STATE OF THE COMMONWEALTH
BY GOVERNOR PAUL E. PATTON
WEDNESDAY, JANUARY 3, 2001 - 7:00 p.m.
Williams, Speaker Richards, and members of the General Assembly, members of the Judiciary, Governor Henry and other constitutional officers,
my fellow Kentuckians.
As the General Assembly convenes in this historic annual session, I come
before the legislature and the people of Kentucky to report on the state of the
Commonwealth. And in many ways, the
state of the Commonwealth is good.
In general, the financial condition of state government is sound.
Our current estimate of state revenue for this fiscal year is within 33
million dollars, or one-half of one percent, of what we estimated and built our
budget on, one year ago. This
modest shortfall, if it materializes, can be handled without any significant
disruption of service to our citizens. Our
Budget Reserve Trust Fund stands at 278 million dollars, 4.1 percent of our
annual General Fund Revenue. Our
bond rating improved the last year and stands higher than itís ever been
personal income tax revenue continues to be strong.
But we are concerned about the sales tax and the corporate income tax
revenues. And, if the national
economy slows down, state revenue could be affected.
In summary, the current revenue situation appears stable.
with one exception, weíre holding expenditures within budgeted limits. That exception is Medicaid.
Increased utilization and higher medical costs will cause a substantial
increase in Medicaid obligations. Weíll
be discussing with you actions that will be necessary to bring costs within
weíll be asking you to consider other areas of concern between now and the end
of March. I will ask you to enact
the adjustments to the coal minerís black lung compensation program that I
proposed in the 2000 regular session.
Some of our cabinets will be proposing adjustments to their programs
which will be primarily operational issues without substantial change in policy.
know that youíll be reviewing regulations, executive reorganizations and
are all important subjects and this 30 day session will allow you to give them a
more thorough review than would be possible in a regular session.
administration will be working with you in these and other areas but weíll
also be going full bore implementing the aggressive agenda youíve approved in
three previous regular sessions and two special sessions since Iíve been
First among these is education. It will always be our primary focus. While weíre fully involved with KERA and your recent emphasis on teacher preparation and dropout prevention, and weíre working with the CPE and our colleges and universities to implement and perfect our postsecondary education improvements, weíre also fully engaged in implementing the two new education initiatives of the 2000 session, early childhood development and adult education.
Weíre making progress in education. KERA is showing results. Test scores are up; our classrooms are the most technologically advanced in the nation; we continue to be a national model. The same is true with our colleges and universities. Enrollment at our community and technical colleges is up 13.5 percent. Our comprehensive universities are establishing national prominence in many of their programs of distinction. Our two research universities are attracting national attention in a variety of ways. The Bucks for Brains program has attracted over 200 million dollars of private donations and helped these schools increase their endowed chairs by 138 percent.
as to early childhood and adult education, Iím convinced we did the right
things. As Iíve traveled the
state this year, Iíve had dozens of practitioners in both fields compliment us
and express their appreciation for these initiatives.
As these programs are fully implemented, weíll also be viewed as
national leaders in improving services in these very important areas.
creation is a vital part of our overall strategy as we continue to promote
Kentucky as a great place to do business. The
results are showing. 1999 was the
best year in the history of the Commonwealth for new job development and while
the slowing national economy affected our job growth in 2000, we still had a
good year creating new and better jobs.
I have and will continue to travel the nation and the world promoting Kentucky,
Iím embarking on a special effort to promote the two most economically
disadvantaged areas of the Commonwealth, Eastern Kentucky and our inner cities.
Youíve approved special incentives for both of these parts of the
state, but Iíve found that itís still difficult to get businesses to forget
stereotypes and take a fresh look at these areas, so Iíll be using the
influence of the Governorís Office to get the attention of the people who
should be taking advantage of these special opportunities and just donít know
about them yet.
we have problems in these specific geographic areas, as we look at the bigger
picture of the state of the Commonwealth, most of our people are doing well.
As our nation enjoys unprecedented prosperity, so does Kentucky.
