Kentucky has made significant progress in “plugging the leaks” in certain areas of state spending, but serious challenges must be addressed to assure the state’s long-term fiscal stability, according to a new report from the Kentucky Chamber of Commerce released during the Business Summit and Annual Meeting.
Building a Stronger Bucket is a follow-up to the Chamber’s 2009 Leaky Bucket report that identified areas of unsustainable spending growth – corrections, Medicaid and public employee benefits – that are diverting tax dollars from education and economic development.
After Chamber President and CEO Dave Adkisson presented the report to Business Summit attendees on Tuesday, Senate President David Williams and House Speaker Greg Stumbo discussed the findings during an hour-long forum.
While the legislative leaders discussed all three “leaks” in Kentucky’s state budget, Williams and Stumbo spent a considerable amount of time debating the new Medicaid managed care plan being implemented by Gov. Steve Beshear’s administration. Just last week, Gov. Beshear announced the state had signed contracts with three companies to expand managed care beyond the Louisville region to the rest of the state, saving the Medicaid system an estimated $1.3 billion over the next three years. Stumbo said Kentucky is on the right track with this plan, while Williams expressed concern that the projected savings will not be achieved in such a short period of time. Building a Stronger Bucket recommends expanding managed care, but also says a detailed, evidence-based study must be conducted to identify specific areas of savings in Medicaid.
In a positive sign that pension reform may be on the horizon, Stumbo acknowledged problems with Kentucky’s public employee pension system and said moving to a defined contribution plan for new state hires, another recommendation in the report, is a “fair debate.” During the 2011 General Assembly, Williams led an effort in the Senate that would have done just that, but the bill failed to get a hearing in the House. On corrections, both Williams and Stumbo lauded the passing of House Bill 463, a newly enacted law that overhauls Kentucky’s criminal justice system and is projected to save the state $422 million over the next decade.
Videos from this forum and other sessions during Business Summit and Annual Meeting will be available on the Chamber’s YouTube Channel in the days to come.