Kentucky Gov. Steve Beshear said last week that the state closed fiscal 2011 with a $156.8 million general fund surplus due to the strength of positive revenues that exceeded budgeted levels.
More than 75% of the surplus, or $121.8 million, will be deposited into the budget reserve trust fund. It is the largest deposit in the rainy-day fund from an end-of-year surplus in state history, Beshear said.
“Many of our families are still facing challenges from this economy, but this end-of-year report shows that Kentucky’s economy continues to grow and improve,” he said. “I am very pleased we are able to begin replenishing the state’s budget reserve trust fund, which we had used to protect our key priorities of education, health care, public safety, and job creation.”
The reserve fund was exhausted during the recession to buffer budget cuts in 2008, 2009 and 2010.
The fund had reached a peak of $278.6 million in fiscal 2001 and was exhausted a year later as a result of the economic downturn associated with the Sept. 11 terror attacks.
By 2007, the fund had grown to $231.5 million, though it was depleted over the following three years to help offset revenue shortfalls and mitigate deeper budget cuts.
The remainder of the 2011 surplus, $35 million, will be used to pay government expenses in fiscal 2012, including costs associated with recovery from natural disasters such as the spring floods that caused heavy damage to parts of western Kentucky.
Fiscal 2011 general fund receipts totaled $8.7 billion, or 6.5% above fiscal 2010 collections.
In June, the state’s unemployment rate dropped to 9.6% — the lowest level since January 2009.
Beshear, a Democrat, is completing his first four-year term in office this year. He is seeking reelection in November against two challengers, a Republican and an Independent.