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Kentucky Facing a 'Financial Crisis,' Gov.-Elect Bevin Says

Ervins Strauhmanis/Creative Commons

John Chilton, the next state budget director, will be immediately tasked with tackling a "financial crisis," Governor-elect Matt Bevin says.

Chilton, a Louisville accountant and businessman whose appointment was announced Tuesday, will be a key player in crafting the next two-year state budget.

In announcing Chilton's appointment, Bevin said the state is facing a predicted $500 million budget shortfall.

“The appointment of a highly qualified budget director, therefore, is of tremendous importance,” Bevin said in a news release. “Much work is needed to get Kentucky's financial crisis resolved, but I know John is up to the challenge.”

The talk of a shortfall doesn't gibe with the recent talking points of outgoing Gov. Steve Beshear, who has said that he’s leaving office with the state in better financial standing than when he arrived.

The state’s consensus forecasting group initially predicted that state government would have a $242.3 million surplus at the end of the current fiscal year, with 2.9 percent growth projected in fiscal year 2017 and 2.4 percent growth the following year.

But Bevin's administration cites a report from outgoing Budget Director Jane Driskell showing that the state will have to find another $500 million to pay for additional expenses over the next two fiscal years. Among those additional expenses are $1 billion in contributions to the teacher pension system over the next biennium.

Also, the state is facing $575 million in additional Medicaid expenses, which includes $212 million to cover the cost of the Medicaid expansion under the Affordable Care Act.

Projected surpluses in the coming fiscal years bring down those expenses, leaving the state searching for an additional $500 million to balance the budget.

The budget will play a dominant role in the General Assembly session starting in January. Bevin has already suggested spending cuts, though he has named few specifics on what programs or departments could lose funding.

He takes office Dec. 8.

Chilton said he is humbled to serve in the Bevin administration.

“Gov. Bevin is a principled businessman with the courage to make the tough decisions needed to get our fiscal house in order,” Chilton said in a news release.

Chilton founded his accounting firm in 1998 with five employees. The firm has expanded to Louisville, Lexington, Cincinnati and Jeffersonville, and currently has more than 300 employees.

Ryland Barton is the Managing Editor for Collaboratives. Email Ryland at rbarton@lpm.org.

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