Attorney General Andy Beshear said there are “significant legal problems” with Gov. Matt Bevin’s recent request for most state agencies to cut their budgets by more than 17 percent.
During a news conference on Tuesday, Beshear said that Bevin can’t make the proposed $350 million in cuts because state law only allows a governor to unilaterally cut budgets if there is an estimated budget shortfall.
“These are the restrictions on what the governor can or can’t do,” Beshear said. “I’m just applying the law as it was passed by the General Assembly.”
State economists with the Consensus Forecasting Group have already made initial predictions that there will be a $200 million shortfall, but an official estimate won’t be set until December.
On Friday, Bevin asked cabinet secretaries and constitutional officers to cut their budgets by 17.4 percent. The money would go towards addressing the expected $200 million budget shortfall and another $150 million would go to the state’s rainy day fund.
Several state programs would be exempted from the cuts, including public school funding, Medicaid and state universities.
Bevin’s communication director, Amanda Stamper, issued a statement Tuesday saying Beshear was “grandstanding” and called his threat to sue over the cuts “premature and entirely political.”
“Kentucky families and businesses know they should not spend more than they make and having zero dollars in the bank to plan for emergencies is dangerous. Director Chilton’s letter merely asked state agencies to draft a similar spending plan before any final decisions are made later in the year. Kentucky law clearly allows the Governor to ask any agency to reduce its spending, and the Kentucky Supreme Court said just last year that the Governor can direct spending reductions for agencies under his control.”
Beshear said Tuesday that Bevin would be able to make cuts to address an official shortfall, but that making cuts to add money to the state’s rainy day fund would be illegal.
“I’m not here to question the governor’s moves in being prudent or not as to his fiscal policy,” Beshear said. “I’m here solely to explain what the law allows and doesn’t allow.”
Last month, the state’s Consensus Forecasting Group made an initial prediction that this year the state would bring in a little more than $10.6 billion in revenue instead of the more than $10.8 billion initially estimated.
Kentucky had a $138.5 million revenue shortfall at the end of the most recent fiscal year — the eighth shortfall in the last 14 years. Officials blamed underwhelming growth from sales and income tax returns.
Bevin had to make a combination of spending cuts and fund transfers to make sure the state’s budget was balanced by the end of the last fiscal year.
The biggest drain on the state budget is the pension system, which has been underfunded in recent decades and needs more money to keep it afloat.
State officials say the funds need an additional $700 million per year out of the state’s $10.4 billion budget.
Bevin has promised to call a special legislative session later this year for lawmakers to make changes to the pension systems, but changes discussed so far have been politically fraught.