Gov. Beshear says Kentucky’s budget should balance this fiscal year without any cuts
Despite earlier warnings about reduced tax collections because of the COVID-19 pandemic, Kentucky Gov. Andy Beshear on Wednesday said the state’s Fiscal Year 2021 budget is on track to balance without any cuts.
“Today’s news means that critical areas such as education, health care and public safety will not suffer from midyear cuts but will instead be fully supported at their budgeted amounts,” Beshear said.
“We’ve had better revenues than anticipated,” Beshear added, “and we believe in large part that’s become of dollars flowing through our economy because of the state and federal COVID relief efforts.”
The state’s $11.5 billion General Fund ended the first quarter of Fiscal Year 2021 on Sept. 30 with 5.8 percent more revenue than it collected for the same time period one year earlier. The fund had been budgeted to grow by only 0.3 percent in the first quarter, so the actual numbers were a big improvement.
The state’s $1.5 billion Road Fund ended the first quarter with 1.9 percent more revenue than it collected for the same period in 2019.
Just as the pandemic broke out last winter, the General Assembly quickly passed a one-year, no-frills budget that maintained most government spending at previous levels while allowing for cuts as necessary.
Lawmakers were advised last month that state budget director John Hicks had asked state agencies to submit tentative plans for an 8 percent spending reduction in the current fiscal year, which started July 1.
For the Kentucky Department of Education, for example, that cut would have meant a loss of $43 million. Among the programs scheduled to take a hit would have been schools’ Family Resource and Youth Services Centers, which provide students and their families with after-school child care, literacy classes, counseling and other services.
But state revenue looks stronger than anticipated, Beshear said Wednesday. Among other things, he credited flexible use of federal pandemic aid through the CARES Act and enhanced unemployment benefits to Kentucky’s jobless. The enhanced unemployment benefits boosted individual income tax collection.
Apart from balancing the state budget, Kentucky should be able to finish this fiscal year with more than $460 million in the state’s Budget Reserve Trust Fund, also known as the “rainy day fund,” which would be its highest total ever, he said.
When the General Assembly returns to Frankfort in January, it will have to pass the next one-year state budget based on whatever revenue projections are produced by the state’s Consensus Forecasting Group, a panel of economists that advises state officials. The forecasting group is not yet scheduled to meet again, but it’s expected to be summoned in coming weeks.
This story was originally published November 4, 2020 at 4:28 PM.
