Beshear offers good budget news but outlooks remains dire

FRANKFORT, Ky. (AP) — Kentucky appears to have avoided one budget shortfall, but the outlook remains dire for the coming year without another infusion of federal assistance, Gov. Andy Beshear said Wednesday.

The state faced a projected budget shortfall exceeding $450 million for the fiscal year that ended June 30 as the coronavirus outbreak damaged the economy. But spending cuts by state agencies, combined with some higher-than-expected revenue collections, solidified the financial situation.

When the books are closed on the just-ended fiscal year, Beshear predicted it will show a surplus.

“It means no cuts to education, health, public safety or the judicial or legislative branch in the budget that we just ended,” the Democratic governor said at a news conference.

It was a ray of good news as the state has been hit by a recent surge of coronavirus cases.

Beshear's administration had to make budget adjustments late in the recently ended fiscal year while also dealing with the public health crisis.

The governor credited state agencies for doing their part by cutting spending, saying: “They stepped up and went above and beyond, and that was necessary to get where we are today.”

The state also was able to bolster its rainy day fund, Beshear said. And stronger lottery revenues will produce an extra $15 million for scholarships, he said.

The budget situation in the just-ended fiscal year was bolstered by revenue from tax collection filings that were delayed from April 15 to July 15, the governor said.

But the budget outlook for the current fiscal year that began July 1 remains dire, he said.

Without another round of federal assistance, or more flexibility in how the state spends federal money already appropriated, Kentucky potentially faces the largest budget cuts in its history, Beshear said.

“So who pays when we don’t have the funds we need? It’s those that need us the most," he said.

Also alarming was a nearly 8% drop in state General Fund revenues from April through June.

But the biggest threats to the state’s budget are the coronavirus and the refusal of some people to wear masks, which threatens efforts to reopen the economy, the governor said. Beshear recently ordered most Kentuckians to wear facial coverings in public to combat the pandemic.

For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some — especially older adults and people with existing health problems — it can cause more severe illness and be fatal.

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