Published Online: February 8, 2005
Published in Print: February 9, 2005, as Kentucky

State of the States


Action on a Budget Urged by Fletcher

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Kentucky Gov. Ernie Fletcher is offering the legislature two budget options: more of the same, or a dramatic revision of the state tax code.

Gov. Ernie Fletcher

The former would keep the state running, but the latter would provide enough money for efforts to improve schools and other state services, the Republican governor said in his Feb. 1 State of the State Address.

“Our current tax system will not provide tomorrow’s support for education and health care,” Mr. Fletcher said. “It will not substantially reduce the poverty level.”

But a tax overhaul could generate enough money to pay for the governor’s education priorities and projects. Those include:

• A $26 million project to experiment with salary plans that Mr. Fletcher says would help recruit and retain teachers. That would be in addition to an across-the-board 2 percent salary increase for teachers.

• A three-year pilot program that would spend a portion of coal taxes on improvements in the lowest-performing school districts in counties that produce coal.

But current tax revenues wouldn’t generate enough money to underwrite those projects, the governor said.

For More Info
Read a transcript of the governor's address.

Kentucky is in the midst of a budget crisis. The legislature adjourned last year without producing its biennial budget. Gov. Fletcher is using executive authority to keep the state functioning, but state courts have declared that the governor may not spend money that hasn’t been appropriated by the legislature. That restriction has put pressure on lawmakers to pass a budget for fiscal years 2005 and 2006 in this year’s session.

If the legislature doesn’t dramatically change the tax code, Mr. Fletcher said, the budget could include money only for the state’s “immediate needs” in Medicaid and teacher salaries.

“I believe the only responsible way to build a brighter future is to bring our outdated tax system into the 21st century,” Mr. Fletcher said.

Any work to change the tax code would have to be done quickly. The legislature is scheduled to adjourn at the end of the month.

Vol. 24, Issue 22, Page 20

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