According to Governor Bevin, the Commonwealth faces a $500 million funding shortfall to meet the financial obligations that must be addressed - including state pensions and Medicaid costs. To find additional monies, the Governor proposed spending cuts across most state agencies but did not recommend any tax increases. The Governor also prioritized and reallocated state dollars to Kentucky Employees Retirement System (KERS), Kentucky Teachers' Retirement System (KTRS), K-12 education, workforce development, social workers and law enforcement.
Specific to Lexington, Governor Bevin provided $60 million in state funding for an investment partnership with the City of Lexington to help with the renovation and expansion of the Lexington Convention Center. The arrangement includes a guaranteed repayment of funds to the state. The convention center serves as an economic engine for Lexington and the region. The project is expected to generate an additional $28 million in annual economic impact.
Spending cuts across most of state government including public universities
- The Governor proposed 4.5 % cuts for the current fiscal year and 9% reduction to baseline spending over the next two years. However, some areas were exempted including Medicaid, public schools, law enforcement and social services.
- Bevin's budget reduces baseline spending by $650 million.
- For the University of Kentucky, this means a significant cut its general fund appropriation which is used primarily for operational costs. Between now and June 30 of this year, UK's current state appropriation will be reduced by $12.6 million (4.5%). In the first year of the new two-year budget cycle starting July 1, UK would face an additional $25.2 million cut to its state appropriation.
Investments in education and workforce development
- Protects per pupil funding to K-12 public schools (SEEK formula) and increases funding by $39 million to accommodate increases in student populations
- $100 million in state bonding pool for the Education and Workforce Development Cabinet to co-invest with local communities in workforce development programs and infrastructure to help train workers to meet employer needs.
- For FY 18, the Governor has proposed funding provided to state universities to be distributed based on performance criteria - also known as outcomes based funding. The details of this proposal are to be determined.
Addresses financially troubled state pension systems
- The Governor's budget takes steps forward to correct serious funding challenges. It calls for fully funding the actuarial required contribution to the KERS with approximately $132 million over the biennium. Funding is also set aside for an independent audit of the system by outside experts to determine problems and future solutions.
- Nearly $592 million over the biennium in payments to the Kentucky Teachers Retirement System with the potential for an additional $132 investment from budget trust fund reserves.
Prioritizes transportation infrastructure investments
- No less than 15% of state funded portion of the road fund for maintenance and repair of existing bridges.
- Focus on improving federal interstate highways including I-75 and I-65.
- Funding in the proposed six-year road plan for the I-75 Connector project (Jessamine and Madison counties)
- Accelerated planning phase for I-69 bridge and highway extension in West Kentucky.
- $10 million per year for maintenance, repair and expansion of airports and aviation needs.
Support for vulnerable citizens, public safety and fighting substance abuse
- Increases in wages and resources for child advocates, social workers, clinicians and guardians.
- Salary increases for state policy troopers and corrections officers
- Investments in combatting substance abuse such efforts aimed at heroin and prescription drug abuse.