BRADENTON, Fla. - Kentucky Gov. Steve Beshear will dip into the state's rainy day fund to help fill a $91 million general fund deficit.

Beshear's budget reduction order also uses surplus funds of state agencies, unexpended year-end operating funds of state agencies, as well as money from the budget reserve trust fund to fill the revenue gap for fiscal 2014, which ended June 30, the governor's office announced July 16.

Beshear said he avoided using "carry forward" funds that are budgeted for spending in fiscal 2015.

The state budget office announced the $90.9 million shortfall last week when 2014 general fund revenues came in 1% less than official revenue estimates.

"We were somewhat limited in our approach to fill this budget hole given it occurred at the end of the 2014 fiscal year," Beshear said. "But as in previous reductions, two goals guided our decisions - to take steps to make government as efficient and as lean as possible, and to protect as best we can the core services," which include education, health care and public safety.

In dealing with the shortfall in accordance with a budget reduction plan enacted by the General Assembly, Beshear's order transfers $50 million from various state agency funds.

"The use of fund transfers is a valuable tool in how we manage and balance the overall budget of the Commonwealth, and one that keeps us from making deeper cuts to state agencies," Beshear said.

A recent ruling by the Kentucky Supreme Court affirms the constitutionality of this practice, and ensures the needed flexibility for the executive and legislative branches, he added.

Nearly $15 million of the budget gap funding will come from unspent general fund appropriations that are expected to lapse. The operating budgets of agencies under the executive branch will be reduced by $3 million, another $1.5 million will come from the judicial branch, and $287,600 will come from the legislative branch.

Using $21.2 million from the budget reserve trust fund, also known as the rainy day fund, will leave a balance of $77.1 million in reserve, Beshear said.

The governor also signed a budget reduction order to fill a $22.2 million shortfall in the 2012-2014 road fund using unexpended year-end appropriations, the automatic budget adjustment due to actual fuel tax receipts, and road fund appropriation reductions.

"No budgeted road projects will be negatively impacted by this necessary balancing action," Beshear said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.