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In Year-End Address, Bevin Warns Of Looming Budget Cuts

J. Tyler Franklin

Kentucky Gov. Matt Bevin says the state will undergo a round of spending cuts in the upcoming legislative session to set aside more money for the struggling pension systems amid sluggish revenue growth.

In 2016, Bevin and the Democratic-led House and Republican-led Senate crafted a budget that set aside more money for the public retirement systems than ever before: $1.2 billion out of the state’s $21 billion biennial budget.

That budget cut most state spending by nine percent but exempted state Medicaid funding and the public school funding formula.

“That caused everyone to complain, and cry, and weep and gnash their teeth over the way we had to restrict the budget last time,” Bevin said in a news conference on Thursday.

“The cuts we had to make last time…that was child’s play compared to what’s coming.”

The upcoming legislative session will be the first time a Republican-led legislature and governor will craft a budget. Bevin said he wants to set aside $2 billion per year for the pension systems in the upcoming budget.

That comes as the state is projected to have a $165 million revenue shortfall at the end of the year and Bevin said he will issue mid-year spending cuts soon.

Bevin blamed Democrats — who controlled much of state government over the last century — for Kentucky’s financial woes.

“For a century they stuck it to this state and stuck it to this state and stuck it to this state,” Bevin said.

“And now the taxpayers in 2017 and 18 and beyond are going to have to pay the piper. But the piper will get paid one way or the other and we have to figure out a long-term plan to make it happen.”

Pensions Expected To Be Addressed In January

Though he had initially planned to call a special session to address pensions, on Thursday Bevin said the issue will be addressed during the regular session. He said he expects the legislature to pass a bill that makes changes to the pension systems early on the legislative session, which begins January 2.

In October, Bevin and Republican leaders of the legislature unveiled a proposal to phase out the state’s use of a defined benefit pension system that guarantees retirement payments for life.

The plan would also tinker with benefits of current employees and retirees by temporarily suspending cost of living adjustments for retired teachers, requiring employees to pay three percent of their salaries for retiree healthcare and shifting workers into 401(k)-style pension plans after 27 years of service.

The proposal was widely opposed by state worker groups and Republican leaders have said a revised version will be released before Christmas.

Economic Development

During the year-end press conference, Bevin also touted the economic development initiatives of his second year in office. He said over the course of the year private companies have promised to invest $8.9 billion in the state — shattering the previous record of $5.1 billion.

Bevin claimed the development is due to the state’s passage of a right-to-work law and repeal of the prevailing wage.

“You talk about job creation, you put seeds in the ground, it takes a while to germinate in some respects. And it takes a while for the true economic impact and advantages of those investments to fully take root,” Bevin said.

Bevin also praised the legislature for passing legislation that bans abortions after the 20th week of pregnancy and requires doctors to describe sonogram images of a fetus to a woman before she can have an abortion.

“These are things our state cares about a lot. Some of you don’t, that’s clear based on the things you write,” Bevin said to reporters.

“Some of your readers [do] not, based on the fact that you’re writing and presumably that’s because they want to read. But I’ll tell you what: the vast majority of Kentuckians care about this tremendously.”

Bevin would not say if he will run for reelection in 2019.

Ryland Barton is the Managing Editor for Collaboratives. He's covered politics and state government for NPR member stations KWBU in Waco and KUT in Austin. He has a bachelor's degree from the University of Chicago and a master's degree in journalism from the University of Texas. He grew up in Lexington.

Email Ryland at
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