Wednesday, January 27, 2016

Gov. Matt Bevin Delivers First Budget for Commonwealth

Budget proposal reduces debt and puts critical investment in high-tech job training, front-line workers



Gov. Matt Bevin's Budget Address delivered on 1-26-16. FTM file. 
Last night, in his first State of the Commonwealth Address, Governor Matt Bevin asked all Kentuckians and members of the General Assembly to stand united in improving the financial condition of the state. A 9% total cut to spending was proposed, 4.5% for the rest of this fiscal year and a 2.5% baseline cut overall.

Northern Kentucky's interests were well represented in the address.

Northern Kentucky University had a great night, as Bevin touted outcomes-based funding, which would help "true up" universities that were churning out more graduates among other metrics, while still finding themselves on the bottom of the university funding barrel.

He said his proposed budget would reduce this disparity NKU receives by 50 percent in the next fiscal year and 50 percent the following year. By 2018, that margin would be on par.

Western Kentucky University was also specifically mentioned as a candidate that would be helped by this measure.

"We are grateful that Governor Bevin recognizes the existing funding disparity and his budget takes action to address that," said NKU President Geoffrey Mearns.

Dealing with the heroin problem was discussed, as Bevin indicated that he has allocated $5.7 and $6.3 million, on top of the 10 million set aside by Senate Bill 192 last year.

The Brent Spence Bridge was also part of the one hour and seven minute address. "We're going to invest in the Brent Spence Bridge corridor. We are going to paint it and stop pretending it's not falling down," said Bevin. "We've ignored our infrastructure and bridges. We are calling for no less than 15% of all state road budget to go to bridges."



“We have the ability to come together to make this state the best version of itself,” said Gov. Bevin. “We are going to tap into the existing talent and skills of our state workers, and take care of those who protect the Commonwealth. However, we cannot move forward unless we address the crippling debt that is facing this state. We have got to focus on getting our financial house in order.”

In his speech, Governor Bevin presented the Fiscal Year (“FY”) 2017-18 Executive Budget proposal, which calls for an analysis of Kentucky’s current financial situation and he believe will put the state on a path to long-term fiscal stability.

Bevin continued, “This budget is a common sense effort to begin dealing with our pension obligations while also investing in critically important areas to better serve all Kentuckians. We have to tighten our belts in order to begin paying down the billions of unfunded liabilities. We must stop putting it on the backs of future generations.”

Kentucky’s two biggest financial challenges are the tens of billions in unfunded pension liabilities and the runaway costs of Medicaid. Modest increases in revenue projections are not keeping up with huge increases in demands upon the Commonwealth’s General Fund. After years of kicking the can down the road, these unfunded liabilities are crowding out necessary investments in education, public safety, and vital social services for Kentucky’s most vulnerable citizens.

Without decisive action addressing these issues, critical priorities like protecting the basic funding for schools, fulfilling the commitment to fighting the heroin scourge and substance abuse, and investing in workforce training to meet the demands of Kentucky’s job creators will be sacrificed.

Governor Bevin’s Budget Proposal adequately funds needed state services and will lead to more jobs, better educational opportunities, and better access to quality healthcare for all Kentuckians.

The budget rejects the call for higher taxes on Kentuckians and the idea that the solution to the Commonwealth’s debt problem is to take on billions of dollars in pension obligation bond debt. It fulfills Governor Bevin’s commitment to the taxpayers to be better stewards of the money they send to Frankfort.

HIGHLIGHTS:
- A 9% cut across the board, but with some agencies seeing exemptions from that, such as Education and Law Enforcement, it's an overall 2.5% baseline cut.

- A "downpayment for the future" was a common theme. "Finding ways to save to put money away into a rainy day fund is what credit agencies are begging us to do," said Bevin.

- Bevin asked the legislature for a $21 billion, two-year budget.

- With no tax cuts in the budget, he called for $650 million in “cuts across the board,” including possible layoffs of state employees, to be left to his cabinet secretaries.

- $1.1 billion to the state’s ailing pension systems for state workers and schoolteachers, which he admitted  falls short of what the teachers’ system requested.

- Allocated $130.7 million to the Kentucky Retirement Systems as the General Fund contribution for state workers and $591.5 million more to the Kentucky Teachers’ Retirement System as the contribution for schoolteachers.

- $4.8 million over the biennium to hire more social workers and social service clinicians, people Bevin describes as the people who are taking care of our state's most vulnerable.

 - Include $12.4 million to boost salaries for Kentucky State Police and $4.5 million in retention raises for correctional officers at state prisons. This is a move that Campbell County Detention Center and Fiscal Court grappled with after turnover was high.

 - Add $6.3 million to hire 44 public defenders, reducing caseloads for the lawyers at the state Department of Public Advocacy who represent indigent criminal suspects.

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