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Beshear budget proposal spares education, health care priorities

SEEK Funding, important to Adair and other South Central Kentucky school districts, is core priority in proposal. Governor's budget proposes no tax increases and limited cuts. Proposal uses limited gaming, a recurring revenue, to balance

From Gov. Beshear's Communications Office

FRANKFORT, KY - Governor Steve Beshear presented a balanced budget proposal to the General Assembly Tuesday night, January 19, 2009. The budget is one that does not raise taxes, cuts many agencies an additional two percent, and includes projected revenues from gaming in order to protect core priorities, including SEEK - the primary classroom funding formula; Medicaid - the health care program for our most vulnerable; and certain public safety and job creation programs.

Gov. Beshear's budget proposal is projecting savings from his Smart Government Initiative of $77 million over the biennium, including $33 million in the General Fund. This government-wide initiative, which he announced last week, includes the sale of non-essential assets and the review of procurement and delivery of services.



"My friends, these investments in our future are ours to make," Gov. Beshear said. "We just need the courage and commitment to make them happen."

The budget proposal assumes approximately $780 million in revenue from video lottery terminals over the next two years. Without gaming revenue, the cuts to the impacted agencies increase significantly - over 12 percent in the first year of the biennium, and 34 percent in the second year. This comes on top 20 percent to 25 percent cuts many of these agencies have already faced.

"Cuts of this magnitude would undoubtedly lead to mass layoffs and would inflict devastating damage on literally hundreds of critical services to communities and individuals around the Commonwealth, such as prenatal care, water permits, air quality inspections, social workers and fire inspections of public facilities like day-care centers and schools," Gov. Beshear said.

Priorities protected, administration says

Gov. Beshear's budget plan continues funding for the Commonwealth's most important priorities: education, job creation, health care and public safety.
  • Education: Funding for the SEEK formula, the main K-12 education funding formula, is wholly preserved. It provides $150 million to rebuild classrooms and repays the Kentucky Teachers' Retirement System pension fund. Gov. Beshear's budget proposal also protects higher education institutions from cuts in FY11 and limits the cuts to two percent in FY12.
  • Jobs: Includes a capital investment program aimed at creating construction jobs in the short-term and investing in the long-term future of the Commonwealth. The Cabinet for Economic Development would be spared from cuts and $60 million in additional loan and grant funds would be authorized for bond funding for creating and retaining jobs. Includes funding for priority projects of each postsecondary education institution, both funded by the General Fund and by university funds. $300 million in bonds are authorized for needed road projects. A total of $150 million is provided to support roads and water and sewer infrastructure projects for the rapidly expanding Ft. Knox area due to the Base Realignment, which will create 5,000 new jobs.
  • Health care: Protects Medicaid funding to care for the most vulnerable Kentucky families, and institutes a range of initiatives to contain costs in utilization and benefit management, while improving program integrity and increasing revenue collections. Gov. Beshear's budget estimates savings of $244 million in the first year and $117 million in the second year from those efficiencies, including 75 million in General Fund dollars in year one and $33 million in year two. In order to address long-term health care issues, the budget proposal funds smoking cessation programs in the Medicaid program; eliminates a premium payment for the state's Kentucky Children's Health Insurance Program, which is preventing some 700 children a month from obtaining needed health insurance; and authorizes funding to rebuild Eastern State Hospital in Lexington and replace the Glasgow State Nursing Home.
  • Public Safety: Maintains funding for prisons, expands use of home incarceration to save money and funds operations of county judicial centers. In addition, Gov. Beshear's budget maintains funding for the Kentucky State Police, allowing them to fund another cadet class.
  • Public Employees and Retirees: Fully funds the HB1 retirement contribution rates provided in the 2008 special session for the next two years to protect the pensions of state employees and retirees and provides for increasing costs in the state's health insurance plan for its teachers, employees and retirees.
Plan for possible future Federal funds

Gov. Beshear addressed the possibility of a new federal stimulus windfall, noting that, "we cannot control what happens in Washington, and thus my budget does not count on that money." However, he submitted a contingency plan for using that money if it materializes, while emphasizing the importance of creating dependable, recurring revenue for the state:
  • Funding one percent pay increases for teachers and state employees;
  • Restoring cuts to higher education;
  • Restoring cuts to the Department for Community-based Services;
  • Creating a buffer
  • Rebuilding Kentucky's rainy day fund.
"I've put forth my plan - a conservative, responsible plan that would not only help the state survive but also help it move forward," Gov. Beshear said. "Now what is needed is honest, thoughtful and open discussion of how to move forward."


This story was posted on 2010-01-20 08:16:20
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