Four days after Christmas the Governor Steve Beshear announced to the Kentucky legislative leadership that the shortfall on the upcoming biennial state budget is dramatically greater than has been discussed in the media. Estimated revenue growth for the next two years is insufficient to fund existing expenses and Beshear reckons the shortfall will reach US$1.5 billion and more.

In addition, the current year budget still faces a revenue shortfall of $100 million. Governor Beshear, who will present his proposed FY11-12 budget to the General Assembly on January 19, challenged legislative leaders to work with him and said he would welcome any ideas they may have for responsibly managing the upcoming budget. It will be the sixth time the governor has balanced Kentucky’s budget in less than two years.

With both tax increases and public service worker layoffs being unpalatable options for reducing the budget deficit, the subject of gambling is again being brought to the legislative bargaining table. Pro-gambling lobbies are pushing for the installation of video gaming machines at horse tracks, which could bring an additional US$350 million to the state in gambling tax. However, gambling expansion is still a thorny subject in Kentucky and many lawmakers will have their eye on this year’s re-election process involving 119 legislative seats.

In the meantime Beshear is keeping his options open, although in 2007 his election campaign included a plan for racetrack casinos and the following year he unsuccessfully attempted to get a casino bill approved. "I have not decided my plans for pursuing gaming in this legislative session," Beshear commented, “but it is clear that we must explore every possible avenue for growing revenue where we can, short of broad-based tax increases." (E-01.04.10)

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