Bevin orders 1 percent budget cut by most state agencies to avoid $113M shortfall

Gov. Matt Bevin has asked most state agencies to cut at least 1 percent of their annual budget in June to help the state avoid an expected $113 million shortfall when the fiscal year ends on June 30.

State budget director John Chilton relayed the request in a May 23 letter to cabinet secretaries and constitutional officers. Responses are due, depending on the agency, from May 30 through the first week of June.

Chilton’s budget-reduction request went to officials in all three branches of government — executive, judicial and legislative.

Bevin communications director Amanda Stamper said in an email that no layoffs are anticipated and that several agencies are excluded from the cuts. Those include universities, property valuation administrators, state parks, state retirement systems and the main funding formula for K-12 schools.

Stamper also said there are “no specific directives to the agency heads on where the savings must come from. We expect they will provide our office with their plans and we will evaluate those on a case-by-case basis.”

In his letter, Chilton said lower-than-expected state revenue in March and April led to the need for the budget reduction.

The Kentucky Constitution requires a balanced budget. About $10.6 billion is needed to fund the state’s General Fund budget this year.

General Fund receipts had grown 1.3 percent in the first 10 months of this fiscal year, which ends June 30, but the state budget called for 2.7 percent revenue growth for the entire fiscal year.

Chilton also said he does not know when the state’s revenue picture will improve.

He noted that a similar shortfall in tax receipts is expected in the fiscal year that begins July 1.

“This being the case, you should plan for lower expenditures in fiscal year 2018 as well,” he told state officials.

Attorney General Andy Beshear, a Democrat, has previously said his office was asked earlier this year not to spend 1 percent of its state allocation from the General Fund, which pays for most state programs. At the time, he refused, saying Bevin, a Republican, had “exceeded his authority and attempted to illegally cut both public universities and portions of state government.”

Beshear, however, said he will comply with this latest request, which equals a $109,000 cut in his office.

“While the attorney general has already returned or will return over $7 million to the General Fund this fiscal year, the governor’s most recent request was legal, so we were willing to do even more and will return the 1 percent that was requested,” he said.

This story was originally published May 31, 2017 at 4:18 PM with the headline "Bevin orders 1 percent budget cut by most state agencies to avoid $113M shortfall."