Lt. Gov. Jacqueline Coleman 04-23-20.jpg

LOUISVILLE, Ky. (WDRB) -- Lt. Gov. Jacqueline Coleman is optimistic that Kentucky won’t have to make the dire choice of filing for bankruptcy protection, an idea floated by Senate Majority Leader Mitch McConnell on Wednesday as states and cities throughout the U.S. begin feeling the budgetary strain brought on by the COVID-19 pandemic.

In a wide-ranging interview with WDRB News on Thursday, Coleman said she hoped Gov. Andy Beshear and other governors would be able to convince their federal delegations to do all they can to help states and cities that are now struggling financially during the economic downturn.

States can’t declare bankruptcy under federal law.

Kentucky, like other states, has seen many businesses forced to close or dramatically change their operations in hopes of limiting the spread of COVID-19, the novel coronavirus that Coleman says “doesn’t discriminate based on political party or anything else.”

“I am hopeful that Gov. Beshear when he talks to Sen. McConnell can explain our situation here in Kentucky, both locally and statewide, and help us get to a place where we don’t have to do something like file for bankruptcy because that is not anything that any state wants to do,” Coleman said. “There have got to be ways that we can work through this together.”

Without federal aid, states face “a rougher recession” that “will be harder to dig out of,” Beshear, a Democrat, said during his daily COVID-19 news conference Thursday.

“We’ll have to cut vital services,” he said. “… It will cripple our efforts to rebuild if we don’t see an aid package.”

The economic impact of the downturn on Kentucky’s state government remains to be seen, though Louisville Mayor Greg Fischer unveiled Thursday the “most difficult budget proposal” his administration has ever presented.

In all, Kentucky’s largest city expects to take a $46 million hit in revenue for the rest of the fiscal year and another $69 million shortfall in the fiscal year that starts July 1 barring any relief from Washington, D.C.

“American cities must receive federal relief to make sure our residents have police, fire, emergency, public health, housing, sanitation and other services needed to recover from this crisis,” Fischer said.

Leaders of other states, including McConnell’s fellow Republicans, panned his suggestion that states should declare bankruptcy rather than receive more federal COVID-19 relief.

Maryland Gov. Larry Hogan, a Republican who chairs the National Governors Association, said McConnell “probably regrets saying that.”

“If he doesn’t regret it yet, I think he will regret it,” Hogan said in an interview with Politico. “I think he’s going to change his mind about that. The last thing we need in the middle of an economic crisis is to have states all filing bankruptcy all across America and not able to provide services to people who desperately need them and further exacerbating the problems of this economic crisis.”

Job losses in Kentucky continue to mount since the COVID-19 outbreak began, with about 500,000 residents filing initial unemployment claims in a matter of weeks as of Thursday.

Coleman, who also heads the Education and Workforce Development Cabinet, said nearly $1 billion in claims have been paid thus far. Those on unemployment are also getting extra benefits of $600 per week from the $2.2 trillion stimulus package passed by Congress.

Eighty-five percent of those who have sought unemployment insurance in Kentucky have begun receiving payments from the state, Coleman said.

That “is a number that many, many, many states cannot say,” she said. “But let me just say this: The other 15% are the folks that keep me up at night and keep the folks that are working on unemployment insurance up at night.”

To help get unemployment checks flowing faster, Coleman’s cabinet has absorbed about 300 state workers to help process claims, boosted its staffing at regional call centers from 12 to 1,000 and upped server capacity in the state’s unemployment office to 11 times its previous high.

“It’s an antiquated unemployment insurance system that was not equipped to take on what we’re seeing right now, and so we are taking every challenge that arises as it comes and doing the best that we can to solve those issues,” she said.

Despite the crush of nearly half a million out-of-work Kentuckians filing for unemployment, Coleman says the fund remains solvent. The Pegasus Institute, a local thinktank, found that the balance of Kentucky’s unemployment insurance trust fund dropped 23% from $557.5 million at the end of March to $426.8 million as of April 16 based on filings with the U.S. Treasury.

“There is not at this point,” Coleman said when asked if there should be concern about the fund.

School systems have also stepped up in response to the COVID-19 pandemic in Coleman’s view by not only continuing to provide education remotely, but also feeding children in their communities.

Coleman, a former assistant principal and teacher before her election, said the sudden shift toward distance learning has exacerbated equity issues that many students face, namely inadequate access to digital resources. More than half of Kentucky’s 172 school districts joined the state’s nontraditional instruction program for the first time in the middle of the 2019-20 school year.

“It makes me even more focused on ensuring that we address those issues moving forward,” Coleman said.

Whether schools can resume normal operations at the start of the 2020-21 school year depends on how well federal and state health guidelines are followed, she said.

Federal guidance on a three-phased approach to gradually ease COVID-19 restrictions has schools reopening in the second phase, with each step reached in part after two-week periods of steady declines in new COVID-19 cases.

“If we think that we’re OK and we go back to life as normal, we’re just going to lapse right back into what we’re in right now, and so we have to make sure that we have fully followed the recommendations that are coming to us to the point that we can start to transition out of this,” Coleman said.

Coleman has also faced her own issues with the COVID-19 pandemic as her parents and in-laws watch her 10-week-old daughter grow by watching a screen, though she’s quick to point out that others have lost their lives, been hospitalized or had to give birth without their families during the outbreak.

“Not being able to have my parents or my husband’s parents be around our daughter in these formative weeks has been hard,” she said.

“It’s been hard on them, and we do FaceTime, and we send pictures and videos and things like that, but being able to hold your granddaughter is not something that can be replaced with technology.”

Coleman called Beshear “a national leader” in ushering Kentucky through the COVID-19 pandemic and credited him for his “decisive and swift and steady leadership.”

“Just because he handles it well doesn’t mean that it’s not a heavy load,” she said. “The weight that he carries in making every decision that affects every family in our economy, in our health-care system every single day is not an easy one.”

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