Without historic horse racing, state will be like ‘Mississippi’: Lawmaker

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FRANKFORT, Ky. (WTVQ) – The state’s budget that starts next July likely will be relatively flat and state lawmakers likely will consider unemployment insurance reforms and legal safeguards against some coronavirus-related lawsuits when they convene in January.

In fact, it’s possible legislators might look at a gas tax increase or some other revenue stream to increase transportation funding, legislative leadership said Wednesday during a day-long virtual conference with the Kentucky Chamber of Commerce.

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But perhaps the biggest threat to parts of the state’s economy in the long-term could be the end of historic horse-racing, more than one lawmaker warned. And Gov. Andy Beshear said he plans to ask the Legislature to make changes to help the billion-dollar industry withstand a court challenge.

For many years, parts of the state looked down on the horse and bourbon industries in Kentucky.

That has changed in recent years and now is time for the state to really get behind both industries and the billions of dollars they generate in jobs, tourism, and tax revenues.

State lawmakers told the state’s Chamber several proposals to support both industries would be on the agenda when the General Assembly convenes in January. Those issues will target continuing their success to attract even more visitors to the state.

And one of the keys to the long-term continued success of both is historic horse racing, which has come under fire in the courts.

“If you want horse racing to away, don’t support historical horse racing and see what’s left of our brand around the country and around the world. It’s not going to be too exciting if we don’t have horse racing and a thriving bourbon industry. We’ll be West Virginia and Mississippi. I didn’t move to West Virginia and Mississippi and a lot of other people didn’t either…it’s because of the great natural great  industries we have here in horses and bourbon,” said Senate Majority Leader Damon Thayer.

As the state looks toward coming out of the coronavirus pandemic, leaders are beginning to look toward rebuilding the economy.

But don’t expect the Legislature to go on a budget spending spree in the months ahead. Instead, lawmakers said Wednesday they expect little changes in the state’s current spending.

Maintaining the status quo will provide a better idea on how state revenues are going to perform. And it also will allow the state to rebuild some of its reserves, see what federal money might be coming and allow the state to better set long-term priorities.

“I see a continuation budget for that…but when the pension costs are included in the formula, it really amounts to more money in the budget,” said state Rep. Brandon Reed.

Lawmakers said demands from teacher pensions, increased health care costs pose long-term demands that must be addressed. Teacher pension costs make up as much as 10 percent of state’s budget.

It may not happen in January but sooner or later, the state legislature is going to have to do something to better fund road and transportation.

That was the general agreement in a discussion before the Kentucky Chamber of Commerce. Whether it is an increase in the gas tax or some other formula, something has to be done.

Lawmakers on the panel said the 26-cent per-gallon tax is the same as it was in 2011. And the Legislature takes $144 million — the equivalent of about 4 cents of the gas tax — in revenue each year to fund other things.

Meanwhile, construction costs are rising, revenues are falling because cars get better gas mileage and more and more electric cars are hitting the roads. In fact, the state could have 500,000 electric cars in 10 years as the costs of those vehciles steadily declines while power and efficinecy improves.

The state has about 4,000 cars now.

“We’re really handicapped when it comes to planning for roads, when it comes to paving roads, roads we were putting off 8 or 10 years we’re now putting off 12 to 15 years. All you have to do is drive Kentucky roads,” state Sen. Jimmy Higdon said.

The Legislature convenes January 5 for a short session and lawmakers said the transportation funding issue may be pushed off to another year.

Businesses are going to get sticker shock in January when they get their bills for unemployment insurance.

It could amount to $100 per employee. State lawmakers told business leaders they hope to make some changes to try to reduce the impact in the long run.

The state has borrowed $865 million from the federal government that will have to be paid back and the state’s unemployment fund is about $650 million in the red.

Legislative leaders also said they support safeguards for businesses against lawsuits related to the coronavirus. That ranges from companies that switched over to make protective gear to companies or put health measures in place

Leadership said businesses can’t really bear any more burdens right now.

“We can’t put anymore straw and that camel’s back. There are too many fragile businesses out there that can’t afford that,” said Senate President Robert Stivers.

The state’s Chamber of Commerce held a day-long discussion with lawmakers on a issues ranging from energy to transportation.