FRANKFORT — Gov. Steve Beshear vetoed 19 provisions in the state budget lawmakers approved late last week, including a provision that would cut the salary of Economic Development Secretary Larry Hayes by more than $120,000 a year.
The governor also vetoed provisions that would protect federally-funded state employees from being furloughed and deleted the legislature's mandated changes to the state employees' health insurance plan.
Senate President David Williams, R-Burkesville, and House Speaker Greg Stumbo, D-Prestonsburg, said they needed time to review the vetoes before commenting on them. Lawmakers do not have the ability to override Beshear's vetoes since the General Assembly adjourned its special legislative session to approve the budget on May 29.
In general, Beshear said his line-item vetoes were necessary because the provisions restricted his ability to implement spending cuts mandated by the two-year spending plan, which calls for cuts of 3.5 percent in the first year and 4.5 percent in the second year for most state agencies. Without those cuts, the state faced a projected shortfall of nearly $1.5 billion over the next two years.
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"My administration must have maximum flexibility to manage state government through these extremely difficult times, while continuing to provide essential services to our people," he said in a news release.
Beshear said the $17.3 billion budget the legislature approved "is not what I wanted, and not what I originally proposed. However, it is better than having to shut down state government, and I will work hard to minimize its impact on Kentucky families."
The Democratic governor said he vetoed language dealing with Hayes' salary, which is $250,000 a year, because "the plain language" of a state law says the Kentucky Economic Development Partnership Board shall set the salary of the secretary and it is exempt from state employee salary limitations.
Beshear also vetoed language that directed his administration to make specific cuts to the number of non-merit employees, many of whom are political appointees, and the amount spent on contracts with private companies. For example, the House and Senate had asked Beshear to reduce the salaries of political hires by about $10 million.
Beshear, in his explanation of the veto, said his administration must make nearly $131 million in cuts in the first fiscal year of the two-year budget, which begins July 1, and $168 million in cuts in the second year of the budget. Vetoing the specific targets will give him more discretion in how to make those cuts, Beshear said.
In his veto message, Beshear said the cuts lawmakers mandated to contracts "would result in harsh cutbacks to education, economic development and care for Kentuckians with mental illness and mental retardation."
Likewise, he said mandated changes to the state employees' health insurance plan needlessly limited the administration's cost-cutting options. Even though specific changes to the plan are no longer set in the budget, Beshear will still have to come up with more than $94 million in savings.
The state personnel cabinet will now have to develop its own health insurance plan that lives within the prescribed spending levels, Beshear said.
Beshear also slashed a series of provisions that protected certain Medicaid programs from cuts. And he vetoed language that would require the Cabinet for Health and Family Services to study whether a Medicaid management care program based in Louisville should be expanded to other areas of the state. The issue of expanding managed care for Medicaid had been discussed during the regular legislative session and sparked disagreement between Stumbo and Beshear.
In addition to the budget, Beshear vetoed parts of House Bill 3, the operating budget of the state Transportation Cabinet.
Included in that veto were two projects — a maintenance facility in Shelby County and a salt storage facility in Spencer County. Deputy State Budget Director John Hicks said Beshear vetoed those projects because the legislature did not appropriate enough money to cover the total costs of building them.
Beshear did not veto any provisions in three other bills, including the state's $6.7 billion road-building plan.
Other items in the state budget that were vetoed by Beshear include:
■ $1.3 million for a fairgrounds project in Hopkins County and $1 million to replace two water tanks in Liberty.
■ Language dealing with the awarding of grants from the Local Government Economic Development Fund.
■ A $1 million grant to the Allen County Industrial Authority to build a storage facility for J.M. Smucker Co.
■ Funding for six Economic Development Innovation and Commercialization Centers and seven Satellite Innovation Centers dealing with economic development.
■ $500,000 for tree nursery programs in Marshall and Morgan counties.
■ Unspecified funds for an urban trauma center hospital in Louisville from the Medicaid program.