Politics & Government

Beshear administration mum on plan to cut $168.9 million from budget

FRANKFORT — Gov. Steve Beshear's administration must cut $168.9 million from the state budget for the 2012 fiscal year, which started Friday, but the administration remains mum on details of how the cuts will be made.

Kerri Richardson, a spokeswoman for Beshear, said this week that the administration was considering its options and concentrating on closing out the 2011 fiscal year.

Under the two-year budget passed by the state legislature, the Beshear administration had to find $131 million in savings or cuts for fiscal year 2011 and $168.9 million in cuts for fiscal year 2012. The state's general fund budget for fiscal 2012 is $9.3 billion. Because of a steep decline in state tax revenues, the legislature has had to balance the budget eight times to make up for shortfalls since Beshear took office in December 2007.

Sen. Robert Leeper, chairman of the Senate budget committee, said Republicans are concerned that if Beshear waits too long to implement the cuts for fiscal 2012, the amount of money that state agencies will have to cut will be even greater in future months.

"If they are trying to postpone these efficiencies until after the election, that's going to be extremely dramatic cuts," said Leeper, an independent from Paducah.

Beshear, a Democrat, faces Senate President David Williams, R-Burkesville, in the general election in November.

When asked when the cuts will be announced, Richardson declined to give a date.

"We are still working on a plan and will advise agencies when those plans are complete," Richardson said.

House Budget Chairman Rep. Rick Rand, D-Bedford, said Beshear still has time to make the cuts.

"I'm not overly concerned that they haven't laid those cuts out yet," Rand said. "Obviously, the sooner the better. The longer you put this decision out, the narrower the window that you have to make those adjustments."

The administration began last month to ask agencies about ways to save.

Ted Sloan, a spokesman for the Department of Agriculture, said that the agency received a letter May 5 from the state budget director's office asking how an additional cut would affect the agency.

Sloan said a cut of about 3 percent would translate to $756,300. A cut of about 5 percent would translate to a $1.2 million cut to the agency. Its $31.5 million budget includes federal, state and other funds.

Most agencies in state government have had their budgets slashed by more than 20 percent over the past three years as the state's revenues tanked.

Sloan said the office has not been contacted yet on whether the Department of Agriculture will have to make those cuts. Sloan said he did not know whether the agency would have to lay off employees if the cuts are enacted.

To generate $168.9 million in savings, at least two options appear to be off the table: furloughs of state employees and restructuring debt to generate cash.

Beshear has said that he does not think there will be a need to furlough state employees in the next fiscal year. Last year, the state's more than 32,000 employees were asked to take six unpaid days off, a move that saved about $24 million.

Richardson said the administration does not plan to restructure any debt payments as part of the $168.9 million.

Republicans criticized Beshear last year for restructuring $67 million more in debt than the legislature originally authorized. Leeper and Williams have said that restructuring debt pushes off debt payments into the next budget cycle.

But there is good news. The state's revenues, which have plummeted over the past three years, have begun to pick up. The state is on track for a surplus at the end of the 2011 fiscal year, which ended Thursday.

Earlier this year, the state budget office projected a $64 million surplus. State budget officials have cautioned that the exact amount will not be known until mid-July, when the books for the previous fiscal year are closed.

Even if there is a surplus, Beshear cannot use that money to offset the $168.9 million in cuts in the 2012 fiscal year. In the two-year budget, the legislature directed that any surplus funds be used for necessary government expenses, such as paying for storm cleanup in Western Kentucky. Any funds left over will go into the rainy day fund.

Leeper said Beshear would have to have legislative authority to spend any money in the rainy day fund, which has been depleted over the past three years. The legislature will not meet again until January, nearly six months into the 2012 fiscal year.

Leeper said he expects the administration to provide more details at a joint House and Senate budget meeting in late July.

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