STATE OF THE COMMONWEALTH
BY GOVERNOR PAUL E. PATTON
WEDNESDAY, JANUARY 3, 2001 - 7:00 p.m.

President 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 it’s ever been before. 

Our 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. 

And, with one exception, we’re holding expenditures within budgeted limits.  That exception is Medicaid.  Increased utilization and higher medical costs will cause a substantial increase in Medicaid obligations.  We’ll be discussing with you actions that will be necessary to bring costs within budgeted resources. 

And we’ll 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 miner’s 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.

I know that you’ll be reviewing regulations, executive reorganizations and executive appointments. 

These 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.

Our administration will be working with you in these and other areas but we’ll also be going full bore implementing the aggressive agenda you’ve approved in three previous regular sessions and two special sessions since I’ve been Governor.

First among these is education.  It will always be our primary focus.  While we’re fully involved with KERA and your recent emphasis on teacher preparation and dropout prevention, and we’re working with the CPE and our colleges and universities to implement and perfect our postsecondary education improvements, we’re also fully engaged in implementing the two new education initiatives of the 2000 session, early childhood development and adult education.

We’re 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.

And as to early childhood and adult education, I’m convinced we did the right things.  As I’ve traveled the state this year, I’ve had dozens of practitioners in both fields compliment us and express their appreciation for these initiatives.  As these programs are fully implemented, we’ll also be viewed as national leaders in improving services in these very important areas.

Job 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.   

While I have and will continue to travel the nation and the world promoting Kentucky, I’m embarking on a special effort to promote the two most economically disadvantaged areas of the Commonwealth, Eastern Kentucky and our inner cities.  You’ve approved special incentives for both of these parts of the state, but I’ve found that it’s still difficult to get businesses to forget stereotypes and take a fresh look at these areas, so I’ll be using the influence of the Governor’s Office to get the attention of the people who should be taking advantage of these special opportunities and just don’t know about them yet.

While 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. 

While 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.  We’re making progress implementing the new economy initiative and we’ll be prepared to propose more changes to you in the 2002 session.

          The net effect of our efforts is that we’ve 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. 

I 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 we’re 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 beneficiaries.

          We’ve 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.

Changing education is a slow process.  Changing an economy is also slow.  The two go hand-in-hand.  They’re the two rails of that railroad that will take us to a better standard of living and quality of life.

          In its broadest sense, that’s 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 we’re dealing with a very subjective goal.  Economic status – 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. 

But 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.  That’s 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 women’s health initiative will make us healthier, as will our extraordinary KCHIP program for children’s 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 it’s still too high.  That’s 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.  That’s why the improvements in our juvenile justice system are so critical.  In 5 years we’ve quadrupled our expenditure on juvenile treatment programs.  And in those five years we’ve turned one of the nation’s most inadequate programs into one of the nation’s 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, we’ve 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 you’ve passed.

          And we’ve 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 – and we have an absolute obligation to invest in the infrastructure that will be needed by our children.  And we’ve done that.  The three budgets we’ve 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.  We’ve invested in the physical as well as the intellectual capital of our people.

          And we’ve 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, we’ve been faithful to our farmers because they represent the very essence of Kentucky – hard work, independence, neighbors, community. 

          We’ve supported our working people, we’ve promoted tourism, we’ve invested in the downtowns of our cities – we’ve addressed just about every aspect of Kentucky life, but we haven’t done all that we need to do.

          Another very important aspect of quality of life is our physical environment.  It’s 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. 

While we’ve experienced some unique environmental challenges, the vast majority of Kentuckians enjoy a good, safe, clean environment.  I’m proud of the Cabinet for Natural Resources and Environmental Protection’s even-handed regulation of industry to protect our environment and our jobs.

          The cabinet’s 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 isn’t the answer.  And planning after a city is built isn’t the answer either.  Herein lies one of the two unfinished major initiatives I’d 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!!!

I realize that some of these issues, especially growth, are complex and the proper foundation hasn’t 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 session.

We must explore how we can give our communities the tools they need to ensure that they’re growing in ways that preserve their quality of life without slowing their economic potential.  Kentucky is developing its farmland at a rate that’s 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.

We 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.  They’re unsightly, they’re dangerous, they’re unhealthy and they’re 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, it’s 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.  It’s the other 10 percent that’s 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 don’t have this service available wish they had it and would gladly pay for it.  Let me assure you that it’s 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, it’s 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 service!!!

          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 it’s 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 don’t have the means to collect the fees that cities do.  That’s 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 it’s good politics.  I know.  I’ve 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.

          I’m 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.  I’m for it in every county and I’m asking legislators from both houses and both parties to stand with me and enact this law in this session!!!  

And then let’s look for other ways to clean up Kentucky with recycling and litter control and dump cleanup programs and programs to encourage smart growth in Kentucky!!!

          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 tonight’s discussion, I’m 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 amount!!!

          Another important element of tax policy is our competitive position relative to other states.  There are many ways in which we’re 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 can’t 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 who’ve 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.  It’s the second major item of unfinished legislative action on my agenda. 

I’ve seen where leaders of both houses of the legislature have called for comprehensive tax reform.  I’m ready.  It’s 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. 

I know there will be critics.  Nothing we can do that’s 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 I’m asking that we establish a joint task force to present a proposal for consideration in the near future.  I don’t think any endeavor could do more to heal the wounds that permeate the body politic of Kentucky State Government, and that’s 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 of Kentucky.

          And to the people of Kentucky, I pledge to you that I’ll work 3 more years just as hard as I know how to work.  I’ll use the very best judgement at my command, I’ll 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.