higdon, R-Lebanon, is the likely GOP nominee to face Haydon or Rapier in the special election.

In Borders’ senatorial district, Rep. Robin Webb, D-Grayson, is the very likely Democratic nominee to replace Borders, and she would be favored to win the race.

Once a vacancy occurs in the General Assembly, the governor may issue a writ for a special election — but the election cannot occur until at least 35 days after the writ (that gives local officials time to arrange the election and the candidates time to do some electioneering). That timeframe fits the talk — two special elections in September or October.

If the Democrats win both elections, it would change the count in the Senate to 19 Rs, 18 Ds, and 1 independent (Sen. Robert Leeper of Paducah), who caucuses with the Republicans.

Under this development, speculation is that President Williams would name Leeper as the new chairman of the Senate A & R Committee, and name either Sen. Robert Stivers of Manchester or Sen. Damon Thayer of Georgetown to replace Kelly as majority floor leader.

So, the situation in the Senate is now extremely precarious for Williams. There is talk of at least one additional senator in the GOP camp being appointed to a state job by the governor, probably within the next few weeks — if it occurs as all; that’s much more speculative, but it’s highly feasible (the draw is pension benefits for ex-legislators, which Kentucky Roll Call will explain in a story to follow soon).

If all of this comes together for the governor — three take-aways for the Democrats in the Senate — the count become 18 Rs, 19 Ds and 1 independent. In this picture, if Leeper stays with the Republican caucus, it’s a 19-19 tie.

If that becomes so, the governor would be expected to call a special session on slots, because he would be able, probably, to count on at least one maverick Republican joining the Dems on critical floor votes. If a special session call is made, you can pretty well figure a deal has been cut.

We’ll have more soon.

Note: Sources say that on July 21, Gov. Beshear will introduce Louisville Mayor Jerry Abramson as his running mate (lieutenant governor) in his bid for re-election in 2011. The announcement would include a fly-around to introduce Abramson out in the state.

Slots no super election weapon

2009-07-08T15:40:00.001-04:00

Those who may be thinking that the Democrats can ride the slots issue all the way to taking control of the Senate in next year’s elections may find the task more daunting than first imagined. The issue seems to be more about geography than political affiliation.

Therefore, it’s probably overblown as an election weapon for the Democrats. We say that based on our study of where the slots-related school and university buildings would have gone had the slots bill not died in the special session in the Republican-controlled Senate.

At an impressive, late-evening rally of horse people, around 900 strong, at the Keeneland racetrack on June 24 – the day the special session adjourned sine die without passage of the slots bill – leaders of the event made it clear that they want new leadership in the Senate.

Gov. Beshear, one of the speakers at the rally, said, “We either need to change some of the senators’ minds, or change some of the senators.”

And former Gov. Brereton Jones referred to Senate president, David Williams, R-Burkesville, as a “dictator,” and said it takes a “revolution” to turn out a dictator. Fighting words, which matched the mood of the occasion.

The Keeneland crowd had fire in its belly: enthusiasm, anger, commitment. It was a powerful display of momentum and spirit; amazing, really, coming together as it did, just two days after their bill died in the Senate A&R Committee.

The slots bill had passed the House, 52-45, the farthest an expanded gaming bill has gotten since the issue was brought to the legislature in 1990. The House action was a historic victory for the horse industry, even though it was artificially achieved – the votes were not there naturally. The House’s Democratic leaders, led by Speaker Greg Stumbo of Prestonsburg, offered House members – Democrats and Republicans – millions of dollars in school and university projects if they would vote for the slots bill. Incentives, they call it. An old practice.

As proposed in the House budget bill, HB 1 (slots was HB 2), of the $1.2 billion of spending, all from the sale of bonds, $688,697,000 was for an “Urgent Need School Pool” to replace old buildings in public schools; the lion’s share of the rest was for university and technical college buildings.

The horse industry recognizes that the Senate, as long as Republicans control it, could continue to block their efforts to allow slots in Kentucky. That’s not to say the Senate won’t allow that issue, or even full-scale casino gambling, to go on the ballot next year — sending it the people for a vote in the form of a proposed constitutional amendment. There’s a better chance than ever before of that happening.

In next year’s elections, can the Democrats (and their gaming allies) take away four GOP-held Senate seats? Currently, the Republicans have a 21-16 advantage in the upper chamber, and there’s one independent, Bob Leeper of Paducah (Leeper caucuses with the Republicans). With three take-aways, the Democrats and Republicans would share power, assuming that Leeper, if he’s re-elected, continues caucusing with the Republicans.

Of the state’s 38 senators, the 19 even-numbered districts are on the ballot in 2010. Twelve of the 19 incumbents facing voters next year are Republicans, six are Democrats, and Leeper’s the other one.

Incumbent senators on the ballot: Democrats – Boswell, Palmer, Reynolds, Rhoads, Ridley and Worley; Republicans – Border, Buford, Denton, Harris, Kelly, Kerr, Tapp, Tori, Seum, Smith, Stine and Williams; Independent – Leeper.

Using an Excel spreadsheet, we put in the 12 GOP-held Senate districts and then inserted in each, the House districts that overlap. This showed us how the House members in each of the Senate districts voted and consequently the projects. It revealed that the slots vote, or stance, with a couple of exceptions (Sens. Kerr and Harris), is not likely a hammer the Democrats can use in most of those districts.

Take, for example, the seat held by Sen. Elizabeth Tori, R-Elizabethtown. Four of the five state representatives in her senatorial district voted “no” on the slots bill. The lone rep that voted for slots, Rep. Jeff Greer, D-Brandenburg, got a $4,278,000 school project, but not in Tori’s Senate district – it was in Sen. Gary Tapp’s, and he’s not running for re-election. Even Democratic Rep. Jimmy Lee voted “no.”

Much ado has been made of Lexington GOP Sen. Alice Forgy Kerr’s “no” vote in Senate A & R. However, no slot-projects were in the budget for her Senate district — nor Democratic Sen. Kathy Stein’s district, also in Fayette County. The lone project for Fayette County was in Sen. Julian Carroll’s district, which includes a slice of Fayette.

Sen. Williams is on the ballot next year, and of the three House members in his senatorial district – James Comer, R-Tompkinsville; Charlie Siler, R-Williamsburg; and Ken Upchurch, R-Monticello – all voted “no.”

More telling, in the mountain counties of Perry, Harlan and Bell where Sen. Brandon Smith, R-Hazard, is up, all three House members in his senatorial district – Fitz Steele, D-Hazard; Rick Nelson, D-Middlesboro; and Tim Couch, R-Hyden – voted against the bill, which tells the rest of us that expanded gambling, at least the racetrack version, is not popular in that region of the mountains.

However, in other mountain counties, voter sentiment may not have mattered as much. Three of the five House leaders assigned to themselves 13.6 percent, collectively, of all slot-projects: Speaker Stumbo – $19,446,000; Majority Floor Leader Rocky Adkins – $41,983,000; and Majority Whip John Will Stacy –$33,538,000. The other two members of the House Democratic leadership, Majority Caucus Chair Bob Damron of Nicholasville and House Speaker Pro Tem Larry Clark of Louisville, had none of the public school projects.

The biggest beneficiary in the House would have been Rep. Don Pasley, D-Winchester, who was set to get $58,883,000, had the slots bill made it through the Senate. The No. 1 recipient of slot-projects overall would have been Sen. R.J. Palmer II, D-Winchester, with $99,745,000.

Among Republicans in the Senate, the biggest recipient would have been Sen. Charlie Borders, R-Russell, whose six counties would have gotten $55,974,000 – most of which was through Rep. Robin Webb, D-Grayson. Webb was in line for seven projects in Carter and Lewis counties, totaling $37,027,000.

In fact, Webb’s projects suggest there were some next-race politics going on. Borders is up for re-election next year, and the Democratic nominee — which could be Webb — can pester him more effectively now to explain why he voted against slots (and the projects), assuming that he runs again.

The allocations of projects were not limited, however, to House members who voted for the slots bill. Rep. Brent Housman, R-Paducah (in the Senate district held by Leeper, who’s on the ballot next year), voted “no”; but, had the slots bill become law, Housman’s House district, and therefore Leeper’s Senate district, would have gotten $17,083,000.

Likewise, in different amounts, for Reps. Comer, Couch and Steele – each voted “no,” but Stumbo nonetheless put in the budget a project in each of their districts, which is to say, he put projects in Sens. Smith’s and Williams’ district whether they wanted them or not.

There’s talk of a second special session to be held in September (we’re working on that story). But if the General Assembly, which convenes in January, enacts a proposal constitutional amendment to be on the Nov. 2, 2010, ballot, the importance of who voted for or against slots in last month’s special session would likely fade significantly, yielding to the argument of “let the people, not the politicians, decide.”

Government dominated state

2009-07-03T21:30:00.007-04:00

This column ran May-June 2009 in the Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Read the newsletter at http://www.kychamber.com/docs/newsletterarchives/MayJune.pdf

Kentucky was once the place the world was coming to, when it was America’s frontier. And for four generations, the rush continued to the land that Alexis De Tocqueville described — in writing about the land watered by the Beautiful River, as the Indians distinguished the Ohio —as “one of the most magnificent valleys which ever has been made the abode of man.”

The lure during the Daniel Boone and antebellum periods ended with the Civil War, and we never regained our economic footing following Reconstruction. As a result, during the last 100 years, the standard of living in the commonwealth has ranked near the bottom among all states. And we’re no longer just stuck in the what-is status, on the brink of being left behind. In Thomas Friedman’s “The World Is Flat” economy, we are at risk of decay.

Did the hand of fate intervene and consign the people of Kentucky to live on less income — and have a lower education level — than citizens in other states? No! Then why is that way? Wealth and poverty don’t just happen.

Over the years, obviously state leaders have turned the economy the wrong way through bad public policies. Changing the course of a state’s economy is not as daunting as it sounds. It’s done one issue at a time: One stroke of the paddle can send the canoe on a new course.

It requires also a business-government partnership, like the partnership created in 1776 from two documents printed that year. “The Wealth of Nations” set in motion an economic system based on economic freedom, and the Declaration of Independence set in motion a political system based on political freedom. Those principles, as partners, created the story of America.

But it was a partnership in Kentucky fewer than 100 years, and then we became a government-dominated state. With business relegated to a secondary role, there should be no surprise that Kentucky’s economic performance, therefore, has been less than mediocre.

The Kentucky Chamber of Commerce, as an organization, can make a difference because government is an institution. “An individual cannot influence an institution; it takes an institution to influence an institution,” observed iconoclastic Harvard economist, the late John Kenneth Galbraith.

The first goal is to create the “condition” for economic growth. Like a tree, an economy functions, one way or another, where it’s embedded. It grows better in the rich soil of free enterprise, because it absolutely depends on laws, written and unwritten, that favor it.

