Gov. Steve Beshear announced this month that state government closed out the 2011 fiscal year with the largest growth rate in General Fund revenue since 2006. State revenue totaled nearly $8.76 billion, a 6.5% increase over last year, resulting in a surplus of almost $157 million. According to State Budget Director Mary Lassiter, almost $122 million of the remaining total will be put in the state’s rainy day fund, the largest deposit in state history and the first since 2007.
As outlined in the Chamber’s Building a Stronger Bucket report, the Chamber recommended that state government eliminate the practice of allocating all anticipated revenue during every budget cycle and instead re-establish the use of a “rainy day fund” to ensure money is available to meet the state’s emergency needs. The Chamber is encouraged that the rainy day fund will receive this $122 million surplus and reminds the business community that its hard work has helped contribute to this fund. In a hearing of the Interim Joint Appropriations and Revenue Committee last week, Lassiter credited the surplus to larger-than-expected earnings from corporate income, limited liability entity, and coal severance tax dollars.
Though these revenue figures are a positive sign the Kentucky economy is recovering, the state’s budget isn’t out of the woods yet. As Building a Stronger Bucket also points out, the state must be careful in relying on using non-recurring revenue to balance the budget, which has resulted in a nearly $500 million structural deficit. To read more on the year-end revenue report, see the story in the Courier-Journal.