By Tom Latek
Kentucky Today
Gov. Matt Bevin said Thursday he is planning for every scenario when it comes to a possible state budget deficit for the fiscal year that ends on June 30.
Budget Director John Hilton is currently projecting a $133 million shortfall that he blames on lower-than-expected income tax and sales tax collections.
“Sadly, this is what I inherited,” Bevin said. “I had to deal with the very same thing last year. Ironically, almost the exact same number. If you remember, the Road Fund was $112.5 million short by itself.”
The governor said, at this point, he is taking a wait and see attitude.
“The number itself will change,” he said. “It will go up or down. Last year we ended up with a slight surplus, but that was only because we cut as much as we had.”
The bottom line, Bevin said, is that Kentucky has serious financial problems.
“This is a state with a failing public employee pension system,” he said. “This is a state where poor management of financial issues for many, many issues, with people kicking the can down the road, has come home to roost.”
Bevin said the projected shortfall confirms the importance of a special legislative session he plans to call later this year to address tax and pension reform.
“This is an urgent situation, so I think this is just affirmation that we had better be serious about this,” he said.
If a shortfall occurs, Bevin could fix it by ordering cuts across various state agencies, or transferring money from the state’s ”rainy day” fund.
The last time Kentucky finished the fiscal year with a deficit was in 2014, when there was a $91 million shortfall. Then-Gov. Steve Beshear plugged the hole by cutting state spending by $3 million and dipping into the state’s reserve fund.