The people play a vital role, too. As a plant needs the sun, rain and soil to sustain it, an economy needs business, government and voters who favor it. Climates, including business climates, vary among states, and even regions in a state, and explain in a large way what grows or wilts.

Low education attainment levels, the kind of government we allow, and the business performance we get: they’re all rooted in the culture and come to fruition in the ballot box.

From here, where do we go? Kentucky’s economy can continue to drift down-river like a log with the ant (government) on top of it enjoying the ride — under an illusion that it’s navigating. Or, with the business leadership potential through the Kentucky Chamber and organizations akin to it, working in a true partnership with government, Kentucky can once more be a place the world is coming to. — By Lowell Reese

Patriots and elections

2009-07-03T21:04:00.012-04:00

This column ran March-April 2009 in the Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Read the newsletter at www.kychamber.com/docs/newsletterarchives/marapril2009.pdf

After the Democratic presidential primary last year in Kentucky, where Hillary Clinton defeated Barack Obama 65.5 percent to 29.9 percent — replicating her victory one week earlier in West Virginia, 66.9 percent to 25.6 percent — the national media began writing about racism in Kentucky, following some comments in exit polling.

Then, when John McCain defeated Obama in Kentucky by 16.2 points, the racism stories continued, speculating that Kentucky rejected Obama at the ballot box because of his color. That’s false.

Kentuckians voted their culture in that race, and will do so again next year in the U.S. Senate race. That’s Jim Bunning’s ace in the hole for his re-election bid, if the 77-year-old incumbent makes the race.

What culture? Scots-Irish, predominately. James Webb explains it in “Born Fighting: How The Scots-Irish Shaped America.” His excellent book on the subject was published in 2004 before he was elected to the U.S. Senate from Virginia.

The people who followed Daniel Boone through Cumberland Gap had a propensity to join the military. The Scots-Irish were 40 percent of George Washington’s army. In the War of 1812, Kentuckians formed one-fourth of General Andrew “Old Hickory” Jackson’s army — 2,500 Kentuckians. More than Tennessee provided. Yet, Tennessee got its nickname, “The Volunteer State,” because 1,500 Tennesseans answered then-Gov. Willie Blount’s call for volunteers for Jackson’s army. Of the soldiers killed in that war, 64 percent were Kentuckians.

In World War I, Kentucky claims Breathitt County as the only county in the nation that did not have to draft a single man. To this day, patriotism — love for America — thrives in Kentucky.

Obama lost here because his core values did not match up with Kentuckians’ values. He was the most liberal of all U.S. senators, according to the National Journal.

The presidential election in Kentucky last year turned on patriotism in the aftermath of 9/11 and the subsequent two wars — with war hero McCain vs. a culturally confusing opponent — an observation supported in part by documentation on how America voted when compared to the number of living military veterans in each of the 50 states, in the nation’s 435 congressional districts and in Kentucky’s 120 counties.

Those states with the least number of veterans, as a percent of the population, gave Obama the presidency. In fact, he won 49.6 percent of the 270 electoral votes needed by winning New York, California, New Jersey, Illinois and Massachusetts — the five (out of six) states with the smallest veteran population. McCain won in Utah, the fifth lowest.

Of the nation’s 435 congressional districts, Obama won 241 to McCain’s 194. Once again, Obama did best where veterans were fewest. Although he won 24 percent more districts than McCain did, the average number of living veterans in the districts won by McCain was 62,003, compared to Obama’s average of 48,763.

In Kentucky, more than one in 10 adults (10.86 percent), age 18 and over, has served in the military — not the highest in America; in fact, we rank 34th, but keep in mind, the data reflects where the veterans live, not from where they entered the military. Hardin County has the highest population of veterans at 18.60 percent. The lowest is 4.45 percent in Magoffin County.

In presidential races, Kentuckians have a history of voting wide margins against liberals: Richard Nixon defeated George McGovern by 28.6 points; Ronald Reagan defeated Walter Mondale by 20.8 points; George H.W. Bush defeated Michael Dukakis by 11.7 points; George W. Bush defeated Al Gore by 15.3 points and John Kerry by 19.9 points. So McCain’s wide margin over Obama does not paint a picture of racism — it’s more about patriotism. Being patriotic means defending your country against all threats, foreign and domestic, on the battlefield and at the ballot box.

So, what can we make of this, as we look to Bunning’s re-election bid during Obama’s mid-term? The party of the president usually doesn’t do well in federal elections during his first mid-term. Bill Clinton is an example: The Republicans that year captured control of the Congress for the first time in more than 40 years. Remember how they morphed Democratic candidates into images of Clinton?

If the economic recovery is somewhat rosy next summer, Obama would be less of an issue in Bunning’s race. Either way, no challenger to Bunning — Republican or Democrat — is likely to be successful without standing up forcibly for the principles embedded in Kentucky’s culture. It’s expected to be an ideological race, and for that reason, some GOP leaders see Bunning as a good matchup against the candidate representing Obama’s party. Who could do better in an ideological race, they contend, than an ideologue? — By Lowell Reese

A cheerless report card

2009-07-03T19:55:00.003-04:00

This column ran in the January-February 2009 issue of Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Go to www.kychamber.com/docs/newsletterarchives/janfebweb.pdf

An editorial writer at the Lexington Herald-Leader recently reminded us “Kentucky is a very poor state.” Okay, but how do they know that for sure? Well, they know it because there is an economic measurement called “per capita personal income.” Last year, Kentuckians had $124 billion in income, on average, $30,787 per person. In the United States, the average per person was $38,564, a 20 percent discrepancy.

Two months ago, the U.S. Bureau of Economic Analysis released personal income figures for 2007. It shows that Kentucky’s economic performance had dropped from 80.31 percent of the U.S. average the year before to 79.83 percent, a fraction below what it was in 1975 — 25 years before the Kentucky Education Reform Act of 1990 was enacted.

In 1975, when Kentucky’s per capita personal income was 79.96 percent of the U.S. average, we ranked 46th among the states, ahead of Alabama, South Carolina, Arkansas and Mississippi, respectively. Since then, Alabama and South Carolina have surpassed us. Today, we rank 45th among the states, ahead of New Mexico, Arkansas, Utah, West Virginia and Mississippi, in that order.

Most experts in the field of economic development agree that in the long term the only way for a state to grow income is through education. So, something’s amiss here.

In his State of the Commonwealth address on Feb. 4, Gov. Steve Beshear said it’s “time for a thorough review” of KERA. While the new BEA report probably didn’t precipitate the governor’s decision, the two events are connected; education and the economy are like two wheels on an ox cart — they have to roll forward together. A problem on one side affects the other.

We know there are structural problems in Kentucky’s economy, which may be more to blame for our economic plight than low education attainment. Either way, the problems can only be fixed through favorable public policies enacted by the General Assembly, with community support. And that’s not going to be easy, for we live in a culture where the importance of education is not an urgent matter and economic illiteracy is pervasive.

The federal government began tracking per capita income growth at the state level in 1929. At that time, Kentucky’s per capita income was $388, and we were ranked 40th among the states. South Carolina had the bottom slot at $267. At that time, we were also ahead of Alabama, Georgia, North Carolina and Tennessee, but all of them have soared ahead of us. Even Mississippi has beaten us over the past 78 years, in terms of closing the gap between the rich and poor states. From 1929 to 2007, Mississippi gained 34 percentage points in the rankings to Kentucky’s 24.2 percent gain.

Kentucky is in the southeast region for economic statistics. We did not join the South in the Civil War, but today we compete for business with some of those states. Of the 10 states in the “Old Confederacy” — Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Texas and Virginia — every one of them has out-performed Kentucky since 1929 in closing the income gap.

Not all of Kentucky is poor. The U.S. Department of Agriculture has a 9-category code system that it uses to identify each of the nation’s 3,111 counties as urban, rural or very rural. Kentucky has 35 urban counties, five of which have incomes equal to the national average, or above. And those five counties — Fayette, Jefferson, Kenton, Oldham and Woodford — make up 29 percent of the state’s population. The average income in those five counties is 106.5 percent of the U.S. average. So, about one-third of Kentuckians are doing okay.

The rest of the urban counties in Kentucky are below national parity. The situation is worse in the rural counties and really bad in some of the state’s 62 “very rural” counties — of which half are not in Eastern Kentucky.

In 1929, the average Kentuckian’s income was 55.59 percent of the average American’s. Today, in 24 rural and very rural counties in Kentucky, the combined average income is just 51.36 percent of the U.S. average — below what it was for the state in 1929. That is to say, the people in 20 percent of Kentucky’s counties have income today that is below the level for the state in 1929, believe-it-or-not.

Sure, quality of life counts for 8 percentage points, and that lifts McCracken County to the national parity plateau — to join Fayette, Jefferson, Kenton, Oldham and Woodford. But still, two-thirds of Kentuckians are living below parity.

A lot of people are working hard to make life better in Kentucky. A higher education level is the consensus remedy. While no one has all of the answers, this much is certain: It’s going to take leadership and political courage — and transformational, not incremental, ideas — to rise to the American level and compete in the global economy. — By Lowell Reese

Commentary on the Fourth Estate

2009-07-03T19:39:00.001-04:00

This column ran in the November-December 2008 issue of Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Go to www.kychamber.com/docs/newsletterarchives/novdecfinalpdf.pdf

Drawing on my experiences from 18 years in the news business and 17 years as a state chamber of commerce executive, I want to pass on some observations about the media and its influence on the performance of business.

Newspapers are major, highly effective players in Kentucky society and government. They exert great influence on the state’s political life and, as a result, the state’s economic well being. Nearly everyone in government and business who cares about the future of Kentucky reads one or both of the state’s two largest newspapers (or one of the state’s 25 daily newspapers, of which only three — The Paducah Sun, Bowling Green Daily News, and Kentucky New Era in Hopkinsville — are now locally owned).

Nearly all of the news on state politics and state government that’s provided to the 4.2 million people of Kentucky is filtered through a dozen or so reporters; the number rises a bit during a legislative session. And not only is Kentucky politics and state government news filtered by a small group of reporters, nothing is news until they decide it’s news. Therein lies a lead-in to my main point.

Editorial opinions don’t always stay on the editorial page; they can creep in silent steps unnoticed to the front page, and the editorial pages of the state’s two largest newspapers are aligned with the New York Times more than the Wall Street Journal.

There are several causes of editorial creep. First, no reporter trying to be fair and professional can write a sentence without little bits of the writer being portrayed in the words.

As language passes through a writer’s mind something happens akin to bees making honey. As described by naturalist John Burroughs (1837-1921): “The hive bee does not get honey from the flowers; honey is a product of the bee. What she gets from the flowers is mainly sweet or nectar; this she puts through a process of her own, and to it adds a minute drop of her own secretion of formic acid. It is this special personal contribution that converts the nectar into honey.”

And writers contribute minute doses of attitude — shades, colors and accents — that can turn ordinary news into subtle commentary.

Another cause for editorial creep is story selection. Choosing all the news that’s “fit to print” is, in fact, an editorial process; and headline writing definitely is.

