Franklin County

Beshear says government shutdown would have 'cataclysmic impact'

FRANKFORT — Gov. Steve Beshear warned Wednesday of the potentially "cataclysmic impact" of not having a state budget when the new fiscal year begins July 1, saying that "every single family in this state will be affected in a negative way."

If lawmakers can't resolve an impasse over the two-year spending plan, Beshear said, visitors would be turned away from state parks, coal mines might close because there would be no safety inspectors or rescue teams, companies depending on economic development programs would go without help, and death investigations that depend on an autopsy by the Office of the Medical Examiner would stall.

Dozens of other agencies and programs also might lose funding, including the Kentucky State Police, veterans' nursing homes, existing road projects, the state-federal Medi caid health care program for the poor and disabled, public universities and public health departments, Beshear said.

Beshear, speaking at a Capitol news conference, said he wanted the public to know what will happen if the General Assembly fails to provide a budget for the executive branch of government.

Despite the Democratic governor's warning, legislative leaders said Wednesday there has been little or no movement on an agreement between the Republican-controlled Senate and the Democratic-controlled House since lawmakers adjourned April 15.

A 2005 state Supreme Court case said only essential services outlined in the Kentucky Constitution or those that are required by federal and state statute could be funded if there is no state spending plan. Because the state has not gone without a budget since the 2005 court decision, there are still many questions about what services would be allowed to continue.

"This decision has not been tested," Beshear said of the 2005 ruling. "We are in uncharted territory."

It's too early to say how many state employees would be laid off because of a partial shutdown of government, he said.

"The General Assembly can render all of this moot by coming together as is their duty and passing a budget," Beshear said.

The governor said he plans to call a special legislative session in May, regardless of whether the two chambers come to an agreement on a budget before then. The state needs a new budget by June 1 to save tens of millions of dollars by refinancing some of its debt.

Beshear also needs a full month's notice to shutter much of the government in an orderly manner, he said. Although he has asked his cabinet secretaries to begin preparing plans for a partial shutdown.

Beshear said he has been working with leaders of the House and the Senate and remains optimistic that an agreement can be reached.

Senate President David Williams, R-Burkesville, said Wednesday that there has been little progress on the budget and that he doesn't understand why House leadership would not accept a Senate proposal that included across-the-board cuts to most state agencies.

"There is no problem in the Senate," Williams said.

House Speaker Greg Stumbo, D-Prestonsburg, said the 100-member House would not pass the Senate proposal that included a nearly $3 million cut to the state's preschool program and nearly $100 million in cuts to the state's Medicaid program for the poor and disabled.

The House originally proposed a two-year spending plan that cut money from most state agencies, trimmed two school days and called for borrowing more than $1 billion to finance construction projects that leaders said would stimulate the economy.

The Senate proposed no new projects and deeper cuts to most state agencies. Williams said he didn't think a 1.5 percent cut to the state's main funding formula for schools would have a "significant" effect on K-12 education.

Williams said the latest House proposal included a continuation budget of this year's spending plan — something that was passed by the House on the last day of the legislative session. But Williams said he would like to see a two-year spending plan. A continuation budget also would require Beshear to make the most difficult cuts, Williams said.

He and Stumbo both urged Beshear to put forward a new version of his budget proposal that doesn't include revenue from allowing electronic slot machines at racetracks.

If Beshear does not offer a budget proposal, then the best solution would be a continuation budget, Stumbo said. That way the two sides would have time to work out their differences before the next legislative session in 2011, he said.

"If the governor really wants to get over the impasse ... the logical thing to do is to present us with a budget based on current revenues," Stumbo said.

Beshear said Wednesday that it is unlikely he would offer a second budget proposal, noting that he fulfilled his constitutional duty to propose a spending plan in January that included more than $780 million in revenue from slots.

Beshear said the two chambers did not have "the courage" to take on the controversial gambling measure, which has previously passed the House.

"In the end, this is going to be a horrible budget, no matter what the budget ends up being," Beshear said, referring to the state's bleak revenue picture. To make up a shortfall between the state's current level of spending and its expected revenue, lawmakers would have to cut more than $1 billion from the budget.