Though we lag the nation in many indices of social progress, we are
improving the lives of our people, in some ways gaining on our fellow Americans
over the past decade. The percent increase in our wages is 7 percent greater
than the nation as a whole. The rate of job growth is 17 percent greater than the nation
and our manufacturing jobs have increased 12 percent over the past ten years,
while the United States has been losing manufacturing jobs. And in November our unemployment rate was below the national
average and the lowest it has been since 1973.
we still must pursue manufacturing jobs, we know the only way we can reach our
goal is to convert our economy to knowledge-based, high-tech industries. Weíre making progress implementing the new economy
initiative and weíll be prepared to propose more changes to you in the 2002
The net effect of our efforts is that weíve stopped the out migration
of our people that was so pervasive in the 1980s.
There are now 4 million Kentuckians, an increase of 9.7 percent over the
past decade. More people are moving
into Kentucky to find economic opportunity than are moving out.
We are moving in the right direction.
We still have a long way to go.
take some pride in our progress in the decade of the nineties because I was
involved in many of the important decisions of that era.
This General Assembly as a body can take even more credit because it has
made the final decisions that have laid the foundation for the successes weíre
experiencing. All of us in this
chamber and our predecessors have made the past 30 years in Kentucky a period of
enlightenment; a time of change; a time of challenge.
We as a people have answered that challenge and our progeny will be the
Weíve laid the foundation upon which we can build a better future.
To a great extent, our job is to persevere in our commitments to the
future, particularly in education. We
have made the right decisions. We
just need to implement them.
education is a slow process. Changing
an economy is also slow. The two go
hand-in-hand. Theyíre the two
rails of that railroad that will take us to a better standard of living and
quality of life.
In its broadest sense, thatís the stated goal of our administration; a
standard of living and quality of life reflective of the nation as a whole by
the year 2020.
As we attempt to measure our standard of living and quality of life, we
must take into account many factors, and even then weíre dealing with a very
subjective goal. Economic status
Ė income -- is a very important determiner of well being, but that must be
weighed against the cost of living. Few
would challenge the argument that a Kentuckian making $30,000 a year is much
better off than a New Yorker making the same wage.
Nonetheless, we need to continue to improve wages in Kentucky relative to
the national average. We can only
do that by improving education and changing our economy.
quality of life is more than just economic status.
Health is perhaps even more important and while many of us are in
excellent health, as a society, our health falls below the national norm.
Good health is a matter of prevention more than treatment. Thatís why our support for our public health departments
was so important in the last session. And
our early childhood initiative, our anti-smoking and drug prevention programs
and our womenís health initiative will make us healthier, as will our
extraordinary KCHIP program for childrenís health insurance.
Programs which promote physical exercise like our school sports, the Blue
Grass State Games and the Senior Olympics are also very important.
A healthy lifestyle is not something government can mandate but it is
something that government can encourage.
Freedom from fear, especially fear of being the victim of crime, is also
an essential element of a high quality of life.
We have a relatively low crime rate in Kentucky but itís still too
high. Thatís why we revised our
criminal code and are building more prison beds and strengthening training and
compensation programs for police officers and modernizing our courts of justice
with buildings and technology -- but here again, prevention is cheaper and more
humane. Thatís why the
improvements in our juvenile justice system are so critical.
In 5 years weíve quadrupled our expenditure on juvenile treatment
programs. And in those five years
weíve turned one of the nationís most inadequate programs into one of the
nationís best and most effective.
In the entire area of social services, the basic safety net that any of
us could have needed if fate had dealt us a different hand, weíve made
progress. More Kentuckians have
better healthcare, our welfare reform has worked in a more humane way than many
states, and women and children are safer from neglect and abuse because of the
work of First Lady Judi Patton and the laws youíve passed.
And weíve invested in the public infrastructure of Kentucky.
Our communities, our businesses, our modern way of life, is based on the
infrastructure built and paid for by those who have come before us Ė and we
have an absolute obligation to invest in the infrastructure that will be needed
by our children. And weíve done that. The
three budgets weíve enacted since I became governor have appropriated more
money for schools, courthouses, college buildings, water and sewer systems,
recreational and community facilities and roads than in any similar period in
our history. Weíve invested in
the physical as well as the intellectual capital of our people.
And weíve acted to preserve our rural way of life, our family farms.
From securing the Phase II settlement with the tobacco companies to
dedicating half of the Phase I money to agriculture, weíve been faithful to
our farmers because they represent the very essence of Kentucky Ė hard work,
independence, neighbors, community.