And then, there’s the new approach to journalism started by the Pew Charitable Trust a couple of decade ago. It’s called “community” or “civic” journalism, the aim of which, according to its co-founder, is to “help public life go well by reengaging people in it.” In other words, instead of explaining the community, convene it; instead of exploring the issues, solve them; instead of exposing wrongs, campaign against them.

Max Frankel, a former executive editor of The New York Times, said, “The ardent civic journalists of today are not content to tell it like it is, they want to tell it and fix it all at once.”

The media are players; they don’t just reflect the news.

In his book, “Democracy in America,” the French genius Alexis De Tocqueville wrote, “A social condition is commonly the result of circumstances, sometimes of law, oftener still of these two causes [society and law] united.”

Social conditions, De Tocqueville said, “may justly be considered as the source of almost all the laws,” and this is where the media come in so strongly. Ideas regulate a society; and the media are at the center of opinion-making.

While Kentucky’s making progress in some areas, in education, for instance, on economic well being we dipped last year in per capita income from 80.3 percent of the U.S. average among states to 79.8 percent, one-tenth of a point lower than we were 32 years ago in 1975.

If the media are going to engage in civic journalism, they have a responsibility to be a partner, along with educators and other groups, such as the Kentucky Chamber of Commerce, in leading the state forward through innovation and global-competitive thinking. — By Lowell Reese

Election roots and risings

2009-07-03T19:23:00.008-04:00

This column ran in the September-October 2008 issue of Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Go to www.kychamber.com/docs/newsletterarchives/septemberoctober2008.pdf

Kentucky is not a battleground state in terms of electing the next president, but the outcome of state House and Senate elections next month can alter Kentucky politics and, therefore, the state’s economic future. A growing economy depends on laws that favor it. More than just controlling the state’s purse strings, the 138-member General Assembly controls the rudder of the commonwealth’s ship of state.

In the state legislature today, power is shared. The Democrats hold a 61-36 edge in the House, where there are three vacancies. The Republicans hold an eight-seat advantage, 22-14, in the Senate (there is one vacancy and one independent). Those numbers will probably change slightly in both chambers once all the ballots have been counted on Nov. 4, but the Democrats will continue to dominate the House and the Republicans will still control the Senate.

Being the minority party statewide, the Republicans don’t need to control both chambers of the General Assembly, or even to have one of their own in the governor’s chair, to make a difference. By controlling the Senate, they have veto power over proposals from the governor and House Democrats. And all policy changes must be filtered through a Republican Senate. This control could continue another decade, at least, because the senators elected this year and in 2010 will redraw the district boundary lines for the Senate based on the 2010 U.S. Census. And any new lines will be favorable, no doubt, to future GOP candidates for the Senate.

Kentucky has been a competitive two-party state since 1994 — at the state level. Democrats still control about 70 percent of the offices in county governments. Obviously, something is different at the state level, and, that is, local politics is not about philosophy; it’s about friends, relationships, jobs and keeping the weeds cut. At the next level, in Frankfort, philosophy (cultural values and opinions about government and the economy) becomes important to voters, and philosophy is even more important higher up the ladder to Washington.

Since the early 1990s, the GOP has gained ground in the state Senate, the governor’s chair (2003-2007), and the Washington delegation, which today is 6-2 Republican. However, that has not been the case in the state House. In 1992 there were 68 Democrats, and after the election next month that number still will likely be 66 to 68. The Senate has shifted; the House has not. Why?

One factor is, House districts are smaller. Therefore, House members, as they like to say, are closer to the people, meaning also they are closer to the local governments, which are run mostly by Democrats.

Republican Gov. Ernie Fletcher’s defeat last year was not a referendum on the values of Kentucky’s citizens; it was a vote on a change of leadership. There’s no evidence of a paradigm shift in values. In fact, while Democrats outnumber Republicans 1.6 million to 1 million in voter registration, the picture is different on voter performance. Around 20 percent of Kentucky Democrats tend to vote Republican in state and federal elections (attracted by philosophy). The Democrats still have the advantage in state and federal races, but it’s a slim 3 or 4 percentage points — a competitive situation.

In the Senate elections next month, two Republican incumbents, Sens. Ken Winters of Murray and Jack Westwood of Crescent Springs, are in competitive races. And the open seat being vacated by Republican Sen. Richie Sanders of Franklin is up for grabs. The Democrats have three Senate seats in play — Sens. Tim Shaughnessy and Perry Clark of Louisville, and Sen. Joey Pendleton of Hopkinsville, which has tightened. Much is riding on those six races.

The Democrats could gain two or three seats … or lose one or two. Either way, the Republicans will maintain control of the Senate.

Voter turnout on Nov. 4 is expected to be high, and that could affect the outcome of some close races, including the state Senate races and U.S. Sen. Mitch McConnell’s bid for re-election. With exceptions, a high voter turnout would help Republicans. In rural areas of the state, it’s estimated that one-third of the Democrats are “yellow dogs.” Since the Ds outnumber the Rs in voter registration, once all of the yellow dogs have cast their ballots, the remaining Democrats, especially the so-called “Reagan Democrats,” are potential crossovers. — By Lowell Reese

Forgotten Fundamentals of Freedom

2009-07-02T22:46:00.004-04:00

This column ran in the July-August 2008 issue of Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Read the newsletter at www.kychamber.com/docs/newsletterarchives/julyaug2008.pdf

At the Kentucky Chamber of Commerce’s Annual Meeting recently in Louisville, banquet speakers Donna Brazile on behalf of the Democrats and Tucker Carlson on behalf of the Republicans gave entertaining but serious insights on the presidential candidacies of Barack Obama and John McCain. Four days later, at the 128th Fancy Farm Picnic, incumbent U.S. Sen. Mitch McConnell and his challenger Bruce Lunsford kicked off the unofficial start of the November elections in Kentucky.

What’s important about all of that, frankly stated, is liberty and standard of living. The government, which is run by people we elect, is fueled by our freedom and our money. In other words, government wants only two things: take our money and tell us what to do.

That the rules of government influence the performance of business is a given. In fact, human progress depends on economic progress, and economic progress depends on laws, written and unwritten, that favor it. The economies of all states and nations develop better where free enterprise is public policy.

That’s an old-fashioned idea, of course — but old-fashioned ideas built our nation. It began when the Pilgrims landed at Plymouth Rock with an anti-government bias. Then, in 1776, two great documents were published that changed the world. The Declaration of Independence, by Thomas Jefferson, set in motion a new political system based on political freedom. The Wealth of Nations, published by Adam Smith, set in motion a new economic system (called free enterprise) based on economic freedom.

Those two systems, working together in a partnership, government and business — both founded on freedom — created the story of America.

The miracle called America had two additional firsts:

1. The Declaration of Independence was the first document ever to declare the pursuit of happiness as a national goal. Actually, the phrase “pursuit of happiness” was an evolution of English philosopher John Locke’s theory on natural rights. Locke wrote that man’s three natural rights consist of “Life, liberty and property.” However, in 1776, “property” was too controversial because of its class connotation. “Pursuit of happiness” was picked as a substitute to ensure popular and prompt acceptance of ratification by the Colonies.

To survive, we must have liberty to take actions in pursuit of our hopes and dreams; and we must be allowed to acquire and possess property — the fruits of our labor. We must have something to live for, as well as something to live on.

2. In 1787, our nation’s Founding Fathers organized a government under a new Constitution with a Bill of Rights, which for the first time in history set a limit on how bad government could get. A high priority was placed on curbing the authority of the state, because the Founding Fathers knew that once the government was created it would set limits on the citizens. Jefferson forewarned that a limit on government was necessary because, “The natural progress of the state is for liberty to yield and government to gain ground.” These fundamental principles remain forever in peril.

Indeed, America today is drifting away from its constitutional plan.

If Paul Revere could return for a visit, he would find that our nation’s enemies are hard to detect. Unlike the British, they don’t wear red coats. As Pogo said, “I have met the enemy, and he is us.”

Given a second chance to place his lanterns in the Old North Church and complete another midnight ride, Paul Revere would surely do two things differently:

1. Instead of using two lanterns to signal the enemy’s approach — one if by land, two if by sea; he would use a third lantern, three if from within.
2. Instead of warning, “The red coats are coming! The red coats are coming!” — he would have warned on his midnight ride, “Pogo was right! Pogo was right! — By Lowell Reese

Sinkholes

2009-07-02T22:36:00.003-04:00

This column ran in the May-June 2008 issue of Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Read the newsletter at www.kychamber.com/docs/newsletterarchives/mayjune2008.pdf

Public-pension plan at a point of desperation

Kentucky’s public-pension plans are draining state and local budgets “to the point of desperation,” as Sylvia Lovely, CEO of the Kentucky League of Cities, describes it. The state’s pension systems are short $26.6 billion. Worse yet, the systems are going deeper in the hole at the rate of $800 million a year, or $2.2 million a day.

And there’s no escape or forgiveness. State and local governments have inviolable contracts to provide employee pensions, and the contracts cannot be broken.

As a result, essential services like education are being squeezed, and huge pressure is building for raising taxes.

This is not just a Kentucky problem. BusinessWeek magazine reported in 2005 that the nation’s 125 largest public employee pension plans were short $278 billion. Even states with well-funded plans are struggling to meet their obligations. The problem: poor stock market returns and costly hikes in benefits driven by health care.

Public employees receive higher pay and better pensions on average than the rest of us.

Nationwide, their retirement benefits are 60 percent higher than in the private sector, according to the Employee Benefits Research Institute. Further, 90 percent of state and local workers have a defined-benefit pension with a guaranteed payout, but only 24 percent of workers in the private sector have such plans.

In Kentucky, state employees have perhaps the best salary-benefit package in the U.S. When former Gov. Paul Patton authorized a formal structure for labor unions to organize state employees seven years ago, a spokesman for a coalition of state workers — who didn’t want the unions — described salaries and benefits for Kentucky’s public employee as “best in the nation, second to none.”

About that same time, a U.S. Department of Labor spokesman told The Kentucky Gazette that the annual salaries of state workers in Kentucky were higher than salaries in the private sector by 9.1 percent ($30,213 to $27,691).

Former Gov. Ernie Fletcher appointed the Blue Ribbon Commission on Public Employee Retirement Systems, which studied Kentucky’s pension crisis and offered its recommendations, in December 2007. Many of the suggested remedies dealt with reducing rich benefits for new hires. But the legislature adjourned sine die April 15 without taking any action.

Consequently, the unfunded liability of Kentucky’s pension plans continues to grow by $91,299 an hour. At that rate, it will grow $600 million before the General Assembly convenes for its next regular session in January — and that’s not counting what may be coming by October, when the state’s pension programs are expected to announce that investment returns this year are the lowest in at least 10 years. The funds could miss their target by nearly $2 billion, a source said.

Meanwhile, Gov. Steve Beshear plans to call the General Assembly into special session on June 23 to address pension reform — and on June 10 House and Senate leaders announced they had reached agreement on the legislation.

