State gets vital boost in revenue

Students concerned about Pell Grant cuts

Commerce Secretary drums up tax plan

Editorial: Tech center: OK the tax plan and it's all ours

Gateway course will aid economy

Academic contest enters its 3rd year

State gets vital boost in revenue

The reason is that actual tax collections across the board — particularly for corporation taxes and state taxes on coal production — have exceeded expectations since last spring, according to the state Budget Office estimate.

Republican and Democratic lawmakers said new money is badly needed for basic services and will not pay for major expansions of programs.

"We better hope we get the dollars predicted in the forecast," said Sen. Charlie Borders, R-Russell and chairman of the Senate budget committee.

"We're going to need that money to cover the Medicaid shortfall, for the health insurance plan we approved for public employees, and maybe do something for tobacco farmers who might lose Phase II payments they were expecting from tobacco companies," he said.

Rep. Harry Moberly, D-Richmond and chairman of the House budget committee, said some of the money should go to education. "If you weigh our needs against available revenues, the needs are still much greater," he said.

Brad Cowgill, budget director for Gov. Ernie Fletcher's administration, said a surge came sooner than expected.

"That's good news. But that will not free us from the necessity of having to make tough decisions," he said.

Larry Lynch, chairman of a panel of economists that issues the official state revenue forecast, cited several reasons for having to revise the estimate, including the unpredictability of corporate taxes.

"We were maybe a little gun-shy last January. The national economic recovery had been under way for months, but at that time we hadn't seen it reflected in state revenues," said Lynch, a professor of economics emeritus at Transylvania University. "We predicted a turnaround, but it occurred a little sooner and a little stronger than we expected."

Lynch and others in charge of projecting state revenue for many years said corporation income-tax revenues — unlike the income or sales taxes — don't parallel economic trends in employment or wages or corporate profits.

"The difficulties in forecasting corporation income tax are not unique to Kentucky," said Bob Cox, deputy executive director of the Governor's Office of Economic Analysis. "Corporations have opportunities at the state level to move income, move operations in and out of states, to either avoid taxation or to shelter taxation."

Coal's big boost

A second surprise was that the tax on mined coal showed strong growth.

"This tax had been decreasing for many years, but in the past year coal prices have been strong and coal production went up," Lynch said.

The coal severance tax — 4.5 percent on the selling price of coal — has produced shrinking revenues for the state since 1990, when production peaked, said Bill Caylor, president of the Kentucky Coal Association.

"But starting last spring, we've seen a big jump in price and maybe a small increase in production," he said. "The price has gone up strictly because demand has gone up for a number of reasons, including that the improving economy causes more demand for electricity."

Caylor said the price of Kentucky coal on the spot market has increased from just more than $30 a ton a year ago to between $44 and $55 a ton today.

The unofficial forecast released Monday by the state Budget Office staff called for revenues to grow to $7.43 billion in the current fiscal year, and to $7.66 billion in 2005-06.

Those estimates are $479.9 million higher than projected a year ago. Combined with a $142.4 million surplus at the end of last year, the increase is $622.3 million, or about 4 percent more than forecast.

Making it official

Lynch's panel, the Consensus Forecasting Group, is expected to make official the Budget Office's estimate or something close to it, he said.

Soon after the 2004 legislature convened, the group projected General Fund revenues at $6.84 billion for the fiscal year that ended last June 30; $7.15 billion for 2004-05; and $7.46 billion for 2005-06.

The House and Senate used that forecast as the basis for budget bills considered through April.

But the session ended without a budget because the Senate insisted on passing Fletcher's tax plan with it, and the House rejected the plan.

Since last spring, General Fund tax revenues have rebounded, and in the year ending last June 30 they hit $6.98 billion — $142 million more than predicted.

Lynch said the Budget Office's estimate for this fiscal year is solid largely because the year is half over and revenues have been strong.

"We'll discuss some issues that could change that forecast for 2005-06, but if we make changes they will be small — less than 1 percent," he said.

Cowgill said state revenues are hard to predict — a problem he said would be eased by the governor's tax proposal.

