Governor Beshear unveils budget plan

Earlier today, Governor Beshear issued this press release:

FRANKFORT, Ky. – Faced with the largest shortfall in modern Kentucky history, Gov. Steve Beshear today unveiled a proposed budget for next year that does not raise taxes on working families and businesses while preserving basic funding for classroom instruction, health care programs for the most vulnerable and key areas of public safety.

Gov. Beshear told reporters this afternoon that he is formally calling the legislature into a special session, starting June 15, to address a projected $1 billion shortfall in the legislatively enacted budget for the new year, which begins July 1. The coming budget year is also the third consecutive year that the state has had fewer dollars in revenue than projected and budgeted expenses – an unprecedented occurrence.

“My plan protects our families and businesses in this vulnerable time; preserves investments in critical priorities like education, health care and public safety,” the Governor said, “and recognizes the economy will take years to recover.”

In short, the proposed plan will be paid for by making an additional $200 million in cuts from enacted levels and utilizing more than $740 million in federal stimulus dollars, the bulk of which would go toward education and Medicaid as prescribed by law.

“Given the challenges that we will face in the next biennium, as predicted by the Consensus Forecasting Group, it is prudent that we reserve some of the stimulus money to help us address next year’s budget,” said Gov. Beshear.

“Without this money, the pain we are experiencing would be magnified many times over,” the Governor said. “We must realize, however, that this is one-time money. We cannot and should not use it to create new programs we would be unable to sustain in future years.”

Highlights of the Governor’s proposed budget plan include:

• Preserving the same amount in the coming year as last year in per pupil spending in classrooms across the state – the basic formula known as SEEK -- and funding for higher education at the same levels as the 2009 budget. “I’ll say it again and again – we cannot move forward if we take significant steps backward in spending in our classrooms,” Gov. Beshear said of his proposal.



• Fully funding Kentucky’s Medicaid program, which until recently had operated with a deficit of more than $280 million.



• Preserving funding for mental health services at current levels.



• Preserving funding for state police and support for local jails as well as increasing funding for prosecutors, public defenders and corrections.



• Maintaining current funding for economic development efforts, veteran’s programs and increasing resources in the Department of Revenue to enhance tax collection efforts. Also, increasing funding for state parks to ensure that the system can meet its obligations in the coming year.



• Cutting most other areas of state government by an additional 2.6 percent in the coming year from current year levels. These latest proposed cuts would be in addition to nearly $600 million in cuts to state government since Gov. Beshear took office 18 months ago, including some $150 million in the 2009 budget. “This will not be easy to implement,” he said. “Many of our departments and agencies have had their spending cut in the current and previous budget cycle, so many are already operating in a lean manner. They will have to cut even more. How they do that will be an ongoing process.”



• Eliminating three paid holidays for state employees making under $50,000 annually and five holidays for those making $50,000 or more. This move, Gov. Beshear said, will not disrupt basic services as state government is closed on holidays in any event and will avert mass layoffs.



• Continuing the budget reduction plan in the Transportation Cabinet to deal with a projected $239 million shortfall in the state’s Road Fund.

Despite the pain that additional spending reductions and program cuts will foster, Gov. Beshear said Kentucky is much more fortunate than most states, many of which have implemented lay offs for scores of police officers, teachers, state and university employees, while also eliminating or reducing basic and human services programs.

“Here in Kentucky, we have avoided such devastating actions by carefully and decisively managing the state budget over the last couple of years,” Gov. Beshear said. “We have acted to preserve priorities in education, health care and public safety and I am proposing to do so again.

“This is a tough time for many people in Kentucky... But we cannot lose hope. We must not lose faith. And we will not lose confidence. We will survive this. And if we work together, if we act boldly, yet responsibly, we can emerge stronger than before.”