The governor’s agenda for the special session would reduce benefits for new hires, reform double-dipping and make a few other important changes, but it fails to address some controversial big-ticket items — such as health care costs, 401(k)s, and a separate pension program for city and county employees. The governor has kicked the really hard choices into a working group that will give him a report by Nov. 1.

The governor’s recommendations, if enacted, would not actually reduce the unfunded liability of the pension systems; it would only reduce the rate of growth of the new accumulation. Instead of the unfunded liability accumulating at $800 million a year, the governor’s plan would trim it to $300 million. But even that figure is questionable. The savings from legislative action on the items the governor has proposed could be as low as $60 million, with the other $440 million coming from increased investments and from a health insurance law enacted in 2003.

The point being, a special session this month would be helpful, but the really hard choices are not on the table yet. And the continued accumulation of unfunded liability is scary. — By Lowell Reese

The two-party factor

2009-07-02T22:16:00.005-04:00

This column ran in the March-April 2008 issue of Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Read the newsletter at www.kychamber.com/docs/newsletterarchives/marapril2008.pdf

Steve Beshear became governor last year by defeating incumbent Republican Ernie Fletcher by 17 points. The circumstances of the race and margin of victory might have convinced some it was simply a matter of the Democrats reclaiming their domain, the office they have held for all but eight of the last 60 years. History suggests as much — except when viewed in the context of a shorter period.

Kentucky is a two-party state. When Jack Trevey, R-Lexington, died in June 1990, his death reduced the number of GOP members in the Senate to six. But the Republicans held Trevey’s seat and scored four take-aways that year, pushing their number up to 11. Although the election was a presage of what was to come, it went unnoticed as a trend. That would take another four years.

In 1994, when Republicans Ed Whitfield and Ron Lewis won the two congressional seats in Western Kentucky, the Democrats’ Rock of Gibraltar, political watchers began asking, “Could it be, Kentucky’s a two-party state?”

Then, of the nearly one million Kentuckians who voted in the 1995 governor’s race, had only 10,690 switched from Democrat Paul Patton to Republican Larry Forgy, the Republicans could have held the governorship during all of the last 12 years.

In the ‘90s, our state’s Washington delegation moved from a 4-4 split to a 7-1 advantage Republican, and the Republicans made steady gains in state Senate races to the point that in January 2000 they captured the Senate for the first time ever, and that altered the dynamics of the Frankfort political apparatus, if not the paradigm of Kentucky politics. Three years later, Fletcher won the big one.

Beshear experienced the Republican factor in the just-concluded session of the General Assembly to the degree that reporter Mark Hebert (WHAS-TV, Louisville), as a member of a news panel on KET’s “Comment on Kentucky,” after passage of the budget, said, “I think we’d all agree, David Williams [president of the Senate] is the most powerful guy in Frankfort right now.”

That’s a huge contrast from the days not so long ago when the governor on the first floor also ruled the third floor of the capitol.

Even with the GOP’s ascension, the Democrats still hold a slight edge in Kentucky politics. During the GOP’s growth surge in the ‘90s, they gained very little at the county level. In 70 percent of Kentucky’s counties, the Democrats dominate the politics. The picture changes, however, going up the ladder to state and federal offices. With each rung upward, politics become more about philosophy and what people stand for, in contrast to local politics, which is more about relationships, jobs and keeping the weeds cut on the road coming into town.

Further evidence that the Republican Party is alive, post-Fletcher, can be found in the financial conditions of the parties and in voter registration numbers.

According to Federal Election Commission financial reports filed last month by the parties, as of Feb. 29, the Republicans had $479,285 cash-on-hand and the Democrats had $34,121.

In voter registrations, from January 2004 (one month after Fletcher took office) to March 2008, the Republicans had a net-gain of 80,418 and the Democrats had a net-gain of 24,592. That comes to an 8.5 percent increase for the GOP, and a 1.5 percent increase for the Democrats.

Voter performance, however, rather than registration, is the real measurement of party strength. At least 15 percent of the state’s 1.6 million registered Democrats are Republicans in sentiment. Subtract those 242,138 from the Dems’ column and place them with the GOP’s one million, and the Dems’ advantage slips to 48.4 percent to 45.0 percent (or 3.4 points); the rest are Independents.

My conclusion: Beshear came in as governor at a time in Kentucky’s political history like no other, but despite the Fletcher stint, Kentucky remains a competitive two-party state…and seemingly is becoming more so, even now. To win re-election in 2011, Beshear’s best course is to avoid offending the Kentucky majority, which is to say, conservatives.
— By Lowell Reese

The foundation of an administration

2009-07-02T22:01:00.002-04:00

This column ran in the January-February 2008 issue of Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Read the newsletter at www.kychamber.com/docs/newsletterarchives/janfeb2008.pdf

Beshear making a good impression with initial speeches

MAKING A GOOD first impression is important even for a new administration in Frankfort, and Gov. Steve Beshear cleared that hurdle with ease. In his Inaugural, State of the Commonwealth and Budget speeches, he came across as a politically seasoned thinker who can lead the state in a bold new direction. The tone of the speeches, together with sound content, probably upgraded the governor’s stock among fiscal conservatives.

He demonstrated that he’s politically mature, that he recognizes the state’s plight, and that he has a plan and a picture in his mind on how to go about charting a new course for the economy.

Throughout his speeches, he talked about the economy and our need to do better. “Re-engineering Kentucky’s economy” is among his highest priorities, he said, making the point that expanding the base brings in more taxes, which then would enable the state to:

• Afford additional investments in education;
• Make health care accessible to all;
• Invest more in job training;
• Better attack the unfunded liability in the state’s retirement system;
• Keep our young people in Kentucky.

We have a governor who quoted Lincoln, Jefferson, Clay, Shakespeare and Emerson, and gave us, with calm gravitas, a feeling that political economy is an important idea in his life.

All of that from a Democratic lawyer? Who told labor unions during the election that former Gov. Paul Patton’s executive order to authorize state government to enter into “letters of understanding” with unions didn’t go far enough?

We’ll see. Man is the only animal that makes other animals think he’s their friend until he eats them. Therefore, it’s with some hesitation that I say it, but I believe we’ve seen Steve Beshear’s true colors in his speeches.

I like what he didn’t say: he didn’t promise any interest group anything; he didn’t pander; he didn’t beat the populist drum; he didn’t promote himself.

He talked a lot about unseen things: dreams, imagination, ideas, creativity and expectations, and what unites us as Kentuckians.

He talked about getting our financial house in order and building an economy would help Kentucky become America’s next frontier, like in the days of Daniel Boone.

He talked about something that received little attention in the media but could significantly affect the $886 million budget shortfall, and, therefore, higher education, which faces a 12 percent cut in the new biennial budget.

In his State of the Commonwealth address, Beshear said, “Government can and must be more accountable, more efficient and more innovative. That’s why we will be looking for good ideas from every possible source, especially from within state government.” His administration created a Web site to collect those ideas.

Tie that, if you will, to a campaign promise. Candidate Beshear said, if elected, he would immediately do an efficiency study of state government that could save as much $180 million a year. Other states that have performed similar studies have “found savings of approximately 2 percent of their general fund dollars,” he said.

Once private funding now being solicited is in place, the governor will issue an executive order authorizing the efficiency study. Will he announce a figure of expected savings by late March before the budget reaches the House and Senate free conference committee for final passage? If so, the savings could knock out up to 40 percent of the shortfall, coupled with the proposed cigarette tax, conceivably 60 percent to 70 percent.

A final thought on not expanding the economy: “Nothing can enter the public treasury for the benefit of one citizen or one class unless other citizens and other classes have been forced to send it in.” — Frederic Bastiat, 1801-1850.

— By Lowell Reese

Two Kentuckys

2009-07-02T21:37:00.007-04:00

This column ran in the November-December 2007 issue of Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Go to www.kychamber.com/docs/newsletterarchives/novdec2007.pdf

Per capita income in Appalachian Mountain region stuck in the 1940s

ENOUGH OF THE CONDESCENDING jokes about Kentucky by late-night comedians on national TV. Enough of diminished pride in our state because our standard of living is below the national average. Enough of inferiority associated with being at the bottom in too many national rankings.

Enough because Kentucky’s economic situation is not as bad as we’ve imagined all these years, unless you reside in the Appalachian Mountain region where per capita income in some of the counties is stuck in the 1940s.

Kentucky’s per capita income as a percentage of the U.S. average in 1940 was 53.8 percent. The average Kentuckian, on the brink of World War II, had almost 54 cents in his pocket or bank account compared to one dollar for the typical American.

Eleven counties in our state today still have per capita incomes equivalent to the World War II era. And nine of those counties are in Appalachia — Jackson, 46.6 percent; Elliott, 46.8; Clay, 48.4; Lewis, 48.4; Menifee, 48.9; Morgan, 48.9; McCreary, 49.6; Wolfe, 52.4; and Lee, 53.8 (Trimble, 51.9, and Hart, 53.5, lie outside the region). In
Kentucky’s mountain counties, per capita income is only 62.3 percent of the U.S. average.

Now for some image-altering good news: Kentuckians who reside in the flatlands beyond the mountains enjoy a standard of living that is very close to being on par with the typical American once per capita income is recalculated to consider cost of living and quality of life. According to University of Kentucky professors Mark E. Berger and Glenn C. Blomquist, “After taking into account Kentucky’s cost of living and quality of life, the state needs only to reach 92 percent of the U.S. per capita income to be equivalent in real terms.”

The per capita income in Kentucky’s non-Appalachian counties is 89.6 percent, just shy of national parity. Moreover, in the Golden Triangle, (Northern Kentucky, Louisville and Lexington) it’s 96.2 percent.

The route to an equitable share of the American pie — for a state, region or individual — is not a secret pathway with limited access. In fact, it is a series of imprints on the mind, commonly called education. Interestingly, when more of it is acquired, the effect is generally the same … more money in circulation and thus a higher standard of living.

The primary hindrance to economic development in any state is an undereducated workforce, and in Kentucky that problem is a tall oak tree rooted deep in the culture, nourished by low expectations and scarce leadership. In the global market in which we increasingly compete for our livelihoods, it is a condition that, if not ameliorated, will surely limit access to a better life for us.

With that said, every so often a window of opportunity opens, and now is such a time. Gov.-elect Steve Beshear has pledged to make education a top priority of his administration; there’s a drumbeat for educational attainment; and the Kentucky Chamber of Commerce on Dec. 4 released an assessment of the 1997 postsecondary reform law, following a six-month study.

The Chamber report provides a 12-step plan “to improve the state’s economic well being and quality of life through better education using per-capita-income growth as the primary indicator.”

The most promising recommendation by the Chamber — a goal originally set forth in the 1997 law — is to double the number of Kentuckians holding a college degree (many of the other aspects of educational attainment would fall into place if that goal is achieved).

