Gov. Steve Beshear’s proposed biennium budget will, in his words, cut some state agencies to the bone.
Facing a $742 million shortfall in the two-year, $19.5 billion spending plan, Beshear proposed 8.4 percent cuts totaling $286 million for most state agencies to help fill the hole.
“Now remember, these cuts are on top of cumulative cuts of 25 percent to 30 percent made over the previous four years,” Beshear told lawmakers during his budget address Tuesday.
“In these agencies, the fat has long been burned away. Now we’re cutting muscle, and we’re cutting bone.”
The reductions, which would be made in the proposal’s first year, could trigger limited layoffs or facility closures as cabinets deal with shrinking budgets, Beshear said.
While most state agencies will cut spending by 8.4 percent, others won’t be slashed as deep. Non-SEEK grants to school districts will be reduced by 4.5 percent, the Education and Workforce Development Cabinet by 4.2 percent and most of the Justice and Public Safety Cabinet, which includes state police and prosecutors, by 2.2 percent.
Some areas exempt from cuts include SEEK funding, Medicaid, retirement and health insurance, community based services, public defenders and mine permitting, reclamation and enforcement.
Beshear won’t propose furloughing state employees to balance the two-year budget. Most state employees were furloughed six days in the last fiscal year to save the state about $12 million.
State workers also won’t receive a pay raise in the biennium, Beshear said.
Rep. Derrick Graham said the possibility of employee layoffs disappointed him.
“In our discussions with the governor and the administration, we hope that the agencies can find other ways in which they can pursue these cuts,” he said in the Capitol after Beshear’s address.
Alongside reductions, Beshear’s proposal uses $102 million from the state’s Budget Reserve Trust Fund, $245 million in fund transfers and an expected $61 million from a tax amnesty program to shore up the budget.
The plan also calls for $815 million in new spending, including $79 million more in retirement contributions, $14 million for more parole and pretrial officers, $8 million for substance abuse treatment through Medicaid, $21 million for more social workers, $15 million to expand preschool eligibility for 4-year-olds in families earning 160 percent or below the poverty level, $2 million in bond funds to improve the new state police training facility on Coffeetree Road and $1 million for colon cancer screenings.
Sen. Julian Carroll said Beshear and his budget staff found ways to expand some programs, namely preschool eligibility and substance abuse treatment, in an otherwise austere budget.
“I think he should be commended for his uniqueness in putting forth several excellent programs in spite of a budget crisis,” Carroll said.
Beshear was interrupted by applause 26 times during his address.
He also told lawmakers that the state needs additional revenue and again called on them to pass a constitutional amendment on expanded gaming.
“You’ve heard a lot of arguments about why gaming is or isn’t right for Kentucky, but you haven’t heard a single argument as to why Kentuckians shouldn’t be allowed to vote on this proposal,” he said.
“In fact, I don’t think there is a legitimate argument. Kentuckians have made it clear through numerous surveys that they want to vote.”
Beshear noted an economic study that showed in 2010, Kentuckians spent $451 million gambling in neighboring states. The same study showed expanded gaming at racetracks would bring in $266 million for one-time license fees and $377 million annually, Beshear said.
Graham said Beshear’s election numbers show voters want to decide the issue.
“He advocated this gaming, and we ought to give people the opportunity to decide whether or not they want to pursue that direction,” he said.
“… It’s not putting it into the hands of the politicians. It’s putting it into the hands of the people to decide which direction to go.”
On tax reform, Beshear said he expects to have a proposal by the end of the year. He’s appointed a commission, led by Lt. Gov. Jerry Abramson, to explore the issue.
Carroll called tax reform a major challenge and said he hoped Beshear would involve some key legislators in the project at some point.
“It’s a long-range program … and I’m pleased that he’s at least making a major effort to get it started,” Carroll said, noting tax reform is a sensitive issue that could take years to implement.
The House and Senate must pass a budget before the session ends.
Cumulative cuts since 2008
> Finance agencies: 30-38% reductions
> Labor: 38%
> Area Development Districts: 38%
> Public Protection: 30-38%
> Constitutional Officers: 32-36%
> Military Affairs: 34%
> Environmental Protection: 32%
> KET: 27%
> Education and Workforce: 23-27%
> Cabinet for Health and Family Services, Non-Medicaid: 7-28%
> K-12, Non-SEEK: 27%
> Natural Resources: 15%
> Kentucky State Police: 15%
> Universities: 15%
> Juvenile Justice: 13%
> Veterans’ Affairs: 6%