"The ride up can be a bit of a thrill, but the ride down can be scary as all get-out," he said of the existing code's volatility.

Tobacco tax

The Kentucky Farm Bureau supports raising the state tobacco tax to cover shortfalls farmers are expecting from cigarette companies. D1

Courier-Journal
January 16, 2005

Students concerned about Pell Grant cuts

Crisp and other Kentucky and Indiana students may be among 1.3 million students nationwide who either no longer qualify for the grants this fall or receive smaller ones.

In Kentucky, 73,168 students received $180 million in Pell Grants in 2002-2003, the latest figures available, and 92,295 students in Indiana received $208 million.

Federal officials say the Pell program has a $4.3 billion shortfall.

The shortfall exists because the program is an entitlement, meaning that everyone who is qualified gets a grant even if Congress hasn't appropriated the money, financial-aid officials said.

Federal officials are required by law to make eligibility changes in the program likely to affect many of the 5 million low- and moderate-income students who receive the grants.

"It would be devastating," said Crisp, 24, of Ashland. "Even $200 — I'm thinking in my head right now what that would take away. I'd cut back on groceries and wouldn't go home as much."

Pell Grants now range from $400 to $4,050 annually, based on need. But President Bush has faced criticism about the eligibility changes and said last week that he would propose raising the maximum to $4,550 by 2010.

Secondary impact

In Kentucky, the Pell Grant rule changes will have a secondary impact. Students who lose eligibility for the federal grant also will lose eligibility for state-funded College Access Program grants of $1,700.

The changes in how the federal government calculates income available to pay tuition are estimated to save about $300 million in the $12.8 billion program.

The American Council on Education, a Washington-based advocacy group, estimates that 89,000 students nationwide could lose their Pell Grants entirely. Overall, 1.3 million are expected to have their grants reduced or eliminated, the council said.

As part of an omnibus spending bill in 2003, Congress blocked the Department of Education from imposing the changes, but it didn't do so last year. Two House members have introduced a bill to prevent student aid from being cut as a result of the changes, but experts say it will be difficult to pass.

"They can write their congressman and scream and all that, and they should — but at this point in time, it's set," said Carol Becker, director of financial aid at Morehead State University.

Terry Carmack, chief of staff for Rep. Anne Northup, R-3rd District, said because the changes will target money to the neediest students, Northup supports them — along with an additional $458 million that was put into the program next year.

"We are trying to update the program and spend money on the people who need it the most," Carmack said.

Bad timing

In Kentucky, it's unclear how many students will be affected, said Joe McCormick, executive director of the Kentucky Higher Education Assistance Authority, which administers state and federal aid programs in the state.

"The Department of Education, they're doing this for one sole reason, and that reason is, it saves them money," McCormick said.

At UofL, officials estimate that 2,678 of the 3,306 students currently receiving Pell Grants would lose an average of $267 each next year when the changes take effect.

Of those students, 95 would lose their entire grant, said Denise Gifford, vice president for student affairs.

Western Kentucky University says 48 of its students could lose Pell eligibility for fall 2005 because of the changes.

Morehead State estimates that of its 3,496 students receiving Pell Grants this year, 151 may lose their grants and another 1,497 would have them reduced hundreds of dollars.

"It's not coming at a very good time, when state revenues are down and institutions have no option except to increase tuition," Becker said.

Updated standards

But Susan Aspey, press secretary for the Education Department, said in a statement that federal law requires it to update eligibility standards. Some Pell Grant eligibility rules haven't been updated in 10 years, she said.

"Our projections show an increase in the number of students receiving Pell Grants next year, and nearly half of Pell recipients are eligible for the maximum award and won't be affected," Aspey said.

The changes come as college students and their parents are beginning to prepare their annual applications for federal student aid. The government uses the applications to determine whether students are eligible for federal aid, including Pell Grants, which, unlike loans, do not have to be repaid.

To determine eligibility, the government reviews a student's or family's income and assets as offset by expenses, including care for dependents, housing and taxes.