Double the numbers, monitor per capita income — it’s a two-factor theory that offers real hope for building a better Kentucky. If educational attainment can reach a certain higher plateau in our state, Confucius’ saying could ring true here: “Good government is attained when those who are near are made happy, and those far away are attracted.” — By Lowell Reese

Fletcher or Beshear, business has a role

2009-07-02T21:18:00.011-04:00

This column ran in the September-October 2007 issue of Kentucky Chamber News, a publication of the Kentucky Chamber of Commerce. Read the newsletter at http://www.kychamber.com/docs/newsletterarchives/septoct 2007.pdf

ON NOV. 6, KENTUCKIANS will choose their political leader for the next four years. What difference will it make whether incumbent Ernie Fletcher gets another term or Democrat Steve Beshear gets a chance to see what he can do to move Kentucky out of the bottom tier in so many national rankings? Elections are usually won and lost on two or three issues that bother people. But of higher importance in the long term is how the state’s leader views the role of government in society.

Given that government is necessary and the debate is over the boundary line, the philosophical distinction between the candidates is most telling by a single issue: Beshear told some bloggers after the May primary that former Gov. Paul Patton didn’t go far enough in pushing for collective bargaining for state employees; Fletcher favors, and attempted to enact, a right-to-work law.

The rules of government influence the performance of business. And a governor is the most significant player in the public policy arena, working in a partnership with the 138 members of the General Assembly, to make Kentucky a place (ideally) where business development is public policy. Kentucky’s progress as a state depends on economic progress, and economic progress depends on laws that favor it. Creating the right condition is how it works.

Democrats in the state outnumber Republicans in voter registration, 1,605,385 to 1,033,887 (an edge of 1.6 to 1). Even so, since 1994 voters have preferred Republicans enough to make Kentucky a competitive two-party state. But will it remain so, after this election?

Democrats held the governor’s chair for a stretch of 32 years between the administrations of Republicans Louie Nunn (1967-1971) and Fletcher. Steve Beshear’s mentor, Wendell Ford, beat Nunn’s handpicked successor, Tom Emberton, in the 1971 gubernatorial election.

If Beshear wins next month, it could give Democrats visions of deja vu and another run of dominance. In external polls through September, Beshear led Fletcher by 10 to 20 points. Much of that spread can be attributed to the crippling of Fletcher by the Democratic attorney general over the way Fletcher went about finding jobs in state government for Republicans. Also, a strong national wave is pushing the tide against Fletcher’s re-election.

For Fletcher to win a second term, he must hold his Republican base and persuade roughly 125,000 Democrats to vote for him. That’s a tall order, given the playing field and the clock.

Further, Beshear is an experienced and effective campaigner who has demonstrated an ability to parry the blows against him by opponents. These are good attributes as the Republicans try to define him unfavorably, especially on social issues, and bring up the ghost of Kentucky Central Life Insurance Company in the closing weeks of the campaigns.

If elected, Beshear would have to deal with a GOP-controlled state Senate for at least three years. A Fletcher win could solidify the GOP’s growth in the state and fortify his fellow Republicans in the Senate, but the House will remain in the hands of the Democrats for the foreseeable future. — By Lowell Reese

Slots ghost crawls out of Senate A&R coffin

2009-06-22T11:15:00.021-04:00

Based on news reports, the public probably thinks the bill to allow video slot machines at licensed racetracks in Kentucky will die late this evening in the Senate A & R Committee, after having passed the House on Friday. That assumption is mainly a result of the media’s customary practice of reporting on what happened yesterday (the role of newspapers is not to be a Paul Revere). Cancel the funeral this afternoon.

The slots bill is going in the coffin, but its ghost will rise and find its way to another instrument that is being built to receive it.

It’s a long story. But let’s start with the House’s and then the Senate’s actions on Friday. After a hectic week of corralling votes — including offerings of compensation (school and university buildings) to members — the House passed the slots bill, 52-45. The speaker had 54 votes. But Reps. Bill Farmer, R-Lexington, and Ancel Smith, D-Leburn, fell off the wagon.

After the vote, the House did not deliver the slots bill (HB 2) to the Senate for enrollment, and the House promptly adjourned and went home for the weekend without informing the Senate. Had the bill clerk delivered the slots bill to the Senate on Friday, it could have been assigned to the Senate A&R Committee and promptly defeated.

The maneuver kept the issue alive, and, further, it subjected the Republicans in the Senate to some hard lobbying over the weekend.

Only four bills are being considered in the session: the budget, video slot machines, economic development incentives and new bridges across the Ohio. On Friday, after the House adjourned and left town, the Senate passed all four of those subjects.

It stripped a bill that had passed the House (the bridge bill, HB 4) and substituted in its place the governor’s proposed budget, with some minor changes, and passed it unanimously. And it placed three of the subjects — econ incentives, bridges and Senate President David Williams’ alternative to slots — into one bill (HB 3), formerly the econ incentives bill the House had passed earlier in the week; the Senate passed HB 3 by a vote of 32-0. Not a single Democrat stood up for slots, nor voiced any opposition to what was happening.

It didn’t make sense: that after the governor and House Speaker Greg Stumbo had worked so hard to round up the votes to pass the slots bill in the House, that no Democrat stood up for it in the Senate. Obviously, something was going on beneath the surface. With a little digging, we found it.

The Democrats’ and the horse industry’s plan is to keep the slots issue alive — get it to the next real battleground, not the Senate A&R Committee, but to a free conference committee.

As part of the plan, the Democrats would be civil and respectful to Sen. Williams’ and his alternative proposal for aiding the horse industry, so as not to antagonize him anymore than necessary, all the while staying focused on keeping the slots issue alive. That’s why the Senate Democrats went silent in the Senate A&R and on the Senate floor, and voted for Sen. Williams’ plan — he’s carrying the slots issue exactly where they want it to go.

When HB 3 (Williams’ three-one-bill) arrives in the House this afternoon, once members convene at 4 p.m., the House will not concur and then the Senate will not recede. Both chambers, then, will appoint members — for example, maybe seven each — to serve on a conference committee to try iron out the differences. That perfunctory step will fail, as everyone knows.

And the next step in the legislative process is to turn the ordinary conference committee into a “free” conference committee, with authority to strip the language of HB 3 and write new language, which they can do, as long as the language inserted is germane to the title. They can insert the slots language that died (by now) in the Senate A&R; that is, they can insert it if the Senate Republicans on the free conference committee would allow it. It takes a majority of a conference committee’s members from both chambers to approve a free conference committee report.

This sets up a situation where, potentially, the slots bill could reach the Senate floor for a vote by the chamber’s 38 members, even though it had died in the Senate A&R. It’s a plan. But the chances seem no better than in the Senate A&R, because the Senate appointees on the free conference committee will almost surely include Sens. Williams, Dan Kelly, the majority floor leader, and Charlie Borders, the A&R chairman, and other GOP senators who firmly oppose slots.

Adding to the proponents’ woes in the free conference committee, by his placing the bridge bill into HB 3, along with the econ incentives and the slots issue, Sen. Williams has created a potentially hard choice for House Speaker Pro Tem Larry Clark, D-Louisville, who may have to choose whether he wants slots for Churchill Downs or the bridges for Louisville. In a characteristic ploy, Williams is driving a wedge between members of the House Democratic leadership.

Of course, anything can happen from here on out; nothing in the legislature goes exactly as anybody plans. All bills, except maybe the budget, are at risk. Some observers believe the special session will end as early as Wednesday. The future of slots? After a substantial victory in the House — the farthest an expanded gambling bill has gone in 15 years of trying — it might seem that the stage is set for the passage of a proposed constitutional amendment in the 2010 legislative session that would go on the Nov. 2 ballot. But that may not be easy, either: the timing is closer to next year’s elections, and no major vote will be made in the session on anything without a serious contemplation of its effect on redistricting that probably will occur in late 2011.

Jawbone intelligence from the Capitol corridors

2009-06-17T18:28:00.012-04:00

Editor’s note: this column is based on hallway conversations, June 16-17.
The special session of the General Assembly, now in its third day, is moving along at a good clip, especially in the House where most of the action is right now. There are only four bills being considered — the budget, video lottery terminals (slots), economic development incentives and building new bridges across the Ohio.

In the House, Speaker Greg Stumbo, D-Prestonsburg, is sponsoring the budget bill (HB 1) and the slots bill (HB 2), both of which remain in the budget committee; the other two bills are on the Orders of Day in the House, ready for passage.

The budget remains in A & R with the slots bill, in part, because the latter hit a wall yesterday, knocking the wind out of it. The Democratic leadership is holding the budget bill, perhaps as a source of sweets to seduce additional House members to vote for slots. The jailers, for instance, want a slice of the pie — another grassroots group with clout, so they’ve got to work for its passage. And the speaker wants to use some of the money generated by slots to rebuild some schools, inviting the teachers’ groups aboard.

The Senate is more or less waiting for the House bills. However, the Senate has done some work: President David Williams has sponsored and introduced three bills — shadows of the House bills, except for slots. His bills speed the process: each now has received its Second Reading. The fourth bill in the Senate, sponsored by Sen. Dorsey Ridley, D-Henderson, would create a Kentucky Public Transportation Infrastructure Authority pertaining to the bridges (so, two bridge bills in the Senate, one in the House).

It appears that the only substantial controversy remaining in the session is slots, where passage, even in the House, is up in the air. On Monday, proponents felt they had enough votes in the House to pass it (51 are needed); they were confident that their count was in the “mid-fifties.” But that dropped yesterday, erosion possibly linked to former Speaker Jody Richards, who opposes the bill, and may have followers on the issue. A Republican member of the House said, in hallway talk, that the Democrats were re-fighting the race for speaker (Stumbo de-horsed Richards in January); horse-industry lobbyists were confirming the rumor, but were unable to prove it.

Whatever caused yesterday’s slippage, the lobbyists for the horse industry seemed a bit more cheerful this morning. And one of them said to KRC, “The only ones who can pick up votes now are the speaker and the governor, and both of them are working the issue, one-on-one with House members.” Then he added, “If the bill is not out of the House by Friday, it’s in trouble.”

The horse industry held a rally this morning on the Capitol steps to lend support for the slots bill. Attendance was maybe 500, including a strong contingency, carrying signs, from the Jefferson County Teachers’ Association (JCTA). Gov. Beshear addressed the rally, saying it’s hot outside, “But I want you to make it hotter inside” — urging them to visit lawmakers.

Click photo to enlarge it

If the slots bill makes it out of the House, there seems to be greater trouble ahead in the Senate, where the president not only opposes the bill but also controls the agenda. Here’s the potential scenario: The Senate would amend the slot bill, possibly even pass it, but with Sen. Williams’ own proposal inserted as an amendment, which might also include a poison pill for some key aspects of slots. Then, the bill would go to a conference committee, appointed jointly by the House and Senate, to try to iron out the differences. One horse-industry lobbyist said, “Oh, there’s going to a conference committee.”

