Politics & Government

Some state agencies to cut 2% to fill budget gap

FRANKFORT — Gov. Steve Beshear has ordered some state agencies to cut spending by 2 percent to help balance the state budget for this fiscal year, which ends June 30.

State budget director Mary Lassiter told lawmakers Tuesday that the agencies will have to evaluate whether to initiate layoffs to arrive at the cuts.

"If there are any, it will be very minimal," she said.

No furloughs of state employees are planned, she added.

The 2 percent cuts will help Beshear raise $29 million to fill a $189.9 million gap in this year's budget.

The cuts will not apply to several high-profile agencies, including basic school funding, Medicaid, community-based services such as social workers, corrections, universities and student financial aid. Agencies on the exempt list make up about 85 percent of the state budget, said deputy state budget director John Hicks.

The administration did not provide members of the legislature's budget committee a list of programs to be cut, but the programs include environmental protection, labor and revenue, fish and wildlife and vocational rehabilitation.

The state legislature had mandated that Beshear make $189.9 million worth of cuts in this year's budget to balance the $9 billion budget.

Besides the $29 million from 2 percent cuts, Lassiter said that mandate will be met by using $75.5 million in estimated excess revenues.

An additional $57.9 million, she said, will come from money that originally was appropriated to meet debt service on building projects but will not be needed. Reasons for this, she said, include projects not being ready to be bonded and cheaper interest rates.

And $27.5 million, she said, will come from recurring savings from 1.5 percent in cuts last fiscal year and reductions in the number of non-merit, or politically appointed, positions. Lassiter did not have an immediate number of non-merit reductions.

Sen. Joe Bowen, R-Owensboro, asked Lassiter about agencies exempt from the 2 percent cuts. He said "the one that stands out" is the Kentucky Horse Park.

Lassiter said the facility in Fayette County is not self-sufficient and is part of the state's parks system.

State parks are on the exemption list, along with debt service, school district health insurance, behavioral health, the teachers' retirement system, state contributions to employee pensions, severance-tax-dedicated funds, prosecutors, public advocacy, juvenile justice, the Executive Branch Ethics Commission, the state's share of elections for the Board of Elections, and necessary government expenses such as spending to cope with natural disasters.

Most agencies have had 8 percent reductions from their 2010 appropriations, Lassiter said.

Lassiter said the state budget for the next two years, which the legislature will tackle in the 2012 General Assembly that begins Jan. 3, "will be very challenging."

She noted that an independent panel of economists known as the Consensus Forecasting Group, which predicts state revenues, expects modest growth — about 2 percent a year. The group will come up with specific projections Dec. 21.

Lassiter also said the legislature will not have use of federal stimulus dollars as it did in preparing the current budget.

Several lawmakers asked Lassiter about specifics of the two-year budget proposal Beshear will present to lawmakers in January, but she said it was premature to comment about that.

House budget chairman Rick Rand, D-Bedford, asked Lassiter whether the 2 percent cuts for this fiscal year in the executive branch also would apply to the legislative and judicial branches.

"No, but we would welcome any input," she said.

"That would be premature," Rand said.

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