Beshear asks agencies to slash spending to cover shortfall. Some officers won’t
Gov. Andy Beshear is suggesting state agencies cut 3% to make up for a projected $156 million budget shortfall, but some Kentucky Republican officeholders have already declined.
During his last weekly update of the year Thursday, Beshear set forth a budget reduction plan that asks his executive branch — including his office and cabinets for economic development, transportation, energy and other sectors — to reduce their appropriations from the general fund by approximately $77.7 million.
The reduction plan comes just days after a group of economists forecasted the state will soon see a revenue shortfall and a few short weeks before the Kentucky General Assembly reconvenes to craft the next two-year budget and pass other policy.
Beshear said a number of agencies are already complying with the reduction plan through vacancy credits, meaning they are opting not to fill open positions they had previously budgeted for.
However, some state officials whose jobs are established and defined by the constitution, declined participation in the budget reduction plan, including Auditor Allison Ball and Treasurer Mark Metcalf, the governor said.
He added that Commissioner of Agriculture Jonathan Shell and the Unified Prosecutorial System within Attorney General Russell Coleman’s office have not submitted plans as requested. If a shortfall is less than 5% of the budget, the last budget bill said those holding constitutional offices are not required to make reductions.
Beshear said Ball had indicated her office had identified wasteful spending that could have been cut to prevent the shortfall in the first place and therefore would not participate.
Metcalf, like other leaders who Beshear identified that have yet to participate, is a Republican and Beshear said the treasurer’s office did not provide a reason as to why it would not participate.
“My office and the lieutenant governor’s office are also taking the 3% reduction, but for the first time in, I think it’s 43 years, that we have constitutional officers that are refusing to do their part to be fiscally responsible and to take part in the budget reduction,” Beshear said Dec. 18. “... There is nothing partisan or political about a budget reduction. It’s created through statute. The way we’re supposed to go about it is created through statute, and all I was asking is that each office do their part.”
Beshear hopes to hold K12, higher education harmless
Another section of the governor’s budget reduction strategy includes the use of an unbudgeted balance of $28.2 million. General fund appropriation reductions and the unbudgeted balance combined equal about $105.9 million.
Essential services like the state’s public school system, its colleges and universities, public employee pensions and public safety systems would not be impacted by the budget shortfall, Beshear said.
Beshear said his administration hopes for no cuts to K-12 education, colleges and universities, Medicaid, pension funding for educators and state employees as well as state police and juvenile justice systems.
The governor is scheduled to give his State of the Commonwealth and Budget Address Jan. 7 as state lawmakers begin balancing the loss of federal funding for health care and grocery assistance programs hundreds of thousands of Kentuckians rely on with what is a more manageable shortfall than previously thought.
Between 1991 and 2024, the state’s executive branch workforce shrunk by nearly a third from about 43,060 employees to just over 30,090, according to the Kentucky Center for Economic Policy.
Forecasts made by experts from the Office of State Budget Director and the Consensus Forecasting Group about the state’s revenues will guide the Kentucky General Assembly as it crafts the state’s next budget.
During the Consensus Forecasting Group’s September meeting — requested by Beshear as he warned a shortfall was likely — economists predicted the state would have a revenue shortfall of $305 million. On Tuesday, the same group, using more data and an additional quarter of receipts, projected the shortfall would come in at around $156 million.
Kentucky’s General Fund will end this fiscal year June 30, 2026, with about $15.5 billion, the economists predict. In the next two fiscal years, the state’s revenue will have slow growth of about 2.5% to roughly $15.9 billion in fiscal year 2027 and then $16.2 billion in fiscal year 2028, they said.
During the previous fiscal year that ended June 30, 2025, the state reported actual revenues of $15.7 billion. Projections made by the forecasting group for the current fiscal year are about $150 million more than the previous set of forecasts requested by Beshear.
.JPG)