Beshear: Layoffs possible in state government
Gov. Steve Beshear
FRANKFORT — Gov. Steve Beshear said Monday that he could not rule out the possibility of layoffs as he cobbles together a two-year budget proposal that could be the most austere in recent history.
Beshear, in a wide-ranging interview with reporters on Monday, said the state has already cut more than $800 million in planned spending from agency budgets since he took office in December 2007.
Many programs have gone through five different rounds of budget cuts as revenues declined.
“It’s impossible to tell at this point,” Beshear said when asked if his budget proposal would include the layoff of state workers. “Further reductions in spending at some of these agencies may result in some layoffs.”
Beshear said he would like to avoid layoffs if possible. But some agencies have already warned him that any further cuts will likely translate to some sort of personnel reduction — either layoffs or furloughs. Many of the easy cuts — such as reducing spending on travel and capital projects — have already been made.
“It is going to be the most difficult budget to put together that this state has seen in modern times,” Beshear said.
Beshear said no details of his budget will be finalized until after Dec. 21, when the Consensus Forecasting Group meets to determine revenue projections for this fiscal year and the next two fiscal years. Beshear will then use those numbers for his budget, which he must deliver to the General Assembly by mid-January.
Although final revenue estimates have not been released, preliminary numbers released in October show a potential two-year shortfall of about $1 billion.
Although Kentucky’s slice of the federal stimulus program is about $3 billion, only about $485 million remains to offset potential shortfalls in the state’s General Fund.
So far, Beshear has been able to continue funding key parts of state government — including mental health and mental retardation services, Medicaid, state police and the main funding formula for schools — but that could change. “I can’t make any guarantees,” he said.
Still, Beshear again said he hopes to avoid cutting the main funding formula for the state’s school systems, known as Support Educational Excellence in Kentucky, or SEEK.
House Budget Chairman Rick Rand, D-Bedford, said lawmakers share Beshear’s goal of protecting school funding.
“I think that would be the last place that we would cut,” Rand said of the SEEK formula.
Some in Frankfort have talked of passing a budget that only covers the first of the next two fiscal years, with hopes that Congress may pass an additional stimulus package to help states balance their books in 2012.
But Beshear said he will present a two-year budget because the law requires him to do so.
Rand said the General Assembly could approve a two-year budget but the second year of that budget may have “place holder” numbers in it. The legislature could return the following year to tackle the budget for fiscal year 2012.
Rand also said Monday that layoffs and furloughs can not be ruled out.
“I think we will be able to manage for 2011 but if things continue on their current path and nothing changes … I think we will have to look at some sort of personnel action, either a lay off or a reduction in benefits,” Rand said.
Kentucky is one of the few states that has not had to layoff or furlough state employees. According to the National Conference of State Legislatures and the Pew Center on the States, about 22 states have had to furlough state employees. And at least 13 states have had to layoff state employees over the past 18 months in order to balance their books, data from the two organizations show.
Beshear said Monday that the state has lost about 2,000 positions through attrition since December 2007.
Lee Jackson, president of the Kentucky Association of State Employees, which represents about 3,000 employees in all 120 counties, said state employees have been hoping for the best but bracing for the worst.
“We are anxiously awaiting the governor’s budget request and his address to the state legislature about the budget,” Jackson said.
Beshear, in his interview with reporters, said that during the first two years of his administration he has had to weather not only one of the worst financial crisis in recent times but also a series of natural disasters — including a severe ice storm in 2009. But Beshear also pointed to some high points of his first two years in Frankfort, including an overhaul of the state’s tax incentive programs which has lead to the creation of at least 200 jobs and the retention of at least 460 jobs in Simpson County.
Beshear also touted his administration’s efforts to get more children enrolled in the Kentucky Children’s Health Insurance Program or KCHIP. The state has enrolled more than 35,000 kids in KCHIP or Medicaid over the past year, Beshear said.
