State agencies planning for 12.5% budget cuts as shutdown costs hundreds of millions
Deep budget cuts are coming across state government, but Gov. Andy Beshear’s office on Wednesday did not specify which services or programs would be affected.
In an April 29 letter to state agency heads, budget director John Hicks warned “there is a lot of uncertainty about how much state revenue will fall in the coming months” due to the novel coronavirus pandemic and subsequent shutdown of most businesses since March.
Hicks instructed the state agencies to submit plans by May 8 — last Friday — that would cut their spending by 12.5 percent for the remainder of the fiscal year that ends June 30. All executive branch agencies will be affected, Hicks said.
He also gave the agencies a couple of specific directives, including a freeze on hiring and discretionary spending unless they are a necessary response to the COVID-19 pandemic.
Hicks added: “Keep all materials in draft form and marked ‘preliminary.’ Please direct all media calls about this planning effort to the governor’s communications office.”
There is an exemption in the Kentucky Open Records Act for “preliminary draft” documents. The Republican Party of Kentucky criticized Beshear for trying to keep information about the impending budget cuts a secret from the public.
“When running for governor, Beshear promised to make transparency a priority. Yet the only thing transparent about his administration is this latest attempt to go back on his word,” state GOP spokesman Mike Lonergan said.
In a written response to the Herald-Leader late Wednesday, Hicks said none of the proposed cuts are final yet.
“At the moment, we have simply requested that cabinets supply a draft proposal on potential cuts,” Hicks wrote. “These are only draft proposals because the Consensus Forecasting Group has not yet met. The Consensus Forecasting Group meets on May 22, at which time it will advise us of the magnitude of the shortfall which will set the revised revenue estimate for the current fiscal year.”
“Also, there is activity in Congress that may be part of balancing the state budget,” Hicks wrote. “Decisions on appropriation reductions will be made after considering both of those future events. At this time, no final proposals are possible.”
Beshear and other governors have called on Congress to approve a COVID-19 relief bill that includes direct aid to help state governments offset their revenue losses, but many Republican lawmakers have been reluctant to do so.
Late last month, Hicks’ office estimated that Kentucky state government could see a revenue shortfall of nearly $500 million this fiscal year because of the shutdown that has thrown hundreds of thousands of Kentuckians out of work. The state’s General Fund is about $11 billion.
Already braced for bad news, the General Assembly earlier this year approved a quickly written one-year state budget that takes effect July 1. It will maintain most government spending at current levels while allowing for cuts as necessary. General Fund revenue in the first half of the next fiscal year is expected to fall an additional 10.5 percent to 17.2 percent, according to the state budget office.
This story was originally published May 13, 2020 at 2:56 PM.