And where would that lead? The legislature would recess, and the conference committee would continue working. Trouble is, there is no provision in the Constitution, KRS or legislative rules that limits how long the legislature can recess or how long the conference committee can work. To carry the point to the ridiculous, the conference committee could meet until Christmas.

Whoever the members of that committee turn out to be (again, only if the bill passes the House), they are in for some very intense lobbying, on the receiving end. In fact, it appears the horse industry is anticipating this course.

Republican Senate, key battleground for slots

2009-06-15T17:00:00.009-04:00

Long before Republicans climbed their way to the summit of the state Senate in January 2000, party faithfuls spoke of the need to control only one chamber of the legislative apparatus to change the dynamic of Kentucky politics. That has been proven so, time and again during the just-concluding decade —and is about to be accentuated with an exclamation point on the issue of video lottery terminals in the special session that begins June 15.

Some horse industry advocates believe they have the votes in the Senate to pass a slots bill, depending on whether Senate President David Williams exerts his leadership position to kill it or allow an open process. Williams said in a press conference last week, the slots bill does not have the votes to reach the Senate from the House. And he offered an alternative bill that would provide $83 million to the horse industry, principally through a 10 percent surcharge (tax) on lottery tickets. The next day, Gov. Beshear announced that he would not place Sen. Williams’ bill on the special session agenda, thus denying it an opportunity to be heard in the debate.

Of the dueling ideas to give the horse industry a helping hand, one was rejected by the governor. Now, what will the senator do? Here’s what he said about that in two meeting with the press, on consecutive days, last week:

Following Gov. Beshear’s announcement that he would add VLTs to the special session agenda, Williams held a press availability, where he said: “I’ve always said, if a bill [VLT] is passed by the House, it will be sent to the appropriate committee in the Senate. If it passes out of that committee, then it will be heard on the floor. We won’t do any procedural votes to stop it. If it’s got 20 votes, it’ll pass. If it doesn’t have 20 votes, it won’t pass.” Later in the press meeting, he said, regarding his idea for helping the horse industry, compared to VLTs, “If the legislature is not presented the opportunity to consider both of these, I don’t know whether anything will go forward.”

The next day, Gov. Beshear announced that he would not add Sen. Williams’ proposal to the call, Then, Sen. Williams held a “press availability,” during which Kentucky Roll Call asked the senator about his comments the previous day, when he said that unless his alternative proposal for VLTs had an opportunity to be considered, then neither may go forward. And Williams answered, “I said that, in my opinion, if there was not an open and complete discussion, it could very well be that neither of these issues will be addressed. And, I don’t think it’s necessarily by my hands. I think it’s by the hands of the members in the House and of the Senate who will demand that if we are going to address the issues of purses and breeder fund that there be a complete, open and honest discussion, where all of the choices will be on the table. That’s what I meant by that statement, and that’s what my position is.” (This article ran in Kentucky Roll Call, June 15, 2009.)

Kentucky Notes & Quotes

2009-06-15T16:46:00.011-04:00

Grapevine talk on session and slots
This is shaping up to be an odd session, one that could be talked about in the lobbying fraternity for years. The budget shortfall of $1 billion was the impetus for calling a special session, but there was no ‘crisis’ at all, thanks mainly to the high-speed printing presses in Washington; and the president of the Senate insists the shortfall was not $1 billion, but only $129 million when measured against the revised estimates made earlier. And there was no consensus, going into the session, on the most contentious issue in more than a decade — expanded gambling — which dominates the agenda in the form of video slots at licensed racetracks. Nonetheless, all the issues appear to be on a fast track for passage in the House.

An insider told us the House is on course to pass all bills by no later than Thursday, June 18. By Friday of the first week, the members of the House will be sitting around with nothing to do, except wait for the Senate to act, he said.

During just the past week there has been “significant” movement in the House on the slots issue, a source representing the horse industry said. The nose count in the House in favor of the bill is in the “mid-50s,” and that does not count leanings, he said. Fifty-one is needed for passage. From others too, it does appears that the vote in the House could be close. The larger obstacle for passage is the Senate. A spokesman for an organization that’s following the slots issue closely — and opposes it — told us, “there’s no way” it can pass the Senate.

Memoir worth writing & writing for ...
Roy Stevens, who worked in state government as a top aide to Henry Ward, Cattie Lou Miller, Julian Carroll and John Y. Brown Jr., and then 20 years in public affairs at Ashland Oil, is retired now in Western Kentucky, back in his hometown of Princeton. After a career of nearly 40 years in public service and public affairs — including a four-year stint with the Kentucky Farm Bureau, as a writer/editor (UK degree in journalism) — Roy is performing another public service: he has written and published a memoir, which covers the period 1940-72, titled “Grass Roots” (taken from the name of his Farm Bureau column). It’s Book One of what may be a trilogy. A second book, to cover the period 1972-1980, is planned. “Grass Roots” adds to the storage of Kentucky history. It is a self-published, 112-page softback, written primarily for his family and their entire extended families. It’s not for sale. However, after Kentucky Roll Call’s nudging, Roy said he would mail a copy (as long as supplies last) to anyone who requests it; in lieu of payment, send a tax-deductible donation (minimum of $10) payable to: Princeton Animal League, c/o Janice Stevens, 1300 South Jefferson, Princeton, Ky. 42445.
Anyone interested may contact Roy’s daughter, Kelly Stevens Shasky, a Frankfort lobbyist, at kellyshasky@aol.com, cell (502) 395-1661. Or, contact Roy at rstevens@pepb.net. PAL is a non-profit corporation that provides financial assistance to individuals for spaying or neutering their dogs and cats.

Bits and pieces ...
At a press conference earlier this month, where he announced the special session of the General Assembly would begin June 15 to fill a $996 million hole in the FY10 budget, Gov. Beshear said he has cut the state budget $600 million since he became governor 18 months ago, and the state has 2,200 fewer employees — the lowest amount in 20 years.

• Secretary of State Trey Grayson, R-Fort Mitchell, recently mailed a fundraising letter to fellow Republicans, asking for a donation to his exploratory committee for his potential race for the U.S. Senate next year. Typical of these letters, it included a “Personal Reply” form, which offered the recipient the choice of two boxes to check: one to say, “Yes! Trey, you should run. I want the next Senator from Kentucky to fight for our conservative values and stand up against runaway liberalism in Washington ....”; and one to say, “No. I support the big government agenda of Barrack Obama and Harry Reid.” In the four-page letter, Grayson warned against America becoming a “European-style social welfare state,” and said he would, if elected, stand for limited government ... low taxes ...liberty and free enterprise ... strong national defense; and that he would stand against gun control, abortion and same-sex marriages. “I will be a strong conservative,” he wrote. Editor’s note: This is the first time in Grayson’s nearly six years in office that we’ve ever known him to take a stand on matters of political philosophy or the role of government. Of course, as for any secretary of state, there’s no demand for public expressions on one’s values, since the job is mainly about keeping records and overseeing elections.

• Check out the Web site FreedomKentucky.org, a project of the Bowling Green-based Bluegrass Institute on Public Policy Solutions. FreedomKentucky is a wiki-built site, similar to Wikipedia, except it’s focused on liberty-related issues, such as education, government transparency, labor (right to manage, prevailing wage), property rights (smoking bans, eminent domain), and federal stimulus spending. And it links to the Kentucky Constitution, legislators and so forth. (These articles ran in Kentucky Roll Call, June 15, 2009.)

Unpaid holidays ready-made issue for AFSCME

2009-06-15T16:34:00.009-04:00

Under Gov. Beshear’s plan to balance next year’s budget, one part would suspend some paid holidays for state workers. Last week, AFSCME, the nation’s largest public employees’ union and one of several unions now working to organize Kentucky state government, suggested in a press release, without actually saying so, that it is orchestrating a grassroots lobbying campaign by state employees to block the governor’s proposal on suspended paid holidays.

The smallest dollar-item in the governor's five-part plan for balancing the budget has become a not-insignificant controversy. To shave $10.6 million off the $996 million shortfall, the governor wants state employees earning under $50,000 a year to give up three paid holidays; they would take the holidays but not get paid.

State employees earning greater than $50,000 a year would be hit with five holiday no-pays. AFSCME didn’t mention this group in the release, maybe because many of them would be managers. The average salary of a state employee is around $36,000 a year.

The AFSCME release was mild in tone compared to its traditional combativeness on subjects of this nature. The temporary tip-toeing could be the fact that it’s waiting for Beshear to negotiate and sign a written agreement with them to officially be the representative of “more than 8,000 state employees” under Beshear’s own executive order to unionize state government.

In the release, AFSCME chided the governor, saying, “The union continues to wait for Governor Beshear's Administration to begin negotiations with state employees to reach a union agreement.”

Outlook: The House Budget Committee is expected to remove the holiday suspensions from the budget bill, and the full House and Senate would likely go along. If AFSCME wins, it could use the victory as a major point to enroll state employees and begin collecting dues when that time arrives. (This article ran in Kentucky Roll Call, June 15, 2009)

Budget woes play second fiddle to video slots

2009-06-12T16:18:00.029-04:00

The governor, the speaker of the House and the president of the Senate have declared no new taxes, at least not during the special session that begins Monday to fill the $996 million hole in next year’s state budget. Not exactly profiles in courage. They were among the first to know there is no budget crisis. The federal government is giving Kentucky, as part of the stimulus package, $3 billions.

Not all of that, of course, is available to fix the General Fund. The money is coming to Kentucky though various federal agencies to state and local governments. But there’s enough available to eliminate the would-be crisis in the General Fund brought on by the recession. As a result, the marquee issue for the special session is electronic gambling machines at racetracks.

In earlier years, the pro-gambling advocates presented their case on the grounds that income from increased gambling would help balance the state budget. Now their banner could read, ‘Save Kentucky’s signature industry.’ They’re not pushing the issue any longer as a budget contributor: Translated, there is no budget crisis, but the horse industry is facing increasing out-of-state competition among breeders and higher purses supported by gambling income.

Arguably, therefore, the only legal reason for Gov. Beshear to call a special session is to comply with language that legislators inserted in HB 143 during the ’09 session, which stripped the governor of his authority to make adjustments in the budget, if the size of a shortfall exceeds 5 percent.

Specifically, the legislature amended the General Fund Budget Reduction Plan for the 2010 budget to read, in part: “If the actual or projected revenue shortfall is greater than five percent in aggregate, the Governor is not empowered nor directed to take necessary actions with respect to the Executive Branch budget units to balance the budget....”

The revenue forecast by the Consensus Forecasting Group, the state’s official panel of economists, estimated on May 29 that the state’s revenue collections for the General Fund next year would be $8.3 billion, a drop of $996 million (or 10.7 percent) under the original amount in the budget enacted in the 2008 regular session, which called for $9.296 billion.

