US state of Kentucky appears to be in financial trouble

The U.S. state of Kentucky appears to be in financial trouble, judging by reports from local media, with extra funds having to be diverted to keep the Department of Public Advocacy running and reports that state prosecutors are having to take unpaid layoffs of up to three weeks, probably resulting in a growing backlog of untried cases in the bluegrass state.

How state finances got into such a mess is not known, but it perhaps goes some way to explain why Governor Steve Beshear is trying to redress the financial problems facing the state by seeking to expand land gambling interests. And his protectionist position on those land gambling interests has been manifested in the recent, and unprecedented, attempt by the Beshear state government to hijack global domain names belonging to online gambling operators, whom the state sees as competition (see previous InfoPowa reports).

Over the past month Politicker.com has followed the decline in Public Advocacy finances, reporting in March that the state was considering the diversion of an extra $4.7 million to the department to enable it to survive through to the end of June and the start of a new fiscal year. Unconfirmed and more recent reports suggest that at least $2 million has already been diverted to the department as an emergency measure.

Department of Public Advocacy spokesman Jessie W. Luscher distributed a statement saying that when funding runs out in May, public defenders will "be unable to provide any representation whatsoever in any court" and may have to withdraw cases.

Earlier, public defenders filed a suit against the state alleging that they had been allotted inadequate funding to handle excessive case loads. State lawmakers cut the agency's budget by $2.3 million to $37.8 million for the fiscal year that ends June 30 2009, and the department still seeks a judicial ruling on the issue because it is quickly running out of operating funds.

The case is being heard by a judge who has become well known to the online gambling industry for all the wrong reasons; Frankfort County Circuit Judge Thomas Wingate made the infamous and initially covert ruling that allowed Beshear's officials to seize 141 international online gambling domains last year. His order was subsequently set aside by judges of the Kentucky Court of Appeals, but Governor Beshear continues to contest the case with an appeal-against-the-appeal filed with the Kentucky Supreme Court.

Reports are that Beshear does not need to put cash upfront for his use of out-sourced lawyers handling the domain case - these legal experts are reported to be working on a contingency basis of 'no win - no pay'.

Should Beshear prove successful in persuading the Kentucky legislature to expand land gambling in the state, it could prove to be both a blessing and a curse to the cash strapped administration. On the one hand it may produce sufficient extra revenues to plug the serious financial deficits plaguing the state, but on the other it could strengthen legal claims by the owners of threatened global domains that the state's motives are more commercially protectionist (and therefore in conflict with the Constitution) than altruistic.

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