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Beshear plugs budget shortfall

BY ADAM BEAMAssociated Press

FRANKFORT - Democratic Gov. Steve Beshear plugged a $91 million hole in Kentucky's $9.5 billion budget on Wednesday - marking $1.7 billion in total budget reductions during his two terms as the state's chief executive.

State officials announced the shortfall last week following a year of sluggish collections on state income taxes.

Beshear said he had few options to balance the budget because the shortfall happened at the end of the fiscal year when most of the money had already been spent. That's why his plan cut just $3 million in state spending. The rest comes from dipping into the various budget accounts at several state agencies and taking from the state's reserve fund.

The $21.2 million transfer from the state's reserves leaves the state's "rainy day fund" - only to be used in emergencies - with $77 million, or less than 1 percent of the state's budget. The Government Finance Officers Association suggests states set aside between 5 percent and 15 percent of general fund operating revenues.

"You never really like to dip into that, but that's why it's there," said House budget chairman Rick Rand, D-Bedford. "It's really conservative how much he dipped into it. I don't think that will cause any great distress going forward."

Beshear said two goals guided his decisions: to make government as "efficient and as lean as possible" and to protect the core services of "education, health care and public safety."

Beshear's plan trims a little more than $260,000 from the Education Cabinet.

He did not cut the budgets of the Health and Family Services and Justice and Public Safety cabinets. But he did transfer $23 million from some Health and Family Services accounts and $250,000 from the Juvenile Justice program operations fund. He said both departments had surplus funds over what had been budgeted.

"The use of fund transfers is a valuable tool in how we manage and balance the overall budget of the Commonwealth, and one that keeps us from making deeper cuts to state agencies," Beshear said in a news release.

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