When it comes to budgets, there is one big difference between the federal government and the states: The states balance theirs at the end of the fiscal year.
It can be a difficult task, especially when the economy is down. Kentucky and nearly 20 other states have an added challenge as well, because they approve their budgets in two-year increments. In our case, that means we have to peer more than 30 months into the future before determining how much money is expected to be available.
The budget the General Assembly approved this spring took effect July 1st, but state officials are still finalizing the last one, which unfortunately ended behind projections.
While revenues were largely on target through the fall and winter – with February seeing 6.2 percent growth when compared to the same month in 2013 – it wasn’t enough to counteract the drop the state saw heading into this summer, even with consumer and corporate spending on the upswing statewide. Making up the difference will put added pressure on the current fiscal year and the one starting next July.
From a historical perspective, Kentucky’s budgetary experiences since the recession began more than six years ago have largely mirrored our counterparts. Like the combined budgets for all 50 states, for example, Kentucky’s state expenses didn’t exceed 2008 levels until 2013.
There are some shared outside influences as well on our bottom lines. For Kentucky and many northern states, the past winter strained state transportation budgets, with Kentucky spending more than $75 million on snow and ice removal. That’s higher than the two previous winters combined, and it doesn’t include the millions of dollars needed to make repairs.
An even larger transportation problem is looming if Congress does not replenish the fast-draining federal Highway Trust Fund. Earlier this month, state officials announced that Kentucky had already slowed $185 million in projects as a result, including the widening of I-65 and the re-surfacing of other interstates and parkways. It’s time for Congress to finally do something to help people.
On the positive side, Kentucky did get some good news last month when we reached an agreement with the major tobacco companies over a decade-long dispute about whether Kentucky and several other states had done enough to enforce the terms of the 25-year national tobacco settlement reached in the late 1990s.
Under a 2000 law, Kentucky divides these annual payments in three ways, with half going to agriculture and the remaining split evenly between early childhood development and healthcare programs. We had been bracing for steep cuts in these areas, but now will have $58 million more than had been predicted for last fiscal year and the current two-year budget. This will boost such things as farm grants, lung-cancer research, and a program that helps first-time parents.
Overall, the current budget features some tough choices, but there are several notable highlights as well. Starting this school year, our elementary and secondary schools will see their first real classroom increase since 2008, and there will also be more money for such things as textbooks, school safety and teacher development.
School and state employees will also see raises, and our college campuses will soon begin a wave of new construction. There is also substantially more money for expanding preschool eligibility, beginning next year, and a childcare-assistance program. Programs used by our most-advanced high school students – like Governor’s Scholars – will also expand.
The budget sets aside $70 million in state, federal and private funding for a major initiative to increase broadband internet access, which will begin here in our region. There is also additional money for a law I sponsored this year to help our coal-county college students complete their four-year degree close to home. While I would still like to see our region have a public four-year college here in the mountains, this program will make it more likely these students will continue living here after graduating.
The budget also adds 1,200 new combined openings for three programs that help Kentuckians with intellectual disabilities; it sets asides $2 million extra over two years for maintenance at our state parks; and it includes $500,000 more for both rape crisis centers and for domestic violence shelters.
Legislators will monitor the budget’s progress in the months ahead, and will make tweaks if necessary when the General Assembly re-convenes in January. By this time next summer, state agencies will begin laying the early groundwork for the next budget. If the economy continues to improve, that two-year spending plan should give us an opportunity to do even more to move the state forward.