State orders 17.4 percent budget cuts in anticipation of $200M shortfall

09/08/2017 01:31 PM

Many state agencies and constitutional offices must cut spending by 17.4 percent as the state faces a $200 million budget shortfall and hopes to build its reserves to $150 million, State Budget Director John Chilton announced in a letter Friday.

The move comes about a month after the Consensus Forecasting Group estimated that state revenues would come $206.2 million short of budgeted amounts in fiscal year 2018. The state plugged a $138.5 million budget hole at the close of fiscal year 2017 in July.

In his letter to agency heads, Chilton also said the state needed $150 million for its Budget Reserve Trust Fund, which is expected to be depleted by the end of the fiscal year. That, Chilton wrote, would likely be “viewed negatively by bond rating agencies.”

The spending cuts will only come from non-exempt budget expenditures, Chilton indicated in his letter.

That means the SEEK formula for K-12 education, Medicaid, the Department of Corrections and debt payments will be protected from the reduction order, according to Amanda Stamper, communications director for Gov. Matt Bevin. University budgets also will not be impacted, she said.

“While challenging, the current fiscal constraints present a unique opportunity to evaluate the effectiveness and necessity of programs within state government,” Chilton wrote.

“Limited resources must be allocated to programs providing critical services and a strong return on investment. As an agency head, you are best positioned to make critical judgements about which programs deserve full funding, and which should be significantly reduced. This effort will also be important as you prepare your budget request for the upcoming biennium.”

Chilton asked agency leaders to draft budget-reduction plans and submit them to his office by Sept. 25.

Chilton’s letter can be downloaded here: 09-08.Chilton Budget Letter.pdf

Kevin Wheatley

Kevin Wheatley is a Video Journalist for Spectrum News and covers Kentucky politics and all the goings-on at the State Capitol. Kevin was born and raised in Frankfort so he grew up around politics and has always had the drive to follow the political process and hold lawmakers accountable. Before joining Spectrum News Kevin covered government and politics for The State Journal in Frankfort. You can watch Kevin’s work weeknights at 7:00 and 11:30 on Pure Politics, available exclusively on Spectrum News, HD Channels 403 and 715. You can reach him at kevin.wheatley@charter.com or 502-792-1135.

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