FRANKFORT — The state's budget director warned several agencies Friday to plan for a possible six percent spending cut in coming months.
State Budget Director Mary Lassiter told agencies whose budgets have already been slashed that more cuts may be needed to resolve a $160 million to $170 million shortfall this fiscal year, which began July 1.
In the letters, Lassiter asks agencies to show how a possible six percent cut would affect programs, services and their workforce. Those plans are due to her office by Nov. 30.
The letters indicate that several state agencies will be exempt from cuts, as they were in previous budget reductions. Those include Kentucky Educational Television, public universities, the main funding formula for K-12 schools, prosecutors, public defenders, Medicaid and mental health services.
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Kerri Richardson, a spokeswoman for Beshear, cautioned that Beshear's office was collecting the data for planning purposes and no final decision has been made.
"We are gathering information on the potential impacts of additional reductions," Richardson said. "We will get final revenue numbers in mid-December, but we think it is prudent to start planning for cutbacks now."
The Consensus Forecasting Group, a group of independent economists, will meet sometime in December to officially revise this year's revenue forecast. The governor will then decide what cuts must be made to balance the state's books.
On Friday agencies were scrambling to determine where and how they would make a six percent cut. Some agencies have had to cut as much as 20 percent from their budgets over the past 18 months. Since Beshear was elected in December 2007, agencies have gone through five rounds of budget cuts as the state's fiscal health continues to sour.
In a special legislative session this summer, the legislature approved a budget fix for this fiscal year that included using more than $787 million in federal stimulus dollars. Still, some agencies had to cut up to four percent from their budgets.
The state still has more than $485 million in stimulus money left but will need that money to balance its books in the next biennium. Lawmakers will likely need to find about $1 billion in additional revenue if they want to continue spending $9.1 billion a year over the next two fiscal years.
Leaders of Kentucky's higher education system expressed relief that the eight public universities and the Kentucky Community and Technical College system appear to be spared from another round of mid-year budget cuts.
Robert L. King, president of the Kentucky Council on Postsecondary Education, said the letter he got from Lassiter also says the state's adult education program will also be spared.
The rest of the agency's $23 million budget, which covers operation costs, staff and a virtual library that allows all Kentucky universities to share access to expensive publications and technology programs, would be subject to cuts, King said.
"It's still a big hit for us," he said. "We've all watched the national and state economy, so it's not a surprise, but obviously not welcome news."
Les Fugate, a spokesman for Secretary of State Trey Grayson, said the agency is still trying to determine where a potential six percent cut will come from. The bulk of the Secretary of State's office budget — like that of many state agencies — is personnel.
"Through innovation and technology we have been able to reduce staffing and other expenses while expanding services and may be in a better position than most to handle these cuts," Fugate said. "This is going to be painful for many agencies."
The state's social service network has also been hit by budget cutbacks. On Monday, the AARP and other senior groups will hold a rally at the state Capitol to protest additional cuts to services for the elderly.
Scott Wegenast, associate state director of AARP Kentucky, said hundreds of people plan to attend the rally to show Beshear and lawmakers that the cuts have had consequences for the elderly.
There is a waiting list of more than 20,000 people for community-based and independent living services that keep people out of nursing homes, Wegenast said.
"The message is real simple," he said. "Aging services can not afford any more cuts. ... There is just nothing left to cut without hurting people."