Like other governors before him, Matt Bevin would balance his proposed two-year state budget using “fund transfers” — shoveling cash earmarked for one specific purpose into the larger General Fund, where it can be spent on a wider variety of needs.
Overall, the governor relies on $472.3 million in transfers over the biennium to make his $22 billion spending plan work.
Bevin’s biggest transfer would be $201.5 million over two years from the Kentucky Employees’ Health Plan. The state health plan is a favorite for governors and lawmakers to raid because it usually runs a fat surplus.
And that reveals a serious problem, said Jason Bailey, who studies the state budget at the Kentucky Center for Economic Policy in Berea.
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“You’ve got state employees who haven’t had a salary increase since 2006,” Bailey said.
“So when you have this surplus every year in their health plan, and you’re not using that to lower their premiums or lower their co-insurance costs, and you keep cutting their benefits, this is just one more way you’re asking state employees to subsidize the General Fund,” he said.
Bevin also would transfer $150 million over the next two years from the Kentucky Permanent Pension Fund that he established in 2016 to address the state’s unfunded pension liabilities, which are now estimated at more than $40 billion. This money would be used to replenish the state’s “rainy day” budget reserve fund.
“I guess in Frankfort, ‘permanent’ means two years,” quipped Jim Carroll, spokesman for pension advocacy group Kentucky Government Retirees, on Wednesday. “They sure raided that one quickly.”
Other sums would be transferred in Bevin’s budget plan from the School Facilities Construction Commission Emergency and Targeted Investment Fund ($26 million), the Petroleum Underground Storage Tank Fund ($23 million) and the Insurance Administration Fund at Environmental Protection ($25 million).
The Malt Beverage Education Fund — fueled by an excise tax on beer, to pay for programs that discourage underage drinking — will kick in $1 million.