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State books balance for FY 2009
Kentucky closes 2009 fiscal year with balanced budget
Unlike many, KY doesn’t use State Fiscal Stabilization stimulus funds in FY 09 to balance
FRANKFORT, Ky. (July 20, 2009) – Kentucky closed its budget books for the fiscal year ending June 30, erasing a $55.7 million additional shortfall in its budget and nearly $37 million in the Road Fund without using any federal stimulus dollars.
“By the end of this fiscal year, our shortfall – in the face of an increasingly tough economy – grew to more than $500 million,” said Gov. Steve Beshear. “However, unlike many states, we have been able to balance our books without using State Fiscal Stabilization stimulus dollars – dollars that will be critically important over the next two budget years in helping fund priorities such as education, health care, public safety and economic development.”
To balance the General Fund budget, even as the shortfall grew in the last two months of the fiscal year, Kentucky utilized unspent general funds in the Medicaid program, the result of a higher federal match rate, said State Budget Director Mary Lassiter.
The higher match rate was retroactive to the beginning of Federal Fiscal Year 2009. The Medicaid program, Lassiter said, is already fully funded for the coming fiscal year, Fiscal Year 2010. The Road Fund shortfall was resolved primarily through the use of debt service and administrative savings.
The additional actions to close out the fiscal year were on top of measures taken in the spring by Gov. Beshear and the General Assembly to close a $456 million shortfall. Those actions included additional cuts to state agencies, modest increases in cigarette and alcohol taxes, and the utilization of the state’s Rainy Day Fund.
Nationwide, the federal stimulus bill provided states with $48.6 billion to help stabilize budgets in order to minimize and avoid reductions in education and other essential public services.  Kentucky has access to $651 million in stabilization stimulus dollars and many states chose to use their federal funding in FY 2009 to help balance their budgets.
In contrast, Kentucky plans to use about $358 million of stimulus funding in the current fiscal year, FY 2010, to address an estimated $1 billion shortfall. In addition, the General Assembly in a recently completed Special Session also authorized state agencies to make additional cuts to balance the FY 2010 budget.
As a result, Lassiter said Kentucky has almost $300 million available in stimulus funding to use for the FY 2011 budget that will be considered in the upcoming General Assembly session, starting in January.
“Kentucky has acted wisely and prudently in downsizing government, while working to maintain funding for key priorities,” Gov. Beshear said. “As a result, we have hundreds of millions of dollars in stimulus funding to use this year and next year. We will need those funds as Kentucky – like all states – continues to grapple with a stubborn economic recession.”

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