FRANKFORT, Ky. (Jan. 7, 2014) – Kentucky Governor Steve Beshear exhorted legislators in his seventh State of the Commonwealth address Tuesday to ignore the lure of partisan politics and continue collaborating with him on improving the state’s business climate in two key areas: strengthening Kentucky’s future workforce by investing in education and creating a healthier population, and modernizing the tax code to make the state more competitive.
National observers have taken notice of Kentucky’s progress in “shrugging off an historic reputation for backwardness and writing a new narrative founded on change and innovation,” the Governor said, but he warned that the Commonwealth’s future growth and opportunities, especially in education, will grind to a halt unless legislators take substantive action in this session.
“We must continue to focus our attention not on the next headline or next election but on a collective vision of a stronger Kentucky,” said Gov. Beshear. “What does that Kentucky look like? It's a place where every person who needs a job has one, where every child has the opportunity to be successful, and where every family enjoys financial security and a high quality of life.
“But core challenges continue to stand in our way, and although we have made significant progress, much more needs to be done.”
The Governor used his speech to a joint session of the General Assembly to discuss Kentucky’s progress in creating jobs, building a more seamless and effective education system and making health care accessible and affordable to all Kentuckians, and to lay out an agenda for the 60-day session and the coming year.
Job Creation is Top Priority; Maximizing Competitiveness Key Goal
Creating jobs remains his top priority, the Governor said.
“Putting Kentuckians to work is the single-best thing we can do both for our families and our state,” he said. “The good news is that companies want to come to Kentucky, and Kentucky companies continue to expand workforces, facilities and production lines.”
But to continue that progress, Kentucky needs to make itself more attractive to businesses.
Competitiveness through Modern, Business-Friendly Tax Reform: The first step requires long-overdue changes in Kentucky’s tax code to improve economic competitiveness, reduce assessments that create an unlevel playing field for existing Kentucky businesses and treat working families more fairly.
Gov. Beshear said he would present in this session a tax modernization proposal with specific recommendations on how to move Kentucky’s archaic tax code into the 21st Century – a package specifically designed to maximize the state’s competitiveness for job growth and sustainability.
The legislative package will be drawn from the report written by the Governor’s 2012 Blue Ribbon Commission on Tax Reform, which included such items as:
· lowering the top individual and corporate tax rates
· broadening the tax base in the sales tax and retirement areas
· establishing an angel investor tax credit for certain investments in small businesses; and
· making changes that favor Kentucky-based companies.
Another recommendation will be a constitutional amendment to allow local communities to vote on local sales taxes for specific projects.
“Kentucky is developing a modern education system, a modern health care delivery system and a modern economy,” the Governor said. “So why should the Commonwealth continue to hamstring itself by using an outdated tax structure?”
Competitiveness through Strengthened Workforce: The second step will be to strengthen Kentucky’s workforce by improving the health and education of our citizens, especially the youth who are tomorrow’s employers and employees, the Governor said.
“I talk to business executives almost daily about what they need to make their companies successful,” he said. “Their No. 1 concern is their workforce – finding enough talented, skilled, energetic, healthy and educated workers.”
One challenge is the collective health of Kentucky’s population, which ranks among the worst in the nation, the Governor said. About 1 out of every 7 Kentuckians lacks health insurance, which not only threatens those families’ financial security but also – on a statewide level -- decreases worker productivity, jacks up health care costs, and diminishes Kentucky’s attractiveness to businesses.
Gov. Beshear seized an historic opportunity to provide accessible, affordable health insurance to every Kentuckian by embracing and localizing federal health care reform. Last year, he expanded Medicaid and created a state-based health insurance exchange so Kentuckians could find health insurance through a custom web portal called kynect. Since the website’s launch on Oct. 1, more than 130,000 Kentuckians have enrolled in affordable health insurance through kynect – many of them for the first time in their lives.
Those efforts, combined with Medicaid reform, improved dental care access in rural areas, and expanded access to early cancer screenings, will help Kentuckians enjoy better health in the years to come.
Gov. Beshear pledged to intensify health improvement efforts through a new initiative, to be unveiled in the coming weeks. The plan will identify multiple health goals and strategies, including:
· supporting comprehensive state-wide smoke-free legislation
· banning the sale of e-cigarettes to minors
· cutting the state’s obesity rate
· requiring HPV vaccinations for youth; and
· reducing rates of heart disease.
“Kentucky’s leaders must recognize the direct relationship between a healthier, more productive workforce and our ability to attract and retain good-paying jobs for our people,” said Gov. Beshear.
