Thursday, March 17, 2011

Special Session - Day 4 Update

Day 4 Highlights

House

Today the House Appropriations & Revenue committee met but took no action on HB 1, the bill addressing the Medicaid budget shortfall. However, on the floor today the House Leadership announced that all House members were encouraged to attend an A&R Committee meeting on Monday at 2:00 p.m. where "important testimony" would be provided on HB 1. The House plans to convene at 4:00 p.m. on Monday and 9:00 a.m. tomorrow.

A&R Committee:
The House Appropriations & Revenue Committee met today and continued their testimony regarding the potential impact further budget cuts would have on state agencies.

Today's testimony was provided by State Budget Director and Secretary of the Cabinet Mary Lassiter. Her presentation was focused on providing a perspective on the history of budget cuts and the economy over past 4 years, impacts of future cuts, and to further discuss debt restructuring. A copy of the slide presentation is available for download, here are the highlights:

- History of cuts and revenues - Still not back to 2008 revenue levels although they may reach that and beyond in 2012. The administration has made eight budget reductions with two more to come in 2012 that will total $250 million.

- 83% of general fund has been held without cuts, because SEEK, Medicaid, and others have been held harmless. However, those that have been cut which is most other state agencies have had
cuts of 25-30%.

- Addressed state employee hiring numbers. They have declined on trend, low point in 2009 when the  retirement window closed, Beshear has added some people, mostly funded with federal funds, in the areas of workforce development and unemployment insurance or at Revenue where additional auditors were allowed for in the budget.

- Probably the most interesting point was in regards to the impact of future cuts. Due to the already mandated $169 million in cuts provided in the 2010 enacted budget, a scenario like the Senate has discussed would be an additional 2% across the board cuts on top of that. However, if the same programs like Medicaid and SEEK were exempted like they were in 2011, the 2% across the board cut turns into 9.5%.

- Because of the use of $565 million in one time monies in the 2010 enacted budget there will be a $565 million structural imbalance going into 2013-14 budget cycle.

The next meeting of the committee will be Monday at 2:00 p.m.

Senate

The Senate convened briefly today and took no action on the floor. They plan to convene tomorrow at 9:00 a.m.

Dustin Miller
Government Strategies, LLC
229 Shelby Street
Frankfort, KY 40601
Work: (502) 226-3975
Cell: (859) 227-5800





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