Gov. Matt Bevin proposed a two-year state budget Tuesday night that would eliminate “about 70” state government programs and cut spending at many state agencies by 6.25 percent.
Bevin, who provided lawmakers with highlights of his plan in a sparsely attended 7 p.m. speech, did not immediately list the programs he wants to eliminate or which agencies will be spared from budget cuts. Unlike previous governors, Bevin did not brief the media on details of his proposal ahead of his speech.
Bevin said the cuts will help fund Kentucky’s ailing public pension programs, which have more than $40 billion in unfunded liabilities.
He proposed spending $3.31 billion on pensions for public workers over the next two years, which he said equals 14.5 percent of the state’s General Fund.
“The focus of this budget is to get our financial house in order,” Bevin said.
Advocates and lawmakers had feared Bevin would propose double digit spending cuts for state agencies, but the Republican governor instead chose to propose eliminating programs he said weren’t vital or haven’t provided a good return on investment.
For example, he proposed closing the state’s film incentive program, which has agreed to give away $162 million in state money to subsidize more than 200 video productions, and defunding the Kentucky Mesonet at Western Kentucky University, the commonwealth’s official source of climate data.
“We have been thoughtful about it, not indiscriminate,” Bevin said of his proposed cuts.
Bevin promised not to cut the main funding formula for K-12 schools, providing $3,981 per student each year, but he said schools will be required to cut their administrative overhead to help pay for their employees’ health insurance.
“We have far too many people who are not teaching our students who are sucking up the dollars that are being spent,” Bevin said.
House Minority Leader Rocky Adkins, D-Sandy Hook, was critical of Bevin’s proposed cuts for schools.
“It’s important we have quality administrators,” Adkins said. “I’m not saying some should not be cut, but we need to be careful in doing that.”
Bevin also asked school districts to dig into their reserve funds to pay for about $138 million in student transportation costs and other expenses. School districts have already paid an increasing share of transportation funds, according to the Kentucky Center for Economic Policy, increasing their share of transportation costs from 36 percent to 49 percent since 2006.
Later in the speech, Bevin was critical of the fact that Jefferson County Public schools had more in its reserve funds than the state.
“We’re going to end our year with zero dollars in the bank. How many of you would recommend having nothing in reserve?” Bevin said. “…I’m putting in this budget half of the bare minimum that we should have.”
Bevin proposed adding $250 million to the state’s rainy day fund, in part by snatching $150 million from the “Kentucky Permanent Pension Fund” he helped create two years ago to help deal with the pension crisis.
After touting the state’s record $9.2 billion in pledged investments from corporations in 2017, Bevin said he would ask the legislature to once again borrow $100 million for workforce investment programs.
He also said he would take $34 million from tobacco settlement funds and use the money to fight abuse of opioids and other drugs. He did not specify how the money would be allocated.
Bevin did, however, say he would invest additional money in law enforcement by allocating money for 75 new commonwealth and county attorneys and 51 new public advocates, as well as purchasing new cars and weapons for state police. Meanwhile, the roughly $11 billion General Fund budget would allocate nearly $650 million to the Kentucky Department of Corrections by the 2020 fiscal year.
Once again, the governor made the state’s adoption and foster care system a focal point in his speech, proposing an additional $10.8 million for the system.
He also proposed spending $24 million to increase the salaries of child-protection workers and to hire more of those workers, but added that he plans to make sure the “right people” are in place before the salary increases begin.
“They’re being broken down,” Bevin said. “It’s destroying them to be suffocated by a caseload that continues to grow.”
Bevin also renewed his call for lawmakers to “modernize” Kentucky’s tax code, promising that he and Kentucky lawmakers would tackle the issue before the end of 2018.
With the legislature focused on pension reform, there has been little talk of tax reform among lawmakers.
“You are going to see proposals coming from me and I want to see any and all proposals coming from you,” Bevin told lawmakers.
The Governor has offered few details on how he wants to overhaul the tax code, but Bevin has often said he would like to see the state to close some of its many tax loopholes.
Both House Speaker Pro Tempore David Osborne, R-Prospect and Senate President Robert Stivers, R-Manchester, said they felt Bevin’s proposed budget was realistic, but wanted to see more details before pledging their support.
“Let’s dream big dreams,” Bevin said to close his address.