Home » Kentucky closes year with $70.6 million budget surplus

Kentucky closes year with $70.6 million budget surplus

Budget director: Lower spending, small revenue growth created savings

New fiscal year maintains reduced operating funds for most agencies

FRANKFORT, Ky. (July 19, 2013) — Thanks to slowed spending by cash-strapped state agencies, as well as a small bump in General Fund revenues, Kentucky state government closed the 2012-13 fiscal year with a General Fund surplus of $70.6 million, according to State Budget Director Jane Driskell.

budgetDriskell warned, however, that the fiscal year that just began July 1 extends the budget cuts that were in place last year, and that Kentucky government agencies would continue to be challenged to deliver services with fewer dollars despite rising costs.

State agencies managing continued budget cuts

State General Fund revenues were up 2.8 percent, or $40 million, more than expected for the 12-month period that ended June 30. Lower spending than budgeted accounted for the other $30.6 million of the surplus. The surplus is less than 1 percent of the FY 13 budget.

State agencies have absorbed seven consecutive years of budget reductions, some up to 38 percent of their total prior operating funds.

“In the 2012-13 fiscal year, most state agencies were reduced 8.4 percent, and those cuts are continued in the new budget year,” Driskell said. “Even as the economy recovers, our limited revenue growth is not keeping pace with increases in required expenses such as pension costs and Medicaid. State agencies will have to continue to manage those reductions in the coming year.”

Surplus split between emergency expenses, rainy day fund

As provided by the biennial budget, Kentucky Gov. Steve Beshear has reserved $45 million of the surplus to cover necessary government expenses for FY 14. Necessary government expenses are specified expenses in the enacted budget that are authorized, but for which no specific appropriation is made, such as costs associated with emergencies and natural disasters.

The remaining $25.6 million will be deposited into the Budget Reserve Trust Fund, the state’s rainy day fund. This will increase the Budget Reserve Trust Fund balance to $147.3 million. However, the enacted biennial budget appropriates $49 million from the Fund in FY 14, leaving an available balance of $98.3 million, or .7 percent of the enacted budget for the new fiscal year.

The Road Fund surplus was $17.7 million because of lower spending than budgeted, as Road Fund tax revenues came in $8 million less than budgeted. The $17.7 million surplus will be deposited into the state highway construction account.