Weíve supported our working people, weíve promoted tourism, weíve
invested in the downtowns of our cities Ė weíve addressed just about every
aspect of Kentucky life, but we havenít done all that we need to do.
Another very important aspect of quality of life is our physical
environment. Itís also important
to our economy because in this age, when a lot of people can work anywhere they
choose to live, a quality environment can attract the very kind of people we
need to achieve our economic goals.
weíve experienced some unique environmental challenges, the vast majority of
Kentuckians enjoy a good, safe, clean environment.
Iím proud of the Cabinet for Natural Resources and Environmental
Protectionís even-handed regulation of industry to protect our environment and
The cabinetís protection of our rural lifestyle through regulations
controlling the worst excesses of large animal feeding operations is vital to
preserving the Kentucky we love. Its
work on cleaning up illegal and unhealthy garbage dumps has been innovative and
effective. But cleaning up after
someone has polluted isnít the answer. And
planning after a city is built isnít the answer either.
Herein lies one of the two unfinished major initiatives Iíd like to
complete before my tenure in this office is finished.
I ask the General Assembly to address the issues of solid waste,
recycling, litter, and residential and business physical growth by the end of
the 2002 session and begin that process in this session!!!
realize that some of these issues, especially growth, are complex and the proper
foundation hasnít been laid, but we can begin now by establishing a task force
that can start work soon and prepare a proposal for consideration in the 2002
must explore how we can give our communities the tools they need to ensure that
theyíre growing in ways that preserve their quality of life without slowing
their economic potential. Kentucky
is developing its farmland at a rate thatís ranked third in the nation. Many of our communities are seeing the high cost of unplanned
growth. This is an issue that we
must begin to address or the Kentucky we know and love today will not be the
Kentucky we leave to our grandchildren.
need to study the growth issue during the interim but as to solid waste,
recycling and litter control, we can begin to act now.
A comprehensive solid waste control program must include a systematic and
thorough education element, to raise our awareness of the extent of the problem,
and to create in all our minds and especially in the minds of our children a
determination to eliminate all unsightly solid waste from our Commonwealth.
This garbage, which gives us and our guests a less than flattering image
of Kentucky, comes from two primary sources, thoughtless littering from
automobiles and deliberate illegal dumping of household waste. Education is the ultimate cure for the first and stronger
laws properly enforced can be the cure for the latter.
Until we can change attitudes through education, we must have an
effective highway cleanup program that includes all public roads; state, county
and city, not just the major state arteries.
But we can also have stronger anti-litter laws and we can do a better job
of enforcing them.
But the unconscionable blight on our countryside, and in some
out-of-the-way places in our cities, is illegal garbage dumps.
Theyíre unsightly, theyíre dangerous, theyíre unhealthy and
theyíre numerous, over 3,300 as estimated by the Natural Resources and
Environmental Protection Cabinet. They
have to be cleaned up!!!
But until we stop people from using them and creating them, itís a
losing battle to clean them up. Every
person, every household, every business in Kentucky generates waste as a
by-product of modern life, about 5 pounds per day per person, about 7 billion
pounds a year in Kentucky.
Ninety percent of us do it right. We
make sure our garbage ends up in a safe, legal landfill.
Itís the other 10 percent thatís giving all of us a bad name and
making Kentucky less beautiful and less healthy than it could be.
Eighty percent of us can get rid of our garbage the cheapest, most
convenient way possible -- we have a garbage service that comes by our house and
will take our garbage to a sanitary landfill.
We hardly give it a second thought.
Half of the 20 percent that donít have this service available wish they
had it and would gladly pay for it. Let
me assure you that itís cheaper in time and money to have your garbage picked
up at the curb in front of your house than it is to load it into your car and go
out of your way to a county transfer station that may not be open when you want
to get rid of your garbage.
And for rural residents, where collecting garbage is more expensive,
itís a lot cheaper when everyone on a road takes the service, not just a few.
We need to ensure that curbside garbage service is available to every
Kentucky residence and business and that every generator of garbage uses that
Yes, I know that solid waste control is a local government responsibility
and I also know that 24 counties in Kentucky have taken that responsibility
seriously by enacting universal garbage pickup service ordinances. The time has come for all counties to do the same thing.
And itís our responsibility to see that they do.
I know that rural solid waste collection is somewhat different from urban
collection programs, primarily because counties normally donít have the means
to collect the fees that cities do. Thatís
something we can and must correct.
