Beshear’s budget: $100M in cuts to state agencies

The governor’s proposal focuses on Kentucky public schools

By Kevin Wheatley, Published:

Fulfilling a promise he made during his State of the Commonwealth address, Gov. Steve Beshear unveiled a two-year budget proposal Tuesday that would increase funding for K-12 education at the expense of many state agencies.

Beshear’s proposed biennial budget will not include revenue from expanded gaming or tax reform, but he told a joint session of the General Assembly that the additional money from those proposals would lessen nearly $100 million in cuts across state government and improve investments in Kentucky’s schools and workforce.

“By tackling either one or both of these issues, we can stabilize our budget,” Beshear said.

The Democratic governor said he will present his tax modernization plan soon and urged legislators to pass a constitutional amendment on expanded gambling, saying both measures would provide long-term growth in the general fund. House and Senate leaders said there is interest in modernizing the state’s antiquated tax code among lawmakers.

House Speaker Greg Stumbo remains optimistic that both a constitutional amendment and enabling legislation on expanded gaming can pass this session, though he reiterated House Democratic leadership’s stance that the Senate should pass a constitutional amendment first, given its failure to do so in 2012. 

Senate President Robert Stivers said he has heard from both supporters and opponents of expanded gambling, but the issue is not a personal priority.

“If there’s significant support to pass a constitutional amendment in the Senate, then I think we can craft a bill that can pass,” Stumbo, D-Prestonsburg, said.

Beshear highlighted Kentucky’s success in education reforms even as Support Education Excellence in Kentucky, the primary funding source for K-12 education, dollars have not grown since 2008. Beshear’s spending plan would boost per-pupil SEEK funding to its highest levels — $3,911 per student in fiscal year 2015 and $3,981 in fiscal year 2016. Current spending per pupil is $3,827.

The proposed budget would also provide $95.4 million for textbooks, professional development and school safety, and $36 million to expand preschool eligibility to 5,100 poor children.

“This budget proposal strategically focuses our very limited resources on what I believe will deliver the greatest return: A more highly educated population that will become a more talented workforce,” Beshear said.

The $188.9 million increase for SEEK will also include 2 percent pay raises for educators in fiscal year 2015 and 1 percent in fiscal year 2016. 

Some judicial branch employees would also receive a pay raise in Beshear’s proposal, with more than $14 million during the biennium to increase salaries of the branch’s lowest-paid workers, Beshear said.

State workers, too, would see their paychecks increase in Beshear’s proposed spending plan — 5 percent for those earning less than $27,000, 3 percent for those making between $27,001 and $36,000, 2 percent for salaries between $36,001 and $50,000, and 1 percent for those making more than $50,001 in fiscal year 2015 and an across-the-board 1 percent increase in fiscal year 2016.

But those same workers will be working with deteriorating agency budgets. Beshear outlined many state agencies that would be forced to absorb 5 percent cuts, such as all constitutional offices, all cabinets’ administrative agencies, Department of Military Affairs and the Energy and Environment Cabinet.

Kentucky State Police, universities and the community and technical college system would face 2.5 percent cuts while several more were spared in Beshear’s proposal, among them Medicaid, the Department of Education, prosecutors, public defenders and public health.

Beshear noted $1.6 billion has been cut from state agencies in the past six years, and some agencies have seen their budgets slashed as much as 41 percent in that timeframe.

While higher education would face cuts in Beshear’s plan, the governor’s budget provides $581.5 million in general fund-supported bond projects and authorizes $703 million in agency-supported bonds. Kentucky State University would receive $10.4 million to replace boilers and repair its heat distribution systems in the budget.

Rep. Derrick Graham, D-Frankfort, said he was glad to see additional money for schools and raises for teachers and state workers, though further cuts for many agencies across state government is a concern.

“That not only impacts our state employees, but that impacts those people receiving those services across the commonwealth,” Graham said.

The governor also budgeted full actuarially required pension contributions to the Kentucky Retirement Systems, which will cost an extra $207.6 million to cover state workers. The state will also pay rising pension contributions for quasi-governmental agencies, Beshear said.

“We urge the General Assembly to make a strong fiscal commitment to help stabilize a dangerously fragile pension fund,” Jim Carroll, cofounder of the group Kentucky Government Retirees, said in a statement. “A deep hole has been dug in pension funding; it must be refilled starting with a complete shovelful.”

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