FRANKFORT, Ky. (AP) — Slowed spending by government agencies and a small bump in revenue allowed Kentucky to finish last fiscal year with a $70.6 million General Fund surplus, one of Gov. Steve Beshear's top financial advisers said Friday.
Budget Director Jane Driskell tempered the good news with a warning that the current fiscal year, which began July 1, is stacking up to be another austere one because revenue growth isn't keeping pace with the rising costs of operating state government.
State agencies have dealt with seven consecutive years of budget cuts, and most were ordered to trim their budgets by another 8.4 percent last fiscal year. Driskell said even with those cuts remaining in place, the outlook for the current fiscal year isn't rosy.
"Even as the economy recovers, our limited revenue growth is not keeping pace with increases in required expenses such as pension costs and Medicaid," she said in a statement. "State agencies will have to continue to manage those reductions."
State General Fund revenues were $40 million over projected levels and agencies spent $30.6 million less than budgeted, resulting in a surplus as of June 30.
Driskell said the surplus is less than 1 percent of the budget for last year.
Of the surplus, Driskell said $45 million will be used to cover necessary government expenses this fiscal year and $25.6 million will go into the state's Budget Reserve Trust Fund.
Driskell said the Road Fund ended the fiscal year with a $17.7 million surplus, even though revenue was $8 million less than budgeted. The surplus was achieved, she said, through spending reductions.
The Road Fund surplus will be deposited into the state's highway construction account.
Kentucky had budgetary bright spots in the last fiscal year, including individual income tax collections that exceeded $3.7 billion, an increase of nearly $211 million over the previous fiscal year.
The corporate income tax generated $400 million, up $26 million from the previous year. And the property tax generated $558 million, up nearly $29 million.
Trouble spots included the state's sales tax revenue, which was down $30 million from the previous year, and coal severance tax revenue, which declined by nearly $68 million.
The state's cigarette tax collections were down $16 million.
Kentucky lawmakers doubled the state's cigarette tax to 60 cents per pack four years ago in hopes of deterring smoking in a state where 25 percent of residents light up. The declining revenue suggests the strategy has worked.