FRANKFORT — The state is projecting a $64 million surplus in its General Fund for the fiscal year that ends June 30, according to a report released Monday by the state budget office.
The state's revenues — taxes and fees — are growing faster than estimates lawmakers used to craft Kentucky's two-year budget. Still, state officials were cautious Monday, saying that any surplus will first go to pay for emergencies, such as clean-up costs associated with last week's storms that ravaged much of Western Kentucky.
The legislature already has mandated that any excess funds not used for emergencies must go into the state's rainy day fund, which has been depleted as the state's revenues took a nose dive during the past three years.
According to the Third Quarterly Report on the state's revenues, much of the increase over the official estimate was a result of an increase in coal severance taxes. The total projected surplus is expected to be $97.3 million, but a portion of coal severance tax money is returned to local governments in the areas where coal is mined. That means about $31.1 million will be returned to the counties, resulting in a projected surplus of $64.6 million in the state's General Fund.
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Corporate and individual income taxes also were stronger than expected during the past several quarters, the report notes.
State Budget Director Mary Lassiter, in a letter to Gov. Steve Beshear, noted that the projected surplus shows the state's economy is improving, although it remains fragile as gas and grocery prices fluctuate.
"We continue to be cautious as the economic recovery has not yet produced job growth levels we would expect to see in a recovery period," Lassiter said.
Lassiter also cautioned Monday that the new figures are only an estimate.
"These are still just projections," she said. "A lot can happen over the next three months."
The state's Road Fund — which is funded through a host of gasoline-related taxes and fees and is separate from the state's General Fund — also is expected to have a surplus, but some of the additional $75.6 million will go directly to city and county road projects.