Gov. Andy Beshear announced in late summer that he was expecting a $300 million shortfall, as the Consensus Forecasting Group predicted lower-than-budgeted tax revenues in the current fiscal year. Now, after a strong couple months of receipts, the independent group said the gap between the budget and their prediction is much smaller, estimating a $156 million gap instead.
Beshear said at a news conference Thursday he has created a plan to account for the smaller deficit, which is about 1% of the state’s General Fund appropriations. He said he is asking many agencies and offices to reduce their budgets by about 3% for the rest of the fiscal year that ends next summer.
“Most agencies are meeting this reduction through what we call vacancy credits. These are jobs that were budgeted for that there are dollars in the budget for, but are not currently filled,” Beshear said. “What the cabinets are opting to do is not filling them through the end of the year.”
Beshear said the shortfall will not affect funding for necessary services, like the public school system, higher education, Medicaid, pension funding or public safety, including Kentucky State Police and the Department of Juvenile Justice.
The Democratic governor said he will be making that 3% cut in his own office and the office of the lieutenant governor. However, Beshear said two constitutional officers have refused to make similar reductions.
“The auditor and the treasurer have just said no,” Beshear said. “They won't- take part or do their part, even though this is all set up by state law. The other constitutional officers, we have not received a plan from, but we hope and expect to get one.”
The two-year budget passed in 2024 however does specify that, in the case of a shortfall that makes up less than 5% of the budget, the offices of the constitutional officers aren’t required to make such a reduction. That includes the offices of the secretary of state, attorney general, treasurer, agriculture commissioner and auditor, all of which are controlled by Republicans.
The law specifies that the governor “may request their participation,” but that it remains at their discretion. GOP Auditor Allison Ball said in a statement that the governor "demanded" a reduction, which she said is not within his power to do.
"My office is responsible for identifying waste, fraud, and abuse, and I identified five times the amount of wasteful spending that could be cut to avoid the budget shortfall entirely," Ball said, pointing to several of her reports.
Lawmakers will soon return to Frankfort for the 2026 legislative session, in which they will craft the next two-year budget.