McCormick said that Kentucky students typically qualify for Pell Grants if they come from families with incomes of $35,000 or less, with lower-income students qualifying for higher grants.

The changes scheduled for the fall 2005 semester would reduce the amount of state and local taxes deducted from student and family incomes on the federal student-aid application.

Melanie Corrigan, associate director for policy analysis at the education council, said the lowest-income students probably won't be affected but that other Pell Grant recipients would see reductions in their grants or lose them altogether.

But because a number of factors go into determining a student's or family's income for aid purposes, Corrigan said, it's too early to tell which students will be affected.

Pat Arauz, director of financial aid at UofL, said her office has not informed students of the change because she can't say who will face cuts.

She said officials — and students — will have a better idea later this year when award letters issued by the school indicate the amounts of federal and state aid that students will be eligible to receive in the fall.

Some students unaware

Several UofL students said they weren't aware of the Pell Grant eligibility change.

"If it weren't for that Pell Grant, I would have to pay for my books," said Ashlee Evans, 19, a UofL freshman from Winchester.

Evans, who has requested a work-study job, said she uses state and university scholarships to pay tuition, but gets an annual $600 Pell Grant that helps her pay for books and other expenses.

Jeremy Williams, 25, a UofL senior from Little Rock, Ark., said a cut in his $4,000 Pell Grant would be "pretty significant." He uses it to pay for tuition not covered by a scholarship, books and living expenses.

"To a college student, that's a significant amount of money," said Williams, a liberal arts major. "I'm nontraditional. I'm poor. I'm an artist."

For Crisp, paying tuition and living expenses means juggling work and school and relying on an array of federal and state aid.

She said she lives on $11,500 a year, with the $4,050 Pell Grant paying most of her $5,040 UofL tuition. She also takes out $4,000 in loans and earns $3,500 from a federal work-study job as an elementary school tutor.

She said the Pell Grant has allowed her to amass less debt.

"If I didn't have the Pell Grant, I'd be taking out loans for everything," Crisp said.

Commerce Secretary drums up tax plan

ASHLAND -- Ashland native and Kentucky Commerce Secretary Jim Host came back to his old home town Thursday to drum up support for Gov. Ernie Fletcher’s tax modernization plans that could create an estimated 7,000 new jobs and stimulate the state’s economy.

"The people voted for Gov. Fletcher for change, and change is what Gov. Fletcher wants to provide," Host told more than 50 people Thursday afternoon at the Ashland Community and Technical College auditorium.

"We have to make dramatic changes in our tax structure," he said. "Kentucky has a wider range of business taxes than any other state. That needs to change. Kentucky’s tax system in antiquated, unfair, unreliable and not good for growth."

Fletcher is Kentucky’s first Republican governor in more than 30 years. He was unable to get a budget approved last year through the Republican controlled state senate and the Democratic controlled state house. Leaders from both parties Thursday talked about the need for bipartisan support to get a budget passed this year and to make changes in the state’s tax codes.

"Mr. Host was very excited about the governor’s plans," said Becky Gehringer, director of lifelong learning at Ashland Community and Technical College. "Everyone agreed there needs to be change, but nobody said what that change will be."

Few details were discussed Thursday about the changes Fletcher is proposing in this year’s budget. After the forum, Host did discuss the possibility of raising taxes 29 cents per pack on cigarettes and raising taxes by 3 cents on a can of beer.

"The governor wants tax changes to be revenue neutral," Host said. "He’s committed to no new taxes."

Host said the proposed changes reduce the income tax burden on 98 percent of working Kentuckians and takes 300,000 low-income state residents off the tax rolls. Another provision would be to shift some increased cost of Medicaid to people who choose to smoke.

Fletcher’s tax proposals could be made public Feb. 2 during the governor’s State of the Commonwealth address.

"I hope we can see the specifics of the plan before then," said State Rep. Rocky Adkins, D-Sandy Hook, majority leader in the Kentucky house. "It’s critical to see the details. There will be debate on those details.

