State Budget Surplus Good News for Kentucky Economy
At the end of every fiscal year in June, the state always runs a small surplus. No matter the economic circumstances or budget cuts, because the state is constitutionally required to balance the budget, the state will end up with a few million more at the end of the year. This year is shaping up to have a little more than normal.
The state is projecting a $64 million surplus for the fiscal year that ends June 30, according to a report released Monday by the state budget office.
The state's revenues -- taxes and fees -- are growing faster than the original estimate that the state uses to craft its two-year budget. .But state officials were cautious Monday, saying that any surplus money will first go to pay for emergencies, such as the clean up costs associated with last week's storms that ravaged much of Western Kentucky.
In 2010, the legislature also deemed that any excess funds not used for emergencies would go into the state's rainy day fund, which has been depleted as the state's revenues took a nose dive over the past three years.
An additional $31 million surplus is from coal severance funds, which are coal taxes specifically designated to return to coal counties, but are often inefficiently used by local governments rather than invested in education and infrastructure.
The slightly more economically important news is that the road fund will also run a surplus.
The state's road fund -- which is funded through a host of other gasoline-related taxes and fees and is separate from the state's general fund -- is also expected to have a surplus of $48.9 million.
The fact that Kentuckians are consuming more gas and purchasing more cars than expected are certainly positive economic indicators.