ATLANTA -- Kentucky Gov. Brereton Jones has named W. Patrick Mulloy 3d to replace Joseph W. Prather as secretary of the state Finance and Administration Cabinet.

Mulloy, a Louisville attorney and real estate developer who has long been active in the Democratic Party, has not served previously in state government. He began his new job as Kentucky's chief fiscal manager yesterday.

In 1987, Mulloy managed former Gov. John Y. Brown's 1987 campaign for the Democratic nomination for governor. He has also been a close political ally of Lieut. Gov. Paul Patton, whose campaign he ran last year. Mulloy himself ran unsuccessfully for Congress in 1984 and has been mentioned as a possible candidate for lieutenant governor alongside Patton, who plans to run for governor in 1995.

Among immediate challenges the new finance secretary faces, Kentucky's legislative budget analysts have forecast a $185 million budget shortfall this year. The prediction has prompted calls from legislative leaders that the Jones administration should make immediate cuts.

Mulloy must also soon choose a new director of the Office for Investment and Debt Management, which oversees state-level borrowings in Kentucky. The position has been open since James Ramsey resigned from the post in July.

A spokesman for Mulloy said yesterday that no timetable had been set for when a state debt manager would be named, but noted the new finance secretary is free to make his own choice.

"No one was picked for the post before Mr. Mulloy was named secretary, so this is a call for Secretary Mulloy to make," the spokeswoman said.

Last summer Prather said he planned to step down as finance secretary to devote more time to personal affairs. He had served in that position since Jones, a Democrat, took office as governor in December 1991. Before becoming finance secretary, Prather had been a state legislator, serving as a president pro tempore.

A spokesman for Jones said yesterday that Prather will continue to serve as an adviser to the governor on a $1-a-year salary.

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