Counties should have as much authority and flexibility as they need to
ensure that those who generate solid waste pay their fair share of the cost of
disposing of it in a safe, healthy, and aesthetically pleasing way.
This is something we can do in this session.
And let me assure you that itís good politics. I know. Iíve
been there, done that, bought a t-shirt. Oh,
I know, the opponents will make the most noise.
But I put my faith in the people who want a clean Kentucky, a healthy
Kentucky, a beautiful Kentucky and want to pay their fair share of the cost of
making it that way.
Iím where I stand today because I put my faith in those kinds of people
in Pike County 18 years ago when we enacted a universal garbage collection
program. Iím for it in every
county and Iím asking legislators from both houses and both parties to stand
with me and enact this law in this session!!!
then letís look for other ways to clean up Kentucky with recycling and litter
control and dump cleanup programs and programs to encourage smart growth in
Another essential element of a good quality of life is a fair government,
especially a government which is supported financially in an equitable manner.
Now I realize that fairness is, in many ways, in the eyes of the
beholder, but I think we could reach general agreement on a fair way to support
Kentucky state government.
When we analyze a system of taxation, there are at least 3 major elements
that need to be considered. One is
adequacy and for the purpose of tonightís discussion, Iím taking that
subject off the table. I will not
propose or support any measure to increase general tax revenue, and will oppose
any measure to cut taxes which does not cut the currently enacted budget a like
Another important element of tax policy is our competitive position
relative to other states. There are
many ways in which weíre out of line with other states, especially our closest
neighbors. We need to analyze our
tax structure, compared to our neighbors and competitors and make appropriate
adjustments. We canít move into a
knowledge-based economy with a tax code designed for an industrial age.
The third essential element of a system of taxation is fairness --
who pays relative to how much they own and how much they earn.
I believe that those of us whoíve prospered the most relative to the
general society should pay relatively more to support the government of that
society. Most people would support
that theory but the disagreement will be about the degree of relative
obligation. Here again, a good
guide would be our sister states, particularly our close neighbors.
By most accounts, we tax our working poor more heavily than most other
states. Our state tax on motor
vehicles is onerous. We tax drugs
differently, depending on how they are dispensed, we still need to modernize the
way we tax the telecommunication industry, and we have other examples of unfair
taxes, high and low. The time has
come to address these inequities. Itís
the second major item of unfinished legislative action on my agenda.
seen where leaders of both houses of the legislature have called for
comprehensive tax reform. Iím
ready. Itís been studied,
restudied, and the restudy has been restudied, to paraphrase words used in a
recent national controversy. The
time has come for action. Here
again, I call for support; from both houses and from both parties.
know there will be critics. Nothing
we can do thatís meaningful or important can ever be done without criticism.
If meaningful progress were easy and obvious, it would have already been
done. Leaders look for the
solutions that require study and analysis and that change the status quo, and
that will always upset entrenched special interests.
These issues require leadership and leadership is not the exclusive
domain of the executive. It
requires equal participation by the legislature and I stand before you tonight
with an offer to join you in an attempt to make our system of state taxation
more fair and more competitive. I
call for comprehensive, revenue neutral, bipartisan tax reform, developed by a
coalition of leaders of the House, the Senate and the Executive, using the
advice of the best experts we can get and working in an atmosphere of trust and
good will. While I think it could be done in this session, as a minimum
Iím asking that we establish a joint task force to present a proposal for
consideration in the near future. I
donít think any endeavor could do more to heal the wounds that permeate the
body politic of Kentucky State Government, and thatís something that needs to
be done and needs to start tonight.
Speaker Richards, I offer a hand of partnership to you and all of your colleagues of both parties in the Kentucky House of Representatives as we work on these and other problems that face the people of Kentucky.
And President Williams, I too offer you and your colleagues of both
parties in the Kentucky State Senate a hand of partnership and pledge to you a
willingness to look only to the future as we work together to serve the people
And to the people of Kentucky, I pledge to you that Iíll work 3 more
years just as hard as I know how to work. Iíll
use the very best judgement at my command, Iíll keep your best interests as
the very keystone of my actions, I will be as fair and honest and sincere as God
gives me the wisdom to know, and I will do my very best.
Good night and God bless you.