– Beth Musgrave
Filed Under: State Budget • State Government • Steve Beshear
About the Author: 
Layoffs are a viable and probable TEMPORARY fix to the continuing issues with the budget & the costs of KY State Government. As the ramifications of the likely alternative sink in, I do hope the Governor thoroughly (and personally) reviews the continuing “wastes” and “duplications” being made in government agencies and leans towards eliminating the PSC (contractors) before laying off those workers being duplicated by PSC’s……look into the technology services areas first….you’ll see so much obvious and patronage-oriented duplication that it’ll disgust you…..clean it all out before you sweep it all out please !
Why does the Gov take a pay cut or better yet, forfit his pay for one year to help this crisis. That is in essence what others are doing!
Obama will save the day. We have change and hope is on the way.
The Commonwealth of Kentucky government must cut all agencies 6%. I know there are mandated federal programs. But, lets get real. First,non-merit employees must take an immediate 6% cut across the board. Second, look to technology to solve the prison issue. Put braclets on the non-violent offenders, and put them to work cleaning the streets, roads ect. Third, do away with 120 counties and consolidate them into regional governments. Fourth, institute a sales tax and eliminate the income tax in Kentucky. Fifth, stop sucking up to unions and give us the right to work law. That will bring jobs to Kentucky.
In short, let her rip, tater chip.
I know someone will say “we already have a sales tax.” I know that too, we need to raise the sales tax and eliminate the income tax.
And race track gambling WILL NOT fix the problem.
Obama already did what he could. Maybe we should elect a Governor once in a while that has had one original thought in his life. Beshear could clean out his spoiled apointees, take the cars and blackberries away and save a lot that way. He won’t though.
Right on, Xstateworker, right on! Too bad the Kentucky Democrats have no interest in such real reform measures that would make Kentucky a pro-growth state. Folks, there is a reason why Tennessee continues to grow while we stagnate and decline.
xstateworker-I’m with you. Cut ALL agencies six percent. Exempt no one. Cut all non-merits over 50K 6%. Over 75K 10%, over 100K 20%. Resind all raises given over the approved 1%. Furlough all non-merits over 80K 30 days.
Raise sales tax to 8%, eliminate income tax.
Use stimilus money to create jobs only, not to balance the budget.
Why just cut non-merit state employees? Cut everyone’s pay 6%! Id cut all their paid vacation time as well. Let them look for work in the private sector if they don’t like it. I agree 100% with the elimination of the excess counties. I can only imagine all the duplication that this antiquated system creates. It also skews political power to impovershed areas at the expense of louisville and lexington. Connecticut has essentially the same population as KY and has SIX counties.
I agree with county consolidation/merger, or whatever you want to call it; but also consider breaking up the little kingdoms of school districts. There are 175+ school districts, each with superintendents and adminstrative staff. Consideration should be given to the consolidation of those into regional districts. And lastly, examine the tax incentives – “Tax Expenditures.” Tax expenditures cost the state nearly $8 billion annually. That’s right – $8 billion. It’s time to get some of them off the teet too.
Way to build the state budget: 1. fund law enforcement 2. fund prison/court system 3. fund primary school system 4. fund secondary school system @ 50% 5. fund aid to poor/disabled thru local church programs – mothball all other agencies.
If you are willing to advocate pay cuts for the average Kentucky state worker, then you should also be willing to take a pay cut yourself and apply that to the budget shortfall. That is, if you want to be fair and equal. Not everyone in state government is overpaid.
Freeze hiring ASAP because the people that are being hired are coming in at midpoints salaries and having to be trained by people that are paid less but know more. A lot of these new hires are political buds and family of political buds. If you look at jobs openings, there are no budget problems. If there is layoffs, will these new hires be the first to go or layed off or fur load?
