Tourism, finance cabinets say they can handle proposed cuts in governor's biennial budget without staff reductions

03/01/2016 07:30 PM

FRANKFORT — Officials with the state’s tourism and finance cabinets say they’ll be able to make spending cuts proposed by Gov. Matt Bevin in the upcoming biennium without laying off staff, they told the Senate Appropriations and Revenue Committee on Tuesday.

Both presented their two-year spending plans as drafted by Bevin’s administration to the panel.

Don Parkinson, secretary of the Tourism, Arts and Heritage Cabinet, said his agency will not fill vacant positions, give existing staff additional duties and reduce staff travel, among other things, to come up with spending reductions totaling $856,000 in the current fiscal year and $1.7 million each in fiscal years 2017 and 2018.

But Parkinson made clear that Kentucky’s parks need new investments, tossing his support behind legislation authorizing the broader use of public-private partnerships in government projects.

“We’re going to be OK,” Parkinson said. “We can execute the things that need to be executed. What we’ve got to have, though, is some new capital to the parks. Once we get P3 should that happen — we really need it to happen — there’s an opportunity with the parks to get some of that fixed, but also perhaps the horse park and also the fairgrounds.

“There’s opportunity. People are coming in that want to do business in Kentucky, they’re interested, and we think there’s a real opportunity to get something done.”

Sen. Stan Humphries, R-Cadiz, agreed, saying that the condition of Kentucky’s state parks may turn off some visitors after a single stay.

Tourists sometimes “become somewhat disenchanted when they see the upkeep that has not gone on in the last several years,” he said.

“That family that’s saved and has scrimped to come to the parks are maybe a one and done,” Humphries said. “You know, we’re familiar with one and done up here watching basketball, but one and done when you’re talking about tourism is not a good thing.”

Parkinson also asked the committee to give his cabinet authority to spend $12 million collected in room taxes meant to help market Kentucky tourism.

Two years ago, Parkinson said then-Governor Steve Beshear and lawmakers swept about $9 million from the fund.

The cabinet ended up spending about $2 million in advertising funds in the biennium, he said.

By comparison, Parkinson said Tennessee spends $9 million promoting itself and another $3.2 million and $4.5 million in marketing Gatlinburg and Pigeon Forge, respectively.

“You have to look at it this way: For every dollar of advertising spent, you get $15 back in tax revenue,” Parkinson said. “So to sweep $9 million was a huge, huge hit. We have got to spend the $12 million as it was originally intended. This isn’t a good way to save money because of the way that we lose tax revenue.”

William Landrum III, secretary of the Finance and Administration Cabinet, presented figures in which he estimated he’ll be able to exceed Bevin’s proposed budget cuts without slashing his staff.

In fact, areas like the Department of Revenue and Commonwealth Office of Technology will actually see their staffing increase under Landrum’s plan.

He’s calling for reductions in fleet management, outside contracts and energy expenses while transitioning COT to a cloud-based subscription service, among other cost savings.

Bevin called for $6.8 million in cuts for the current fiscal year and $13.5 million in cuts in each of the two following, and Landrum said he expects his cabinet will exceed those, particularly with $14 million and $13.6 million in estimated spending reductions in the next two fiscal years.

“I address the areas of people, I address the area of process and I address the area of financial readiness,” Landrum said. “But my second point as the secretary of Finance and Administration Cabinet with over 30 years of public service, that while I lead this cabinet, that I plan on protecting the people’s money as if it was my own, and I plan on treating the people’s money as if it was my own.”

Lawmakers on the Senate budget panel praised Landrum for his proposed handling of cuts, but Senate President Pro Tem David Givens took issue with the amount of General Fund debt in the budget.

Without adding amounts from the upcoming biennium, Givens said the state’s debt is already near $5 billion.

“As we go forward, for the financial stability of the commonwealth we’ve got to have everyone contributing the kinds of savings as skillfully and artfully and as targeted as you are,” said Givens, R-Greensburg.

“I do think it’s important that we acknowledge this is not a fun exercise,” he continued. “Us cutting is not a fun exercise. Us going through a budget that’s going to be painful is not for joy, it’s not for celebration, it’s not because it feels good. We’re at a point in time where if we don’t, if we don’t, if we fail, our future looks really dim.”

While much of Landrum’s presentation dealt with his cabinet’s upcoming budget, he also addressed a letter he wrote regarding the Kentucky Horse Park.

Landrum said he requested the agency’s small purchase spending authority drop from $20,000 to $1,000 because it appears that the horse park continued to spend money for non-contracted food services after an audit brought the matter to light.

In all, Landrum estimated that the horse park spent more than half a million dollars in so-called “split purchases” to come below the $20,000 threshold after an audit outlined issues at the Kentucky Horse Park.

“When I went back and looked at the audit where the Kentucky Horse Park acknowledges cited deficiencies and weaknesses on every item identified, that’s when I said I would like to go ahead and issue a reduction of the small-purchase authority from $20,000 to $1,000 until further judgments, until further investigation, until something could be made that would identify that we either had a training issue, an intent issue or whatever the issue may be,” he said.

The GOP-led Senate passed a bill, Senate Bill 200, on Monday that would overhaul the governing board of the Kentucky Horse Park.


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