Gov. Matt Bevin has proposed 9 percent cuts to most state government agencies over the next two years in an effort to reduce state spending by $650 million.
Bevin proposed his first budget on Tuesday evening in an address to the Kentucky General Assembly, which will use much of the 2016 session to forge a state spending plan based, at least in part, on Bevin’s proposal.
Bevin, a Republican, entered office last month promising to put Kentucky’s “financial house in order.” His Democratic predecessor, Steve Beshear, offered an optimistic outlook of Kentucky’s fiscal shape before he left office. But Bevin has taken a dimmer view, citing underfunded pension systems and a $250 million payment for expanded Medicaid.
Bevin said Tuesday he would also issue an executive order to cut state spending by 4.5 percent across the board during the current fiscal year, which ends in June.
During a meeting with reporters Tuesday before his formal budget address, Bevin said individual cabinet secretaries would responsible for cutting the budgets of state agencies they oversee.
“It can be anywhere that cabinet secretary wants. I’ll leave it to their discretion,” Bevin said. “Each of them is far more competent in their respective cabinet area than I am; that’s why they’re the head of those cabinets.”
Several programs would be exempt from the cuts, Bevin said, including the Department of Veterans Affairs, Medicaid, public safety employees, social worker salaries and the SEEK formula, which is the funding structure for local schools.
Bevin proposed allocating almost $600 million to the Kentucky Teachers Retirement Systems, which manages the pension plans of 120,000 current and retired teachers, over the next two years. With only 42 percent of the money it needs to make future contributions, pension officials had requested more than $1 billion in additional funding.
He also recommended more than $130 million for the Kentucky Retirement Systems, which manages many state worker pensions.
Bevin said he will not shore up the retirement systems by borrowing or raising taxes to generate new revenue.
“We’re not going to borrow from the future to balance the budget, we’re not. And I will not sign a bill that looks tremendously different from that which we’re going to put out,” Bevin said.
Bevin said cuts would allow the state to stabilize its finances and put funding toward priorities.
Some parts of Kentucky state government would get additional funds under Bevin’s plan.
Among the proposals are a $100 million “bond pool” for the Education and Workforce Development Cabinet to invest in workforce training projects.
The budget would fund 44 new public defenders and set aside $12.4 million for state trooper salary increases.
Also, Bevin’s budget sets aside $4.8 million for an increase in social worker salaries and $4.5 million to address the backlog of untested rape kits.
Bevin also proposed phasing in “outcomes-based funding” for state universities over the next few years. The plan would distribute funding to state universities based on their individual performances.
The budget process now moves to the Democratic-controlled state House and the Republican-led Senate. Bevin will have to sign off on the final bill this year.
© 2016 Louisville Public Media