Sen. David Williams, the Senate president, R-Burkesville, said the 5 percent rule does not apply, because the panel of economists, in making their forecast, should not have used the original budget as the base. Instead, they should have used as the base, he contends, the CFG’s revised estimates for FY09, made in November 2008, which would put the shortfall at only $129 million, not $996 million. Had the panel used the revised version, the shortfall would have been well below 5 percent.

Nonetheless, the governor has made the call and legislators will be coming to Frankfort on June 15. A majority of them may have preferred not to come. But they’re lucky. President Obama’s gift — the federal $800 billion American Recovery and Reinvestment Act — has taken them virtually off the hook, concerning the budget issue.They don’t have to raise taxes or make deep spending cuts, after voting to increase taxes on cigarettes and alcohol three months ago.

Although the start of summer is a few days in coming, the filing deadline for re-election can be seen on the horizon, just seven and a half months away, in January. Raising taxes a second time so close to running for re-election probably was not going to happen; so, without the federal stimulus funds, it’s very unlikely there would be a June special session.

The winners in next year’s election will redraw the district boundary lines for all House and Senate members, good for 10 years. That can make and break careers. Therefore, legislative leaders in both chambers, Ds and Rs, are going to be acutely sensitive to redistricting and how their move on any issues would affect it.

Gov. Beshear held three press conferences last week, on consecutive days, to announce the agenda for the special session. On the first day, he put forth his plan for balancing the FY10 budget. Once his plan is introduced in the House of Representatives, legislators in both chambers will have to spray their scent on it and possibly leave some claw marks.

Although the media prefers to report the General Fund shortfall as being $996 million — which is the size of the estimated dip in revenue collections — the actual shortfall, according to figures released by the governor, is $1.08 billion. The higher figure is due to some carry-over spending obligations, such as $19 million in payments to local government due to higher coal severance tax collections.

The governor’s balanced-budget plan has five parts:

1. Federal Stimulus Money. Federal money will cover $741.7 million of the shortfall — more than two-thirds (68.4 percent). Of that amount, $383 million is money freed up in the Medicaid program, and $358 million is from a category in the Recovery Act given to states to help them stabilize their budgets.

The Medicaid money that the governor is applying to the shortfall is available because the federal-state matching formula, during the recovery period (October 2008 - December 2010) was changed. Before the Recovery Act, the feds were pitching in 70.13 percent and Kentucky was contributing 29.87 percent (roughly a 70/30 match) through the General Fund. Currently, the federal share is 78.61 percent, which drops Kentucky’s share to 21.39 percent. Expenditures on Medicaid in the commonwealth during the next fiscal year will exceed $5.5 billion.

In the state budgets section of the federal Recovery Act, Kentucky gets $651 million, of which Gov. Beshear wants to use 55 percent ($358 million) for FY10 and hold the rest in reserve, as sort of a Rainy Day fund, for the 2011 budget, which will have a shortfall too, the forecasting panel predicts. There is some federal language attached to this money, which has caused some confusion concerning restrictions on how it could be spent; a restriction said 81.8 percent of the “State Fiscal Stabilization Fund” (for state budgets) is provide for education, leaving 18.2 percent that governors could use to “prevent tax increases and avert cutbacks in other critical services.”

Well, that applies to places, like Alabama, but not Kentucky, because all of our state tax dollars spent on education go through the General Fund; so, this is throwaway language for us. The only restriction being, spending on education could not be lowered.

There is another source of stimulus money that legislators might turn an eye toward: $990 million in the Medicaid program. This is nearly one-third of all of the stimulus money coming to Kentucky. The governor chose not to touch it when he put together his plan for balancing the FY10 budget. Although this category of funds is related to the federal-state matching formula money that the governor is using, it’s in a separate pot. Some of it will go to erase a $280 million deficit in Kentucky Medicaid expenditures and for higher enrollment during the remainder of the recession will consume a big slice.

2. Cut bulk of government 2.6 percent. The governor is calling for another round of belt-tightening in state government, $200 million worth. HB 143, enacted in the 2009 regular session, protects some programs from cuts, but the governor wants to cut the bulk of state government by 2.6 percent.

3. Restructuring state debt. The governor proposed to save $113 million during the fiscal year by restructuring state debts.

4. Enhanced tax collections. The governor expects the state to receive $18.5 million from “enhanced tax collection efforts.”

5. Suspend three to five paid holidays
Finally, the governor has proposed a savings of $10.6 million from the suspension of some paid holidays for state employees. Their annual holidays total 11.5 days. Under the governor’s plan, state employees earning less than $50,000 a year would take three holidays without pay during the FY10 budget year, and state employees earning greater than $50,000 would sacrifice five holidays.

The budget issue is one of six items on the special session agenda. The other five would: (1) authorize video lottery terminals at racetracks, (2) upgrade economic development programs, (3) provide tax incentives to attract the NASCAR Sprint Cup race and the Breeders’ Cup World Championships to Kentucky, (4) enact a resolution to authorize Hardin County to “transfer or lease” a 1,550-acre tract of land to a national consortium for construction of a $600 million, 2,000-worker lithium-ion battery factory for hybrid electric vehicles, and (5) create an authority for financing the construction of bridges across the Ohio River between Indiana and Kentucky; this could include “tolls,” among other financing methods. (This article ran in Kentucky Roll Call, June 15, 2009.)

Fischer files suit on constitutionality of slots

2009-06-12T16:00:00.017-04:00

Rep. Joe Fischer is no ordinary “Joe” on matters pertaining to the Kentucky Constitution. The now 54-year-old Fort Thomas Republican and lawyer-legislator is the same person who filed suits against the legislature in the early 1990s (prior to serving in the House) on the subject of re-districting, contending the legislature split too many counties, in violation of the Kentucky Constitution. The courts concurred; the legislature remapped. But not enough. He filed a second suit, and won. Three times, the legislature remapped because of Joe Fischer.

On June 9, he filed a suit in Campbell Circuit Court against the proposal to enact during the special session a bill to allow video lottery terminals at licensed racetracks. In the suit, he alleges that the proclamation Gov. Beshear signed to add VLTs to the agenda of the special session is unconstitutional and that any bill enacted would be unconstitutional.
Rep. Joseph M. "Joe" Fischer, House District 68, R-Fort Thomas

Fischer has standing with the court because the proclamation is asking him, as a legislator, to vote on a matter that he believes is unconstitutional. The Family Foundation of Kentucky, which has promised to a file a suit if a slots bill is enacted, has no standing at the moment, but would have, with all citizens, once a slots bill is enacted.

Fischer is asking the court for a “declaratory judgment” and a “temporary and permanent injunction.” Specifically, he wants the judge to strike the proclamation and declare that any slots bill enacted in the special session is void. His case (No. 09-CI-00846) has been expedited — moved up on the court’s docket — for consideration, and a court ruling is possible before the special session adjourns.

The suit was filed in Fischer’s home county, but both circuit judges there recused themselves because of personal relations — family members being legislative colleagues of Fischer: Judge Fred Stine’s wife is Sen. Katie Stine, and Judge Julie Reinhardt Ward is a relative of former Rep. John David Reinhardt. Therefore, Circuit Court Judge Greg Bartlett in Kenton County has the case as the chief regional judge for Northern Kentucky.

In the suit, Fischer put forth his reasons for filing it, which include: Section 226 of the Kentucky Constitution, as amended in 1988, allows only a state lottery; Section 59 of the constitution reads, in part, that “no special law shall be enacted”; and Section 256 provides that constitutional amendments may be considered only during a regular session.

Further, authorizing the Kentucky Lottery Corp. to “establish, license, regulate and tax video lottery terminals at licensed racetracks, ” as Gov. Beshear’s proclamation and bill propose, is in violation of the constitution, Fischer contends, on the grounds that slots would be at limited locations, not statewide, and, therefore, would not meet the definition of a lottery provided in Section 226(1) of the Kentucky Constitution.

If a slots bill is enacted in the special session, any ruling by the court in Fischer’s favor is almost sure to be appealed by the horse industry. (This article ran in Kentucky Roll Call, June 15, 2009.)

Following is the lawsuit that Rep. Fischer filed, in its entirety.

CAMPBELL CIRCUIT COURT
DIVISION NO._______Two_______
CASE NO.____09-CI-00846_______

JOSEPH M. FISCHER
126 Dixie Place
Fort Thomas, Kentucky 41075 PLAINTIFF

vs.

KENTUCKY LOTTERY CORPORATION

Serve: Arthur "Arch" L. Gleason, Jr., President & CEO
1011 West Main Street
Louisville, KY 40202

and

COMMONWEALTH OF KENTUCKY

Serve: Hon. Steven L. Beshear, Governor
First Floor, State Capitol Building
700 Capitol Avenue
Frankfort, Kentucky 40601

Serve: Hon. Jack Conway, Attorney General
Office of the Attorney General
700 Capitol Avenue, Suite 118
Frankfort, Kentucky 40601 DEFENDANTS

COMPLAINT

1. Plaintiff is a citizen, taxpayer and qualified voter of and for the United States, Commonwealth of Kentucky, Campbell County and the City of Fort Thomas, thus conferring upon Plaintiff the requisite standing to invoke the jurisdiction of this Court to request an equitable declaration and enforcement of his constitutional right to vote on any subject matter to be approved by the Kentucky General Assembly that would require amending the Kentucky Constitution under Section 256, including but not limited to enjoining the General Assembly from considering and enacting any proposal that would authorize the Kentucky Lottery Corporation to establish, license, regulate and tax video lottery terminals at authorized licensed racetracks in Kentucky in the absence of a constitutional amendment approved by a three-fifths majority of the members of each house during any Regular session and subsequently approved by a majority of Kentucky voters in accordance with Section 256.

2. Plaintiff is a member of the Kentucky General Assembly, representing the 68th District in the Kentucky House of Representatives, which district is situated in Campbell County, in which capacity, Plaintiff is subject to any Proclamation by the Governor of Kentucky, calling the General Assembly into Extraordinary Session to consider subjects specified in the Proclamation, thus conferring upon Plaintiff the requisite standing to invoke the jurisdiction of this Court to request an equitable declaration and enforcement of his constitutional right to prohibit the consideration of any subject during the Extraordinary Session that would require an amendment to the Kentucky Constitution under Section 256, which may only be considered during any Regular Session of the General Assembly, including but not limited to any proposal that would authorize the Kentucky Lottery Corporation to establish, license, regulate and tax video lottery terminals at authorized licensed racetracks in Kentucky.

3. Venue is proper in this county under the authority of Fischer v. State Board of Elections, Ky., 847 S.W. 2d 718 (1993).

4. Defendant Kentucky Lottery Corporation is an independent, de jure municipal corporation and political subdivision of the Commonwealth of Kentucky created under KRS Chapter 154A to administer the state lottery as authorized and limited pursuant to Section 226 of the Kentucky Constitution.

