Kentucky state budget (2009-2010)

Note: This article was last updated in 2010. Click here for more recent information on state budgets and finances.

Budget officials announced on July 21, 2010 that, at the close of FY 2010, the state's general fund had a surplus of $29.7 million. The surplus was realized after lawmakers revised the budget and lowered revenue expectations by more than a billion dollars for the fiscal year.

State Budget Director Mary Lassiter explained that the surplus funds were already spoken for, because the state budget allowed the surplus to be put in the state's rainy day fund or spent on certain likely costs that were not funded in the budget. In FY 2010, the state paid $39 million in such unfunded costs, including to the Kentucky National Guard and other disaster-response agencies.

Budget background

See also: Kentucky state budget and finances

In Kentucky the legislature passes biennial budget bills which include two fiscal years. However, the state's fiscal year begins July 1 and ends June 30 of the following year. The budget includes appropriations for the state's operating and capital budgets and recommendations made by each state agency. Estimates of the general fund and road fund revenues are compiled by the Consensus Forecasting Group. Prior to the governor's approval the budget passes through first the House of Representatives and then the Senate for amendments. After a series of hearings the governor can either approve the budget as approved by the legislature or continue to amend the bill through vetoes. Once the budget is approved, amendments can be made to the budget bill as necessary.

Budget figures

The following table provides a history of Kentucky's expenditures and gross domestic product (GDP).

Fiscal year	Expenditures (billions)	GDP (billions)
2000	$21.5	$111.9
2001	$23.1	$115.1
2002	$24.8	$120.7
2003	$25.8	$124.9
2004	$26.9	$131.7
2005	$27.0	$138.5
2006	$29.5	$146.4
2007	$32.3	$154.7
2008	$35.3	$162.4
2009	$38.6*	$171.0*

• NOTE: The figures for FY 2009 had not been finalized at the time this data was compiled.

2008-2010 biennium general fund appropriations - $19.1 billion

Category	Percentage
Education	43.8%
Postsecondary	13.7%
Medicaid	13.3%
Other	11.5%
Criminal justice system	10.2%
Human services	7.4%

2008-2010 biennium total fund appropriations - $53.2 billion

Category	Percentage
Postsecondary education	20.1%
Medicaid	20.0%
Education	18.5%
Other	11.8%
Transportation	8.6%
Capital projects	8.3%
Human services	7.9%
Criminal justice system	4.8%

2008-2009 budget crisis

Kentucky faced a FY 2009 budget deficit of more than $500 million by the end of the fiscal year on June 30, 2009. Gov. Steve Beshear and the Kentucky Legislature balanced the FY 2009 budget without using state fiscal stabilization stimulus dollars. Kentucky's state revenues continued to decline for the first quarter of FY 2010 compared to FY 2009. General fund collections dropped 9.8% for September 2009 compared to September 2008 and were 5.6% less for the July to September quarter. The FY 2010 budget basis anticipated a revenue decline of 1.5% from FY 2009.

Accounting principles

The Reorganization Act of 1936 established the Auditor of Public Accounts as an impartial auditor entirely independent of state administration and charged the office with the responsibility to audit the accounts and financial transactions of all spending agencies of the Commonwealth. This remains the primary function of the Auditor of Public Accounts today.

The Institute for Truth in Accounting (IFTA) rated Kentucky “tardy” in filing the state’s Comprehensive Annual Financial Report (CAFR), the annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and six states as worst. IFTA did not consider Kentucky's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis did not include significant liabilities for the pension plans and for other post employment benefits, such as health care. Kentucky's CAFRs are published online by the Finance and Administration Cabinet and the Office of the Controller. Jonathan Miller was Secretary of the Finance Administration Cabinet and Edgar C. Ross was Kentucky State Controller as of 2009.

The Secretary of Finance provides executive policy and management for the departments and divisions of the Cabinet and serves as the chief financial officer and manager of the financial resources of the Commonwealth. The Kentucky Office of the Controller is responsible for all state accounting policies and procedures, cash management and strategic financial planning. The Controller acts as the commonwealth’s chief accounting officer.

Credit rating	Fitch	Moody's	S&P
Kentucky	NR	Aa2	AA-

Accounting transparency checklist

The good

• The website had Comprehensive Annual Financial Reports (CAFR) dating back to 1998.
• An independent auditor’s report was published on page 12 of the document.
• It provided supplements to the budget workup, such as non-major governmental funds, starting on page 130 of the document.
• The budget was posted using organized and consistent methods of financial reporting.
• Kentucky law requires a balanced budget.
• It included all costs incurred by the government, including future liabilities, starting on page 99 of the document.
• The CAFR compared estimated and actual budgetary numbers, such as on page 108 of the document.

The bad

• The Kentucky office was not precisely timely in submitting the budget.
• The CAFR was posted in PDF format, so it was not searchable online.

Transparency

Economic stimulus transparency

• Kentucky would receive approximately $292 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.

• Kentucky would receive an estimated $2,090,341,858 from the economic stimulus program of 2009.

Error in ARRP

According to Recovery.gov, federal stimulus funds would go to 884 congressional districts, though there are only 435.

According to the website, stimulus money went to nine non-existent districts in Kentucky. Kentucky's 7th District received more than $31 million from the stimulus package, despite being eliminated in the 1990 census.

Government tools

See also: Evaluation of Kentucky state website

Check It Out Kentucky! provides a searchable database of the Secretary of State's financial information, organized by categories such as expenditures and vendors. In addition, the Office of the Treasurer developed a site, V.I.E.W. (Vendor Income and Expense Watch), that posts information on contract amounts, contractors, and the government agency issuing the fund. As of 2009, V.I.E.W. contains financial information for only a handful of state agencies, including the Auditor of Public Accounts, the Department of Highways, the Kentucky State Treasury (State Treasurer), and the Office of the Controller. Data from other agencies would be placed online as that data was approved for release.

Kentucky's Open Door provides spending information, including state expenditures on grants, contracts, and public employee salaries.

The following table is helpful in evaluating the level of transparency provided by Check It Out Kentucky!, V.I.E.W., and Kentucky's Open Door:

Criteria for evaluating spending databases

State database	Searchability	Grants	Contracts	Line item expenditures	Dept./agency budgets	Public employee salary
Check It Out Kentucky!	Y	N	Y	Y	N	N
V.I.E.W.	Y	Y	Y	N	N	N
Kentucky's Open Door	Y	Y	Y	Y	Y	Y

Public employee salary information

See also: Kentucky state government salary

See also

• Kentucky government sector lobbying
• Kentucky public pensions
• Kentucky state budget and finances

External links

• Kentucky Budget Process on FreedomKentucky.org
• Kentucky's Open Door
• Bluegrass Institute for Public Policy Solutions
• Check It Out Kentucky!, official website
• V.I.E.W. (Vendor Income and Expense Watch), official website
• Kentucky Secretary of State website
• Office of State Budget Director
• Kentucky Finance and Administration Cabinet, Office of the Controller (dead link)
• Kentucky Government spending
• Model transparency legislation from the American Legislative Exchange Council is available at this link.

Additional reading

• Gov. Steve Beshear, "2010 State of the Commonwealth Address," January 6, 2010
• Associated Press, "Bourbon spills to protest Ky. tax hike on booze," February 10, 2009 (dead link)
• Stateline.org, "Kentucky State of the Commonwealth Address 2009," February 4, 2009