FRANKFORT — A more than $450 million hole in Kentucky's state budget is likely to fill much of the General Assembly's time when lawmakers convene in January.
Gov. Steve Beshear has predicted drastic funding cuts "that will bring pain to our people," and has suggested a possible special session for lawmakers to deal exclusively with Kentucky's budget problem.
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Last week, he asked university and government agency officials to suggest how they'd cut 4 percent in spending this year.
"There's only two options and everybody better accept them," said Senate Minority Floor Leader Ed Worley, D-Richmond. "Either raise some money or you cut expenses. It is that simple."
Kentucky lawmakers passed a two-year, $19 billion budget nearly eight months ago that included funding cuts for higher education and government services. It was based on an estimated $900 million drop in revenue from the prior year.
Last month, however, matters got worse.
A group of state economists predicted that state revenue is off pace an estimated $456 million between now and the end of June. Over the next year and a half, Kentucky's general fund shortfall is estimated to be more than $1.3 billion behind.
Kentucky's road plan, which is supported by fuel and vehicle taxes, is also short $100 million, the economists predicted.
The news was even worse than Beshear's internal projections that the state was facing a $294 million drop in revenue. Beshear is crafting a proposal to address the problem, spokesman Jay Blanton said.
Now all options — from boosting the state's tax on cigarettes to severe funding cuts — appear to be on the table.
Beshear supports a higher cigarette tax and casino gambling as a way for Kentucky to rake in hundreds of millions in new revenue. Lawmakers so far have ignored both ideas.
"We know this process is not easy for anyone involved and the size of the cuts being contemplated would, as the governor indicated ... result in very difficult and painful choices," Blanton said in a statement last week. "But we have to prepare and these scenarios are critical in doing that."
Still, lawmakers are likely to want a say in how the fiscal problem gets settled.
Senate President David Williams, a Burkesville Republican, said he's looking for the governor to present a budget plan for lawmakers to consider early next year. Lawmakers could start considering a budget solution in January, Williams said.
"Will there have to be cuts? Yes. Are folks in the private sector, private businesses, having to cut their budgets? Yes," Williams said. "We'll look forward to seeing what happens."
House Speaker Jody Richards, a Bowling Green Democrat, said in a statement last week that Kentucky needs to raise more money to avoid further cuts in education and human service programs.
"Together we must work to weather the worst crisis this nation has seen since the Great Depression," Richards said in a statement. "The only thing we know for sure is that there are no easy ways out of this."