FRANKFORT — Gov. Steve Beshear on Friday line-item vetoed all spending cuts to state government and all reporting requirements contained in a Medicaid budget fix passed by the legislature Thursday night.
The move means Beshear can implement his original plan to fix a hole in the Medicaid budget. He will transfer $166 million from next fiscal year to the current fiscal year, then plans to make up the difference in the second year of the budget through a series of cost-saving initiatives, including managed care plans.
Beshear, speaking at a Capitol news conference, said it won't be necessary to cut payments to Medicaid providers by 35 percent from April 1 to June 30, as he had warned would happen if lawmakers failed to approve a budget fix.
He said the line-item vetoes of House Bill 1 will both preserve essential services in state government and allow him greater flexibility to manage the state's still fragile finances.
"The Senate's draconian cuts to basic priorities are neither necessary nor advisable," Beshear said.
Senate President David Williams, R-Burkesville, blasted Beshear for making the vetoes, particularly ones that erased restrictions aimed at monitoring Beshear's efforts to save money.
Williams said the vetoes leave Beshear "completely unaccountable to anyone. It's an outrage."
The Republican gubernatorial candidate repeated that he does not believe Beshear can create sufficient savings from privately-run managed care programs to balance the Medicaid budget next fiscal year, which begins July 1.
"He wants a blank check and an open-ended credit card," Williams said, adding that Beshear "is more concerned about the next election than the next generation."
Beshear's vetoes came a day after the House late Thursday agreed with the Senate's version of HB 1, which included approximately $101 million in across-the-board cuts to state government. The Democratic House approved the Senate plan after being assured by Beshear that he would veto the spending cuts.
Beshear also vetoed language that Senate leaders had put in HB 1 that would have suspended legislative pay during a 10-day veto period, which began Friday.
Friday was the 12th day of a special legislative session that costs taxpayers $63,500 a day.
Beshear said he vetoed the language because the Kentucky Constitution says legislators cannot alter their pay during a legislative session. Beshear said legislators could easily donate the money they receive from the special legislative session back to the state's coffers.
The Democratic governor also vetoed all language in the bill that would restrict his administration's use of furloughs for state employees and would limit the amount of debt he can restructure to achieve savings next fiscal year, which begins July 1. Also struck from the Senate plan was a requirement that the administration pay for an independent accounting firm to determine the exact amount Beshear is able to save in the Medicaid program.
Beshear said he will continue making quarterly reports to the Legislative Research Commission, the administrative arm of the legislature, on the status of the Medicaid budget.
Williams said he is "convinced that when members of the Kentucky House of Representative see these vetoes they will be outraged and will come back to the Capitol and do their jobs."
The House voted to end their participation in the legislative session Thursday night, effectively giving up its ability to override any vetoes. The Senate still plans to return on April 6 but cannot override any vetoes unless the House does the same. In the meantime, taxpayers will spend more than $600,000 as lawmakers continue to be paid seven days a week.
"You will have to ask the governor what it costs," Williams said. "It's his veto."
House Speaker Greg Stumbo, D-Prestonsburg, said earlier on Friday that he hoped Beshear would not veto language in the bill that would prevent more furloughs of state workers and that would ensure $169 million in efficiencies are created with lasting cuts, such as eliminating political appointees, rather than one-time reductions. Furloughs fall in the latter category.
But Stumbo said later that Beshear never promised to leave those provisions intact.
"The Governor did what he said he would do when it comes to upholding our shared priorities," Stumbo said of the vetoes. "I never doubted that, nor did 80 percent of the entire General Assembly."
Mike Goins, a spokesman for House Minority Leader Jeff Hoover, R-Jamestown, said Hoover has not yet had an opportunity to review the vetoes or discuss them with the House Republican caucus. Hoover had argued Thursday that the House should not adjourn the special legislative session.
Beshear said he vetoed the language on furloughs and many of the reporting requirements because he needed more flexibility to manage the state's finances. The state has gone through eight rounds of budget cuts over the past three years. Some agencies have been cut more than 20 percent.
Beshear said the state decided to furlough state employees for six days this fiscal year rather than lay off 415 employees.
"I need the same flexibility that every governor before me has been afforded," Beshear said. "I ask for no more. I expect no less."