COMMENTS & ANALYSIS - January 2005
by Ed G. Lane


Kentucky Needs a Budget, Tax Modernization
The Lane Report's annual business and political forecast

Politically, 2004 was a significant year. President George Bush was re-elected. Republicans increased their majorities in the U.S. House and Senate. In Kentucky, Republicans increased their numbers in the General Assembly. As Kentucky’s senior Sen. Mitch McConnell recently stated, “If you’re on the Republican side of the aisle there is not much not to like about the election.”

2004 Political Forecast
The senator’s quote introduces our post-analysis of The Lane Report’s 2004 political forecast. Our accuracy rating for 2004 was 69 percent - down from 78 percent in 2003. A few comments on our 2004 political forecast boo-boos:

The Lane Report congratulates U.S. Congressman Ben Chandler on his win over State Sen. Alice Forgy Kerr in the special election to replace Ernie Fletcher who resigned his Sixth District Congressional seat to become governor. We missed this election forecast “big” and tip our hat to Ben Chandler’s impressive win.

Greg Stumbo started his new career as attorney general by promoting the formation of the Kentucky Bureau of Investigation – a bad idea. Being an astute politician, the AG recovered quickly from his misstep and ended 2004 on an up-tick. A nice recovery!

Teresa Isaac was forecast to have a better year in office compared to her wimpy start in 2003. Unfortunately for Lexington’s mayor, our 2004 forecast was not to be so. Asking for multiple tax increases that were not approved by the council and having an $11 million plus “surprise surplus” on June 30, 2004 is an example of why Mayor Isaac’s approval rating has reached a new low.

Our best forecasts for 2004 included “Ann Northup wins with by her greatest majority,” and the fourth district pick of Geoff Davis over Nick Clooney’s “style.” We still think Clooney has a lot of “class.”

2004 Economic Forecast
Much of our 2004 outlook for the American economy was right on the mark. The stock averages hit new post-9/11 highs and year-end economic conditions were positive – low interest rates, high employment, increasing tax revenues for state and local governments. We give our economic forecast a 75 percent accuracy estimate.

We missed on these issues:

The situation in Iraq is still tense and not improved enough for our forecast to be accurate.

Technology growth and tax modernization suffered from the “do nothing” Kentucky General Assembly that failed its constitutional duty to pass a budget.

By not passing the state’s budget, or authorizing bonding for new research and educational facilities, or funding new economic initiatives for the state, the General Assembly has done a major disservice to Kentucky’s citizens and taxpayers and stunted economic development. Kentucky is in a global race for jobs and economic growth. Taking a one-year hiatus in funding, budgeting and planning because of the inability of our legislators to work out compromised legislation is malfeasance in office.

We recommend that Gov. Fletcher call continuous special sessions in 2005 until Kentucky’s House of Representatives and Senate pass a budget and modernize taxes. The governor cannot allow the General Assembly to squander valuable time and delay the creation of economic opportunities for our citizens.

Ed G. Lane is chief executive of Lane Consultants, Inc. and publisher of The Lane Report
editorial@lanereport.com

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