Date: 09-08-2017
BEVIN ORDERS 17.4 PERCENT BUDGET CUTS TO DEAL WITH EXPECTED $200 MILLION SHORTFALL
FRANKFORT – The Bevin Administration asked constitutional officers and cabinet secretaries Friday to cut spending in most state agencies by 17.4 percent this fiscal year to address an expected $200 million budget shortfall.
The cuts would not affect SEEK, the state’s school funding formula; universities; Medicaid; the Department of Corrections; and debt payments, said Bevin communications director Amanda Stamper.
In a letter to state officials, State Budget Director John Chilton said Kentucky “must start preparing for the ongoing financial challenges facing the state” and come up with a budget reduction plan by Sept. 25.
Chilton said the cuts would save an estimated $350 million, enough to close the $200 million projected shortfall for the fiscal year that began July 1 and replenish the state’s $150 million rainy day fund for emergencies. He said the emergency fund will be spent in coming months and must be replaced.
“While challenging, the current fiscal constraints present a unique opportunity to evaluate the effectiveness and necessity of programs within state government,” said Chilton. “Limited resources must be allocated to programs providing critical services and a strong return on investment.”
Chilton said agency heads are “best positioned to make critical judgments about which program deserve full funding, and which should be significantly reduced.”
The legislative and judicial branches of state government have also been asked to make similar cuts.
Bevin’s announcement comes on the heels of repeated budget cuts since 2008. In all, some state agencies will have seen more than 70 percent of their budgets disappear in the last decade, according to the liberal-leaning Kentucky Center for Economic Policy.
Bevin’s move to cut costs comes after a group of economists revised the state’s official revenue forecast downward last month by $200 million.
The state ended fiscal year 2017 with a $152.2 million budget shortfall. Bevin signed a budget reduction order in July to deal with that shortfall that cut about $55.5 million in spending across most state agencies, took about $77.4 million from restricted funds, and transferred about $15.5 million from excess funds.
Bevin promised as recently as July that he would call a special legislative session this year to overhaul the state’s tax system and fix its financially-ailing pension plans, but he has since backed away from that promise and said lawmakers should consider the issues separately, starting with pensions.
By Jack Brammer
Lexington Herald-Leader