Realistic cuts in state government will be programs that are pet projects of commisioners, dirctor or secretaries. That is whyit will never happen! My million dollars, right away from corrections, it will be unpopular but here we go 1. housing provided for higher paid employees at the rate of $100 per month, with no gas,electric, water, phone. internet 25 houses at 100 per month 25,000 x 12. ACA membership, big cash cow here. Why does corrections have 3 deputy commissioners? Then directors as well, eleminate 1 deputy commissioner and 2 directors. Use of video conferencing why send staff all the way from Eddyville to LaGrange for a 3 hour meeting? Ky Council on Crime and Delequency, another major waste of money, 3 day party where corrections employees are paid to attend meetings several do not go to, lodging is also covered. Why do wardens get to drive state cars home? How many cell phones are needed in a prison? Let me at the budget bet I can cut a million and half without one merit employee layof! Please feel free to sent to your state rep if you want!
By the way my job will be open real soon, I went 7 months doing my job and the other identical position to mine, don’t replace me! It didn’t kill me!
I can think of a whole lot of ways to cut the state budget that don’t involve any cuts or sacrifices made by merit system employees.
You can’t cut merit employee salaries, there are laws against that. You can cut non-merit salaries.
But how about this? For all the snow days that are missed this year by public schools, make none of them up and pay no one for the time. This includes principals, school teachers, bus workers, and cafeteria staff. Some of the days are “forgiven” anyway, but yet the teachers get paid. How fair is that?
Teachers are paid on an annual basis, not a daily basis, right?
Interesting that no one has mentioned the Legislative Branch of state government and it’s ever increasing piece of the budget pie. And while not funding the state employees retirement plan at the proper level, our elected legislators this 2010 will make sure their retirement plan increases substantially and is fully funded. Is there a single legislator that will introduce a bill to repeal this increase? Or stop the legislators’ annual raises this session?
Run it like a business. If revenue is down and projects are down, there is no doubt there is no need for a full staff of employees. I am tired of seeing the following: a full garage of tools, employees and facilities but the highway dept sending its vehicles to a shop across the street for service work and wash jobs. Mechanics in the highway garage sitting on their a** because the budget is tight and they can’t buy parts for equipment. Seven men on a crew, two working, two flagging and three watching. I think they are waiting for the two working to get tired and they switch off. I run a construction company. When the first two guys get tired, they suck it up and work until lunch. They rest at lunch and work the rest of the day. Let a true businessman run some of the departments and agencies like they ran their own business and I guarantee that savings will be found. I hate to see anyone lose their job, but facts are facts and hard times demand hard decisions. RUN IT LIKE A BUSINESS!!!
Who cares if teachers are paid on an annual basis? You can change that contract. No work = no pay. I guarantee they will want to go to school on the snow days.
But this would save a whole heckuva lot of money.
I agree all contracts can be changed if the economics warrant it… well that is unless you are a Goldman Sachs bonus baby. Why do we even have highway crews picking up trash? Why not get our prisoners out there to pick up all the trash and do more jobs state employees do. I have heard of some of this earlier- prisoners answering customer service phones, etc. Since we in the commonwealth heavily embrace the prison industrial complex let us have them at least work for us while they are getting free health care and lodging.
Great comments all. But they will fall on deaf ears.
The only way Kentucky will get better and will get out of the basement of every economic category is to VOTE ALL THE INCUMBENTS out of office. Everywhere, local and statewide.
If we continue to keep voting the same guys into office each election cycle, all the written, spoken, blogged, twittered, facebooked complaints will be to no avail.
Don’t worry about what Beshear, David Williams or Greg Stumbo say. They will not follow through.
This legislature will not start on anything until after January 28. No votes on anything until they see if they are going to have opposition in the 2010 election cycle. Automatically they wasted the first month of this legislative cycle.
Then it will come down to the last days and 4 or 5 legislators will go into closed session , no press, to hammer out a budget in secret. This will allow them to take care of their buddies.
They will get richer while the rest of Kentucky will remain in the bottom 5 of every category.
POSSIBLE? They will happen.. Wait till health care taxes set in- you talking about layoffs and lost tax revenues from payroll and incomes. This is just the tip of the iceberg.. Now Obama says he is gong to force cap-n-trade on us without a vote of Congress. What a change ?– sounds like a dictator.. We have go to get the Chicago crowd out of the White House..or the last man standing – grab the flag and bring it home.
Very Good