The week between Christmas and New Year’s is a time to reflect on and reevaluate what is important.

Most of us focus on family and friends, business, church or other personal interests, with very few people considering what is important to Kentucky as a whole. But now, as the state faces what could be another $1 billion shortfall over the next two years due to the poor national economy, more and more Kentuckians are starting to take a closer look at what is truly the state of our Commonwealth—and we lawmakers are among them.

Two weeks from now state lawmakers will be back in legislative session in Frankfort to decide how much money our state agencies and agencies that rely on state funding, like our school districts, will have to spend over the next year or two. But we know, as you do, that revenues have fallen and many of those agencies will again face budget cuts. What those cuts will be, and who will be exempt from them, remains to be seen as we continue to reevaluate our state’s needs and how to meet them in this economy.

Lawmakers thought we were going to have to fill an approximately $160 million shortfall in the state budget this fiscal year following official reports that revenues had decreased in most areas. We were all very relieved last week when a reevaluation of the state economy reduced the expected shortfall to about $100 million, lessening the pain a bit.

The revision will not be enough to prevent cuts altogether. And that is unfortunate.

State lawmakers are sick and tired of making cuts. And state agencies—along with the Kentuckians they serve—are sick and tired of the effects of the cuts, which have totaled approximately $800 million over  the past two years. Suggestions have been made on ways to avoid more cuts, including changing the state’s income tax structure, reinstating the state estate tax or instituting a tax on services like car and home repair to increase revenue, but there is little bipartisan support for tax increases right now. Expanding gaming in the state by allowing video slot machines at racetracks has also been suggested as a money maker, but that too remains a hard sell.

What route lawmakers can, and will, take to balance the state budget next session remains to be seen. No one is sure about what to do at this point. But everyone is sure that without new revenue, more cuts are inevitable. And the agencies and people those cuts will effect could grow.

Public schools, Medicaid, corrections and other essential services have escaped the cuts that most other agencies and universities have experienced in recent sessions because of their importance to the state’s health, safety and competitiveness. Growing demand for Medicaid and corrections services and legislative commitment to advancing the K-12 goals our state set almost 20 years ago have almost made Medicaid, education and corrections immune from the fate of other agencies. But this year, as our state continues to battle $1 billion biennial shortfalls, agencies that were previously exempt from cuts could lose some immunity.

Governor Steve Beshear told the media earlier this month, “I can’t make any guarantees” about what cuts will or will not be made over the next two years, although he said he hopes to protect base per pupil funding for schools known as SEEK (Seeking Educational Excellence in Kentucky).

State employees could also be at risk. Dozens of states have had to lay off employees to decrease their costs this recession, and there has been continued talk of possible furloughs or even lay offs of state employees in Kentucky, although no such proposal has been formally introduced.

We will all learn more about the state budget situation and how the governor proposes to balance the budget in the governor’s budget address, which is expected to be held by January 19. By that time we should know more about any exemptions to agency cuts or proposals affecting state government jobs. We will also hear more about tax reform and video slot machine proposals that could be considered during the upcoming session.

Governor Beshear has said he plans to limit his agenda this next session to the budget mostly, although other issues will also demand lawmakers’ attention. Our state retirement systems need increased funding to protect benefits for teachers and state employees, child abuse and neglect cases in Kentucky are soaring, our state prison system tops the nation in growth, and more protections are needed to protect domestic violence victims from their abusers. We saw this in the case of the late Amanda Ross, in whose memory Speaker Greg Stumbo has filed a bill that would allow the courts to order someone with a domestic violence order against them to wear or carry a GPS (global monitoring system) device that notifies victims when that person is nearby. I will go into more detail next week about these issues.

Until then, I wish you and all Kentuckians a happy New Year’s holiday.