"Tax modernization is something that’s needed," Adkins said. "We want a tax modernization plan that is fair and will grow the economy. The process requires good-faith negotiations. There’s going to be debate and discussion. Not many things will be rubber-stamped. We need to have more communication. I think it has to be a bipartisan effort."

State Rep. John Vincent, R-Ashland, said everyone wants to see bipartisan support on the budget.

"I’m optimistic we can come together for the good of the Commonwealth and that’s what people expect us to do," Vincent said. "The No. 1 goal I have is to provide a more competitive environment for us to attract jobs to our area."

Fred Jackson, chief executive officer at King’s Daughters Medical Center, said one change that could be made is in the state provider tax that costs the Ashland hospital $5 million a year. That money could be better spent on an additional 180 nurses at the medical center.

Eliminating state income taxes on the poorest Kentuckians is another likely change. Currently, Kentucky residents making as little as $5,000 a year have to pay taxes. That could be increased to $12,000 under Fletcher’s plan. Adkins, meanwhile, said the change could be tied to federal poverty guidelines, meaning those making $18,000 a year or less might not have to pay.

The Henderson Gleaner
January 19, 2005

Editorial: Tech center: OK the tax plan and it's all ours

It's comforting to hear Gov. Ernie Fletcher repeat his support for the long-proposed Tri-County Technology Center, as he did in a stopover here last week to tout his tax plan.

However, to no one's surprise, the support comes with a caveat on the order of "scratch my back and I'll scratch yours." Or, as he laid it out last Thursday: "... I'm a supporter of it, but let's see how the tax plan goes."

Though he insisted in response to a follow-up question that, if the legislature sends him a budget with the tech center included, he is "not going to strike it out," he also pointed out that "you can't increase your (bonding) debt limit unless you have sustainable revenues."

Those "sustainable revenues" are to be found in ... his tax plan, of course.

So it is that the tech center's best chances are rooted in passage of the governor's tax plan.

Fair enough.

Although we have some reservations about the tax modernization's potential for overwhelming success, our newspaper has been generally supportive of its passage from the beginning -- especially if the proposed cigarette tax is hiked upward from the paltry 24-cent increase first offered.

To his credit, the governor has said he can accept a raise to near "40 cents a pack." Kentucky, with some of the nation's very worst health issues related to smoking, now enforces the nation's lowest tax on cigarette's: 3 cents a pack. That's shameful.

There's bound to be a reachable middle ground on the tax plan and the budget. It would be more appropriate if the two were considered separately, but the governor is determined to marry one to the other.

We believe our legislators are willing to give ground if the governor will accept compromise. There's still hope that level heads will prevail and Kentucky will have a budget and some sort of tax plan -- and the Tri-county will finally get the technology center that would help underpin the governor's economic development vision for the state.

The Kentucky Post
January 11, 2005

Gateway course will aid economy

Gateway Community and Technical College and NOR-COM Inc. of Hebron have teamed up to start a course of study that leads to a certificate as an audio visual technology specialist, the first of its kind in the country. The 32-credit-hour program will include courses in electronics, construction, voice and data wiring, and computer repair.

The course of study will conclude with a class that focuses on the essentials of the audio visual industry, taught by Jim Huber, NOR-COM's director of business development and a certified technology specialist.

As a part of the class, students will take a test to try to become certified technology specialists.

Gateway and NOR-COM officials said the program should benefit students, the audio visual industry and the Northern Kentucky economy.

"This is a prime example of how Gateway can provide services that will greatly enhance economic development for the region," said Angie Taylor, provost of Gateway's school of technical careers and vice president of business and industry services.

NOR-COM designs and engineers a variety of audio visual systems that include conference facilities, technology centers, video teleconferencing, distance learning, tele-medicine, security systems, video media management systems and large venue performance facilities.

"In our specialized industry, we are forced to bring in people who are under-prepared for this type of engineering and creative work and train them in-house," said NOR-COM President Dan Van Meter. "This is our biggest challenge, and so this partnership with Gateway is vital for NOR-COM but will also benefit the community."

Van Meter said the variety of courses in the program should give students a better understanding of how the arts and sciences come together to produce the knowledge and ability to create audio visual systems. "Understanding basic acoustics, sound, absorption rates, electricity and how each affects the other is vital," he said.

