Educating children, protecting families, supporting healthy communities and other investments in Kentucky are essential to reducing harm during the COVID-19 crisis and creating a pathway to eventual recovery. As we can safely increase economic activity, the stronger the building blocks of our communities are, the healthier our economy will be.
That is why we, the 48 undersigned organizations from across the commonwealth, are deeply concerned by the fiscal situation Kentucky faces. Layoffs and reduced consumer activity related to the pandemic have led to a truly shocking state revenue forecast. The Office of the State Budget Director estimates that Kentucky’s General Fund will experience a shortfall in the fiscal year ending June 30, 2020 of up to $495 million. Next year, the shortfall could easily exceed $1 billion. This will take place even as the state must increase spending through important programs like Medicaid to address the impact of the pandemic.
Without adequate federal fiscal aid, the depth of cuts required to balance our state budget will be devastating to communities that have not yet begun to reinvest after a decade of budget cuts caused by the Great Recession. Further funding reductions for our schools, health care, human services, infrastructure, public safety and more will hinder our response to COVID-19. Adding teachers, first responders, social workers and other public servants to the long unemployment lines will only drag our economy further down.
Service reductions, layoffs and other impacts will fall hardest on communities already facing structural barriers to health and well-being. Lacking the wealth, income and proximity needed to access high-quality private services, Kentuckians of color, people living in the coalfields and other rural areas, Kentuckians with disabilities, the youngest and oldest of us and many others will bear the brunt of the crisis. By harming Kentuckians, deeper inequality will further limit our economic potential together.
Yet none of this is inevitable. That is why we are calling on Congress to pass a robust federal fiscal relief package for states that prevents cuts to critical public services and cushions the blow from COVID-19.
Federal relief is the appropriate economic policy response to such a severe economic calamity. While states face balanced budget requirements, only the federal government has the ability to close an economic gap this wide. By doing so, Congress can help limit the harm and boost the economy once things open back up. In turn, a quicker, fuller recovery will help restore revenue growth at the state and federal level.
During the Great Recession, the American Recovery and Reinvestment Act provided $3.3 billion to fill holes in Kentucky’s budget. Those dollars were essential to keeping that recession from worsening into a depression. But in an important lesson for this moment, that funding ended too early — contributing to a decade of painful budget cuts. States cannot afford for such inadequacies to lead to another round of historically deep and protracted troubles.
Early indicators suggest the COVID-19 downturn maybe worse than the Great Recession. As of May 9, more than 740,000 Kentucky unemployment insurance claims have been filed. The federal government has provided some aid to states, but that assistance is set to expire and it is not nearly enough given the depth of the crisis as shown in new economic forecasts.
Experts now estimate that states need Congress to provide at least $650 billion in relief. This aid – which must continue until the economy has fully recovered – can be delivered through tools like a further increase the federal match for Medicaid and flexible grants to states.
Kentucky communities are in this together, and so are states. We all need Congress to protect our economy in this crisis and provide a path to a full recovery.
Advocacy Action Network
Appalachian Citizens’ Law Center
Access for Rural Community Health Coalition
Bridgehaven Mental Health Services
Clover Fork Clinic
Coalition for the Homeless
Community Farm Alliance
Family & Children’s Place
Family Circle, Inc.
Four Rivers Indivisible
Giles Professional Counseling & Consulting
Governmental Management Advisory Services
Homeless and Housing Coalition of Kentucky
JCAESP AFSCME Local 4011
Jefferson County Teachers Association
Kentucky Center for Economic Policy
Kentuckians For The Commonwealth
Kentucky Coalition Against Domestic Violence
Kentucky Coalition for Healthy Communities
Kentucky Conservation Committee
Kentucky Council of Churches
Kentucky Education Association
Kentucky Equal Justice Center
Kentucky Government Retirees
Kentucky Nonprofit Network
Kentucky Poor People’s Campaign
Kentucky Psychological Association
Kentucky Rural Health Association
Kentucky State AFL-CIO
Kentucky Voices for Health
Mountain Association for Community Economic Development
Matthew25 AIDS Services
Mental Health America of Kentucky
National Association of Social Workers – Kentucky Chapter
Northern Kentucky Justice and Peace
People Advocating Recovery
Planned Parenthood Advocates of Indiana and Kentucky
Pride Community Services Organization
Westview Tax Services