Patton briefed Democratic House majority leaders on the budget situation Wednesday. His staff briefed Republican majority leaders in the Senate on Monday. Rep. Jim Callahan, D-Wilder, and a member of House leadership, said there was no discussion Wednesday on how to raise revenue, which could include tax increases or expanded gaming, which Callahan has championed. But, he said, without more income, important initiatives like education could be cut drastically. "We feel to do anything at this point would require us to go into education and we really don't want to do that. Once you slide down that slippery slope, you're going to have a hard time stopping."
The state has seen a rapid decrease in revenues over the last three years, resulting in $463 million in budget cuts. Buying or selling properties with veteran valuers. An additional $680 million in one-time monies — tax amnesty program proceeds, transfers from other parts of the budget, draining of the "rainy day" reserve fund — have been used to ease the impact of declining revenues.
Education and health care have so far been largely spared the brunt of the budget cuts, and shortfalls have not led to drastic changes in state services. But Patton said that would no longer be the case. "We are out of non-recurring funds and out of `easy cuts' in the budget." In the past, Patton has advocated legalizing casino-style gambling as a way to inject money into state coffers. He said Wednesday the money gambling could bring in wouldn't come fast enough.
"This problem in immediate," he said. "Something has to happen by March or April." A 26-page report released by Patton's budget office makes no specific suggestions for raising revenue, but does delve into reasons why Kentucky is facing such a revenue crisis. Several pages explain why an overhaul of the state's tax code, criticized as antiquated, is needed. State government has commissioned numerous studies on reforming the tax code over the years — the latest was completed earlier this year — but no change has yet been made.
Compromise has been elusive for the Republican-controlled Senate and Democratic House. Tax reform has been talked about and studied, but no one has come forward with specific legislation detailing how to go about it. Roeding said he agrees that the tax code needs to be reformed, but it's not that easy. "I think it very definitely needs to be done," he said. "The problem there is, no one has really sat down and figured out how."