5. On or about June 3, 2009 and June 5, 2009, Governor Steven L. Beshear issued a Proclamation and amended Proclamations, pursuant to Section 80 of the Kentucky Constitution (the “Proclamation”), convening the Kentucky General Assembly into an Extraordinary Session beginning June 15, 2009 for the sole purpose of considering certain subjects, including:

(i) Enacting legislation authorizing the Kentucky Lottery Corporation to establish, license, regulate and tax video lottery terminals at authorized race tracks in Kentucky.

(ii) Amending or repealing only those provisions of the Kentucky Revised Statutes specifically necessary to implement the subjects and provisions of this amended Proclamation.

(iii) Declaring an emergency thereby making any legislation enacted pursuant to this amended Proclamation effective upon the signature of the Governor.

A copy of the relevant section of the Proclamation is attached and incorporated herein as Exhibit A.

6. Section 226 of the Kentucky Constitution states, in relevant part:

“(1) The General Assembly may establish a Kentucky state lottery and may establish a state lottery to be conducted in cooperation with other states. Any lottery so established shall be operated by or on behalf of the Commonwealth of Kentucky...

(3) Except as provided in this section, lotteries and gift enterprises are forbidden, and no privileges shall be granted for such purposes, and none shall be exercised, and no schemes for similar purposes shall be allowed. The General Assembly shall enforce this section by proper penalties. All lottery privileges or charters heretofore granted are revoked.”

7. Section 59 of the Kentucky Constitution states, in relevant part, “Twenty-ninth: In all other cases where a general law can be made applicable, no special law shall be enacted.”

8. Section 256 of the Kentucky Constitution provides, in relevant part, “Amendments to this Constitution may be proposed in either House of the General Assembly at a regular session...”

9. The Proclamation and any legislation enacted during the Extraordinary Session convened in response to the Proclamation adopting, amending, repealing or implementing any provision of the Kentucky Revised Statutes that would require or authorize the Kentucky Lottery Corporation to establish, license, regulate and tax video lottery terminals at authorized race tracks in Kentucky is void, unconstitutional and unenforceable for the following reasons and for others which may later become apparent at trial:

(i) Video lottery terminals are not a “Kentucky state lottery” within the meaning of Section 226(1) of the Kentucky Constitution and the General Assembly is not authorized to consider the subject of video lottery terminals at an Extraordinary Session called by the Governor or to enact legislation requiring or permitting the Kentucky Lottery Corporation to establish, license, regulate or tax video lottery terminals except in the event either house of the General Assembly should propose and approve a constitutional amendment at a Regular Session by a three-fifth majority of its respective members, subject to a vote of the citizens of the Commonwealth.

(ii) Video lottery terminals are a form of gambling that is forbidden under Section 226(3) of the Kentucky Constitution and the General Assembly is not authorized to consider the subject of video lottery terminals at an Extraordinary Session called by the Governor or to enact legislation requiring or permitting the Kentucky Lottery Corporation to establish, license, regulate or tax video lottery terminals except in the event either house of the General Assembly should propose and approve a constitutional amendment at a Regular Session by a three-fifth majority of its respective members, subject to a vote of the citizens of the Commonwealth.

(iii) Limiting the location and operation video lottery terminals to racetracks is special legislation in violation of Section 59 of the Kentucky Constitution

(iv) Limiting video lottery terminals to any particular locations such as racetracks renders the activity outside the scope and meaning of a “state lottery” under Section 226(1) of the Kentucky Constitution.

10. This Complaint is filed under the Kentucky Declaratory Judgment Act and thus Plaintiff is entitled to have this Complaint treated as a Motion for purposes of placing the matter immediately upon the Court’s docket. See, KRS 418.050 and CR 57.
11. The Attorney General of Kentucky will have been given notice and a copy of this Complaint in accordance with KRS 418.075 and CR 24.03.

WHEREFORE, Plaintiff prays for the following relief:

1. For a declaratory judgment finding the subject matter contained in the amended Proclamation attached hereto as Exhibit A, calling for legislation authorizing the Kentucky Lottery Corporation or the Commonwealth of Kentucky to establish, license, regulate and tax video lottery terminals at authorized race tracks in Kentucky and all related legislation, is void and unconstitutional and shall not be considered by the General Assembly during the Extraordinary Session to commence June 15, 2009.
2. For a declaratory judgment finding that any legislation enacted during the Extraordinary Session authorizing the Kentucky Lottery Corporation or the Commonwealth of Kentucky to establish, license, regulate and tax video lottery terminals at authorized race tracks and in Kentucky all related legislation is void, unconstitutional and unenforceable.
3. For a temporary and permanent injunction striking the subject matter contained in the amended Proclamation attached hereto as Exhibit A and restraining Defendants from implementing and administering any legislation enacted during the Extraordinary Session purporting to authorize the Kentucky Lottery Corporation or the Commonwealth of Kentucky to establish, license, regulate and tax video lottery terminals at authorized race tracks in Kentucky.
4. For an expedited hearing on the merits of this declaratory judgment action.
5. For all other relief to which Plaintiff may appear entitled, including his costs and expenses incurred herein.

Joseph M. Fischer
Pro Se
126 Dixie Place
Fort Thomas, Kentucky 41075
(859)781-6965

I hereby certify that the facts contained in the above Complaint are true to the best of my knowledge.

Joseph M. Fischer

Commonwealth of Kentucky )
County of Campbell ) ss

Before me, a notary public, personally appeared Joseph M. Fischer and acknowledged that the above referenced document to which his signature is affixed was his free and voluntary act and deed this___8th__ day of June 2009.

John C. Fischer
Notary Public
My commission expires:__4/17/12____

Special session update

2009-06-05T19:04:00.014-04:00

Friday, June 5. Gov. Steve Beshear has once more amended the agenda for the special session he has called for June 15. In a single proclamation this afternoon, he added four subjects, all related to economic development.

This brings to six the number of items on the special session agenda:

Proclamation No. 1, June 3. This would balance the FY10 executive branch budget by filling a $996 million hole — the session’s top priority. Under a proposal that the governor will present to legislators, federal stimulus money would take care of 74 percent of the shortfall and trimming the bulk of state government by 2.6 percent would handle another 20 percent. No new taxes. The feds are giving Kentucky $3 billion through varies agencies.

Proclamation No. 2, June 4. This would allow video lottery terminals at authorized racetracks — these are like slots machines. And right now a hot potato. Under the governor’s proposal, the VLTs would be regulated through the Kentucky Lottery Corp., and enactment would not require a constitutional amendment, so says the governor, Speaker Greg Stumbo, and even the Republican Senate president, David Williams. The Family Foundation disagrees and promises a lawsuit.

Yesterday, Williams proposed an alternative in lieu of VLTs. His plan would underpin the horse industry to the tune of $83 million a year, of which 56 percent would come from a “10 cents on the dollar” surtax on lottery tickets.

This afternoon, however, the governor said he would not add Williams’ proposal to the call; then, jerking the rug that the governor’s standing on, Stumbo, in a press release, said, “Obviously, it is the governor’s prerogative to amend the call [and deny Sen. Williams’ plan from official consideration], but we’re looking at President Williams’ proposal.” Williams said yesterday, which he softened today, that unless both proposals — the governor’s and his — get hearings, neither will get a hearing.

Proclamation No. 3, June 5. This one adds four subjects:

• To upgrade the state’s economic development tools — and place the emphasis on expanding in-state businesses rather than on luring investments from other states;

• To enact tax incentives to attract the NASCAR Sprint Cup race and the Breeders’ Cup World Championships to Kentucky;

• To enact a resolution that would authorized Hardin County to “transfer or lease” a 1,550-acre tract of land to a national construction for construction of a $600 million, 2,000-worker lithium-ion battery factory for hybrid electric vehicles; and

• To create an authority for financing the construction of bridges across the Ohio River between Indiana and Kentucky; this would include “tolls,” among other financing methods, the governor said.

The language of the governor’s bills and supporting details are not available at the moment, but will be in a few days, he said.

It takes a minimum of five days in the legislative process to enact a bill. Now, especially with the added subjects, it’s uncertain how long the special session will last. The cost to taxpayers is $60,000 a day. Sen. Williams said the LRC would pay for the first five days out of its budget, but beyond that, the cost would come, in effect, out of the governor’s budget. That is, Williams said he would urge the House and Senate to approve a so-called “pay bill,” whereas the expenditures for the session, after five days, would be paid by an appropriation from the General Fund. Traditionally, “pay bills” have occurred in about 75 percent of special sessions, but not the last two.

U.S. Rep. Whitfield said to be "testing the waters"

2009-06-01T16:18:00.019-04:00

U.S. Rep. Ed Whitfield, R-Hopkinsville, speaking at Fancy Farm. Seated behind him are U.S. Sens. Mitch McConnell and Jim Bunning.

The following story ran May 27 in The Kentucky Gazette. By Sam Edelen, Special to The Kentucky Gazette.

While much attention this spring has focused on next year’s U.S. Senate race and state legislative elections, it appears as though one Kentucky congressman may have his eye on the governor’s race that follows in 2011.

An aide to U.S. Rep. Ed Whitfield, R-Hopkinsville, recently purchased two Internet domain names – www.whitfieldforsenate.com and www.whitfieldforgovernor.com – the latter of the two portending a possible gubernatorial match-up with current Democratic Gov. Steve Beshear, should he seek re-election.

According to Whitfield’s 2009 first quarter fundraising report to the Federal Election Commission, the domain names were purchased Jan. 28 for $866.48 from Network Solutions, a Web services company based in Herndon, Va.

Neither Web site is currently active, but both contain the following explanation as to the site’s future: “This “Under Construction” page is an automatically generated placeholder Web page for a domain that is not yet attached to an active Web site. This page replaces the “Not Found” error pages and notifies visitors that a Web site is coming soon.”

A company representative said that the domain names were reserved through Jan. 27, 2010 under the name of Jason Hasert, who works as a field representative for Whitfield’s congressional office in Hopkinsville. FEC reports show that Hasert was paid around $25,000 for work last year between July and December for Whitfield’s re-election campaign to the U.S. House.

When reached last week by phone at Whitfield’s campaign office in Hopkinsville, Hasert said he was unable to comment on the matter. He also said he had taken a leave of absence from his duties with Whitfield’s congressional field office.
Kristen Walker, a spokeswoman for Whitfield, said in an e-mail to the Gazette that the campaign had in fact purchased the domain names in question.

“As often happens on the Internet and especially with politicians, people purchase domain names and then squat on them indefinitely or use them to put up false information about candidates,” Walker said. “These names were apparently just registered as a precautionary measure to ensure no one but Congressman Whitfield had access to them.”

Whitfield, 66, was first elected to the 1st District House seat in 1994 as part of the so-called “Republican Revolution” on Capitol Hill. The district includes roughly 34 counties in far western and south-central Kentucky. Whitfield was re-elected to an eighth term in November, winning 64 percent of the general election vote against Democrat Heather Ryan, of Paducah.

Sam Edelen is a political writer based in Louisville. He may be reached at samedelen@yahoo.com