Students certified as audiovisual technology specialists should be well equipped to pass an examination to become certified technology specialists, said Gateway and NOR-COM officials. "A certified technology specialist is the worldwide industry standard certification for technicians in this field," said Huber.

He said the average annual salary for a CTS technician is $40,000 to $50,000 and noted that sales people with CTS backgrounds can earn at least $100,000 a year.

Kentucky New Era
January 15, 2005

Academic contest enters its 3rd year

HOPKINSVILLE -- The academic all-star ceremony traditionally sponsored by the Kentucky New Era is gearing up for a third year with several additions to the program, including new sponsors.Billed this year as the Kentucky New Era/Rotary Regional Academic All-Star Awards and Recognition Ceremony, the event is slated for April 21 at Hopkinsville Community College.

Nominations for students to be included on the 8-member All-Star team are being accepted through March 1. Those selected to the team will receive a $500 scholarship from the Kentucky New Era. Those students will receive an additional $500 scholarship if they attend the sponsoring colleges.

Newspaper Publisher Taylor Hayes noted that the annual program has expanded its offerings because other folks have become interested in this year's ceremony and agreed to sponsor it.

Both the Tennessee Valley Authority and its distributors along with Rotary clubs in Christian, Trigg, Todd and Caldwell counties have joined the 2004-2005 program.

TVA, in conjunction with the Hopkinsville Electric System, the Pennyrile Rural Electric Cooperative Corp. and Princeton Electric Plant Board, have donated $3,500.

Local and area Rotary clubs have agreed to give each senior nominee from their respective counties a $100 scholarship.

"Anything positive for the students we can do in this community, that's what we're out to support," observed Chris Whitmer, president of the Hopkinsville Rotary Club.

Whitmer pointed to the loans that his club provides each year for local students as well as the $25,000 in scholarships that were awarded by the club last year, and he noted that the New Era's recognition ceremony just seemed to fall in line with the club's outreach to youth.

Created in 2003, the program recognizes students from area schools for their prowess in a variety of academic disciplines. Forty-four students from Christian, Todd, Trigg and Caldwell counties were recognized during its first year and 47 during its second year.

With this year's additional sponsorship, the current program has been expanded to include students that are from the 11 middle schools in the newspaper's coverage area, in addition to the $100 Rotary scholarships that will go to each senior nominee.

The program also has been endorsed by Virginia Fox, the Kentucky Education Cabinet Secretary, and Hayes noted that while the overall concept of the program has not changed, people's excitement about it has.

"More organizations and businesses want to play a role in encouraging success in the classroom," he said.

Schools wishing to nominate their top students for recognition have until 5 p.m. March 1 to submit their entries to the newspaper. Eligible students must either be high school seniors or eighth-graders at their respective middle school.

High-school students will be recognized in eight categories including arts, career and technical, English, foreign language, journalism, math, science and social studies/economics.

Middle-school students will be recognized in English, math, science and social studies/economics categories, although there will be no judging or selection process for the middle school division.

All middle-school nominees will be recognized at the April ceremony and honored as being a part of the academic all-star team.

Judging for the team will take place through March 26.

Nomination forms are available on the New Era's Web site at www.kentuckynewera.com/academic allstars. The forms must be typed, and the decision of the judges is final. Incomplete forms will be subject to elimination by the judges.

The forms may be mailed to the Kentucky New Era, Regional Academic All-Star Team, P.O. Box 729, Hopkinsville, Ky. 42241-0729, or dropped by the office at 1618 E. Ninth St.

For more information, call Wendy Shelton, assistant to the publisher, at 886-4444 or by e-mail at wshelton@kentuckynewera.com.

Additional sponsors for this year's recognition program are Austin Peay State University, Christian County Board of Education, CoPar Inc., Hilliard Lyons investments, Hopkinsville Community College, East Meets West, Murray State University, Todd County Board of Education, Towne and Country Drugs, Trigg County Board of Education, US Bank and Western Kentucky University.