Governor Steve Beshear addresses budget crisis.

Here is the press release:

Governor Steve Beshear Addresses Budget Reduction Plan for This Fiscal Year

FRANKFORT, KY (January 4, 2008) – Gov. Steve Beshear today announced a budget reduction plan for the Commonwealth by signing a General Fund Budget Reduction Order and an Executive Order directing cost-saving measures for the Executive Branch of Government.

"Today my purpose is to discuss ways in balancing the current budget and how getting over this mountain doesn’t solve our long-range predicament," Beshear said.

"There won’t be enough income during the next biennium to cover expenses in the current budget, much less any additional monies requested by a multitude of organizations both inside and outside state government."

Last week the Gov. announced that the Commonwealth’s financial condition, as discovered upon his taking office December 11th, was much worse than anticipated.

"In round figures, the Commonwealth’s budget shortfall for Fiscal Year ’08 that I am addressing today is $265 million," said the Governor. "This does not include the $166 million in additional spending needs previously cited by various state agencies that I will address in my budget recommendations at the end of the month."

The General Fund Budget Reduction Order signed today includes cuts or reductions in state activities and services. For FY ’08 this amounts to only $78 million of the $265 million previously mentioned.

The balance of the $265 million will come from:

· FY ’07 budget surplus of $145 million

· Unbudgeted/excess funds of $42 million

"Unfortunately, the FY ’07 surplus does not begin to cover the overall budget deficit," said Beshear.

The projected shortfall for the remaining FY ’08 Budget will be managed through the following measures executed by all government agencies:

· Reduction in the state workforce through attrition. Any hiring actions must be justified as crucial in governmental performance. Funds must also be available to sustain the position within reduced budget amounts and be approved by the Secretary of the Executive Cabinet prior to submission to the Personnel Cabinet for processing.

· Contracts will be reviewed for cost savings.

· Travel expenses will be reduced.

· Printing costs must be lowered in every agency.

· A moratorium is being placed on all purchases of furniture and equipment by state agencies.

· Acceleration of the sale of surplus property.

· Discretionary spending must be reduced. No area of spending is immune.

· Energy savings will be maximized.

"Finally, let there be no question that our resolving the FY ’08 budget does not mean we are out of the woods," said Governor Beshear.

"A much greater obstruction awaits all of us. Daunting revenue projections over the next two years will translate into unnerving and unpleasant decisions. To meet this challenge we will have to look at all areas of state government for reductions. Nothing is off the table."

Gov. Beshear will present his proposed 2008-2010 budget to the Kentucky General Assembly on January 29, 2008.