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Beshear Trumpets Recovery, Bevin Warns Of Budget Shortfall

AP

While Gov. Beshear paints an optimistic picture of the state’s progress under his two-term administration, the soon-to-be top executive says he’s entering office amidst a “financial crisis.”

In a news release naming Louisville 40-year veteran public accountant John Chilton to the post of budget director, Matt Bevin says the appointee will be facing a projected budget gap of more than $500 million dollars. The numbers come from a Beshear administration 2016-18 analysis that balances General Fund revenue forecasts with base and required spending and a 1 percent pay raise for state employees.

Major drivers of the shortfall include the state's struggling pension systems and anticipated Medicaid increases.

Bevin transition team spokesperson Jessica Ditto tells the Courier-Journal Bevin is concerned Beshear is leaving Kentuckians with a misleading impression of the state’s financial outlook as he exits the office.

In interviews during his final weeks in office, Beshear has listed Kentucky's protracted but steady return from the depths of the 2008 recession as one of his proudest accomplishments, often citing the one-time 11 percent unemployment rate's fall to under 5 percent. But while Bevin inherits a stronger overall economy, critics are quick to mention the twin elephants in the room - the Kentucky Teacher's and Employment Retirement  Systems, which present a $37 billion dollar problem for the incoming administration.

Confusion over the starkly different portraits of Kentucky's fiscal status could come down to semantics.

While Transition Senior Advisor Andrew McNeill acknowledges the surplus, he says Bevin is referring to 2017 and 2018, when mandated spending is set to balloon by a projected $546 million. For now, Beshear tells WHAS-TV he's leaving the new administration with a healthy balance sheet.

"We're not leaving this incoming administration with any shortfall,” he maintains. “The budget is not only balanced but we've got a surplus. We've got a rainy day fund that we've built. I just deposited $82 million more into the rainy day fund in July and August at the end of the first year of the two year biennium."

Beshear admits that future increases will fall on the shoulders of the incoming administration, but the two-term Democrat insists his successor will have many options to "skimp and save" as he tackles those problems.

Josh James fell in love with college radio at Western Kentucky University's student station, New Rock 92 (now Revolution 91.7). After working as a DJ and program director, he knew he wanted to come home to Lexington and try his hand in public radio.