Stateline Story

On the Record: Kentucky Gov. Paul Patton (D)

The battle to close looming deficits in Kentucky has been a losing one for term-limited Gov. Paul Patton (D), who finishes his term as chairman of the National Governors Association in June. In an interview with STATELINE.ORG, Patton discussed state budget problems and the NGA's position on federal fiscal relief for states.

STATELINE.ORG: You've been battling with Kentucky's legislature the past two sessions to raise taxes to close the state's budget deficit. Did you have any success with your budget agenda this session?

PATTON: We didn't have a lot of success. We got a budget passed, so that was positive, but it was not a budget that I supported. I supported and introduced a budget with a $500 million tax increase, about 7 percent of the general fund. That was not even considered (by the legislature), so the legislature wrote a budget that used the last of our one-time monies, made some very questionable assumptions and made some cuts in higher education and K-12 education. And still the budget is about $370 million structurally imbalanced; that is either the money is not there or it won't be there in the next budget cycle.

STATELINE.ORG: Nearly every state has struggled to pass balanced budgets this spring. How do you think states have measured up to the challenge of closing record deficits?

PATTON: I don't know any state that's really stepped up to the plate and solved all of their financial problems; if they have I'm not aware of them. We've had no tax increases (in Kentucky), but many states have had tax increases and are still facing major budget revenue shortfalls.

STATELINE.ORG: What are some of the severe cost-cutting measures states have taken this spring to close their deficits?

PATTON: They're all over the board; some states have made draconian cuts that are bound to affect their society in the future, others have raised taxes. Every state has made cuts. Some have made moderate cuts and used tax increases to cover the more draconian measures.

STATELINE.ORG: For the past year, the National Governors Association (NGA) has been lobbying Congress to provide federal aid to states because of the budget crisis. The White House opposes a bailout for states and some Republican governors have criticized the NGA for pushing state fiscal relief. Has the NGA reached a unified policy on state fiscal relief?

PATTON: (The NGA Executive Committee) approved a letter (May 14) that was sent to Capitol Hill that strongly endorses a state fiscal relief policy. There was some disagreement about exactly how it would be requested and for what, but I don't think there was any resistance to fiscal relief so much as there was some disagreement on exactly what it would be for. We resolved that by generally alluding to unfunded mandates without getting into specifics. The truth about it is that nobody is going to object if they in fact pass fiscal relief and it's not designated for any particular purpose... There's a pretty good sense in Congress that they don't want (fiscal relief) tied to too many specific things, so Congress is going to have to work out those differences but I think we made a pretty strong statement in favor of fiscal relief.

STATELINE.ORG: NGA policy is formed by consensus, not by majority. How do you achieve a consensus among governors on politically divisive issues?

PATTON: You have to understand what each governor is interested in and how the politics of their states work and how strong they view certain issues. It's a diplomatic challenge to work with 50 very strong, very opinionated, sometimes very partisan people that have very strong differences. We're dealing with people from exact opposite ends of the political spectrum as well as people that are in the middle and everywhere in between. I don't know of any governors that have personal animosity between them. There was a situation up until a couple years ago where there was one particular governor that grated an awful lot of people wrong...

STATELINE.ORG: Who was that?

PATTON: I'm not going to say. He's not a governor now, I'll say that much. He grated people wrong in his own party, he was just an abrasive individual. That's very rare, the NGA is a very collegial group and we have much more in common than we have differences.

STATELINE.ORG: There were reports that the NGA's annual winter meeting last February was marred by partisan debate over state fiscal relief. How serious was the partisanship that arose over the debate on federal fiscal relief for states?

PATTON: I think that the February meeting was the most difficult meeting that I've been involved in, but I think that it was a good meeting in that a lot of people took away a broader perspective of the NGA than they had initially held. Keep in mind that we were dealing with 24 new governors who did not really have the broad perspective of how the NGA had to work that the more senior governors had developed. There's never been in my memory that many new governors come into the organization (at the same time), and some of them just simply didn't have an appreciation for how the NGA works and some (Republicans) did have the attitude that we have the majority of governors and we ought to dictate the policy. (26 Republican governors, 24 Democratic governors) The NGA is just not like the Congress, it has to operate by consensus. That's not necessarily 100 percent of the governors, but in my opinion, if we don't have 40 governors who can come together and agree generally on a direction, it's probably something that we shouldn't get involved in.

STATELINE.ORG: Some Republican governors have said that the staff in the NGA's Washington, D.C. office has an anti-Bush administration agenda- how do you respond?

PATTON: I would not agree with that, I think the staff is professional and I think the staff responds to the leadership. The governors' interest will conflict with the White House- the states' interest will conflict with the White House regardless of the party. I disagreed with the Clinton White House and they understood and accepted that... So the governors, if they look out after the best interests of their states, they're going to differ with the White House, and governors ought to understand that and the White House ought to understand that.

STATELINE.ORG: Do you think this White House is exerting too much control over Republican governors?

PATTON: I think that some of the Republican governors are beginning to understand that sometimes the interests of their state and the NGA will differ from the administration, and they may be just as timid as I was in publicly articulating that position because nobody wants to alienate the White House, particularly of their own party.

STATELINE.ORG: What other issues are at the top of the agenda for the National Governor's Association right now?

PATTON: All governors want to see Medicaid improved. We haven't made any decisions yet, but we're certainly looking at the fact that states have proven that they will not sustain the eight, nine or 10 percent increase in the state share of Medicaid that has been prevalent and is no doubt going to continue in the next decade. States are self-limiting the program - states are cutting the program, not the federal government - and actually cutting back the program and taking back benefits, as we're doing here in Kentucky, because we simply cannot afford our (federal matching rate). It's just gone beyond what our people are willing to spend. I don't know when the governors are going to agree on specific reforms, but it's one of our priorities and (the NGA executive committee) had a good meeting with Health and Human Services Secretary (Tommy) Thompson (May 14).