Competitiveness through Prioritizing Education: A strong workforce is an educated workforce, and Kentucky has made enormous progress in creating a seamless, cradle-to-career education system that is better preparing students for a complex world.
With special focus on early childhood education, raising the graduation rate, and increasing college and career readiness for all students, Kentucky’s schools are emerging as national leaders in education reform and measurable student progress.
In 2013, Education Week’s annual Quality Counts report ranked Kentucky in the top 10 states in student performance and education progress. The state is implementing the Graduation Bill passed last session, which will require students to stay in school until age 18. And last month, Kentucky won a $44.3 million federal Race to the Top grant to improve early learning programs for thousands of Kentucky preschoolers.
But schools have stretched their dollars as far as they can, the Governor warned, and will lose ground without new investment.
Kentucky has frozen SEEK – the basic funding formula for K-12 classrooms – for six years, even as student enrollment expanded, costs increased and local support in some areas dropped. Plus, budget pressures forced deep cuts in areas ranging from textbooks to teacher training and school safety.
Meanwhile, because of impending federal sequester cuts, schools face the prospect of significant layoffs, increased classroom sizes and out-of-date technology.
“We are in danger of losing all of the positive momentum which has been built up. And I am not going to allow that to happen,” the Governor said. “I am determined to find money to reinvest in education – even if I have to make harmful cuts in other areas to do so.”
Fiscal discipline and aggressive managing of the budget – including some $1.6 billion in spending cuts – helped Kentucky get through the recession, but in some areas the cuts went deep enough to damage programs and services critical to building a stronger future.
“We cannot continue making progress by paying teachers less than they deserve, by ignoring needs like textbooks and technology, by delaying research into innovative energy production, by pricing college out of reach, by leaving needed cancer screenings unfunded, and by retreating from things like child care and mental health services,” said Gov. Beshear.
The Governor identified two possible sources of new, recurring revenue with which to make investments: tax reform, because increasing competitiveness by broadening our tax base and improving our business climate will help stabilize future budgets, and gaming.
Gov. Beshear said he would ask the General Assembly again to place a constitutional Amendment on the ballot related to expanded gaming.
Over the years several economic studies of various gaming scenarios have projected potential Kentucky tax revenues in the hundreds of millions of dollars – money that is currently crossing the border “to fund roads and schools in Ohio, Indiana, West Virginia and other states.”
Kentuckians “want to vote on this issue,” he said.
Additional Legislative Priorities
Also this session, Gov. Beshear will propose and support a series of initiatives designed to promote public safety.
· Booster seats: Kentucky should align its booster seat regulations with federal recommendations, because current state laws are not protective enough. Federal safety officials and doctors recommend using a booster seat until either age 9 or until a child reaches 57 inches tall; in Kentucky, only children under 7 and between 40 to 50 inches tall are required to use a booster seat. Recent Kentucky statistics show that 70 percent of children hurt in car crashes were 8 or 9 years old – kids who typically aren’t tall enough for adult-sized seat belts to protect them properly. Misaligned belts can cause serious trauma in an auto accident.
· Substance abuse: Since 2011, the rate of deaths attributed to prescription drugs has dropped while deaths attributed to heroin have surged. Gov. Beshear will support legislation to mandate a more aggressive approach for both law enforcement and treatment.
· ‘No phone zones’: Given the vulnerability of schoolchildren and construction workers, Gov. Beshear will support legislation creating ‘no phone zones’, areas such as school and construction zones where drivers are not permitted to use cell phones while driving.
· Domestic violence: Kentucky is the only state without any civil protection for victims of violence in a dating relationship. Gov. Beshear will again support legislation to extend these critical protections to dating couples who do not live together.
Governor Urges Continued Bipartisanship
Gov. Beshear thanked legislators for working with him in the 2013 session in a bipartisan manner on several difficult issues that threatened state budgets, communities and schools. Those successes include comprehensive legislation attacking prescription drug abuse, raising the graduation age, shoring up funding for state pensions, and authorizing innovative funding mechanisms for state universities that required no additional taxpayer burden.
The Governor contrasted those efforts with the endless bickering and political posturing of Washington, D.C.
“We have proven over the last few years that here in Frankfort, we can work through those differences and pass meaningful legislation that strengthens our capacity and builds a better quality of life for our people,” he said. “We must remember that we are Kentuckians first, and Democrats and Republicans second. I believe we can continue to show our Washington colleagues what leadership really looks like.”