Kentucky state budget

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Kentucky is currently facing an estimated budget shortfall of $1.4 billion for FY 2011 and $108 million shortfall for the current 2010 fiscal year.^[1] $358 million of stimulus funding will be part of the plan to close the estimated $1 billion shortfall for the current fiscal year, FY 2010. The Kentucky Legislature met in a Special Session this summer to authorize state agencies to make additional, and necessary cuts to keep the FY 2010 budget balanced.^[2] The state has $300 million in federal stimulus funding to bridge the FY 2011 deficit, which will be considered when the Kentucky Legislature convenes from January 5 to April 13, 2010.^[3][4]

In the governor's "2010 State of the Commonwealth Address" he recommended a $18.4 billion budget proposal and a reported "Smart Government" plan which will eliminate the $108 million budget gap for FY 2010.^[5][6] Beshear's budget does not include tax increases, however, it includes $780 million in slots revenue. The House passed a slots bill last year, but it the proposed legislation died in a Senate committee.^[7]

Kentucky budgets for 2-year cycles on a biennium basis. The enacted FY 2010 General Fund budget is $9.62 billion. The 2008-2010 biennium budget originally passed in 2008 was $19.1 billion in General Funds, total funds $53.2 billion.^[8]

[edit] Budget Background

In Kentucky the legislature passes biennial budget bills which includes two fiscal years. However, the state's fiscal year begins July 1st and ends June 30th of the following year. The budget includes appropriations for the state's operating and capital budget 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. ^[9]

[edit] Budget figures

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

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.
• See Kentucky state budget (2008-2009) for more details.

2008-2010 Biennium General Fund Appropriations $19.1 Billion^[11]

2008-2010 Biennium Total Fund Appropriations $53.2 Billion^[12]

[edit] 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 continue to decline for the first quarter of FY 2010 compared to FY 2009. General Fund collections dropped 9.8% for the month of September 2009 compared to September of 2008 and 5.6% less for the July to September quarter. The FY 2010 budget basis anticipated a revenue decline of 1.5% from FY 2009.^[13]

[edit] Accounting Principles

The Kentucky Auditor of Public Accounts has been Crit Luallen since her first election in November of 2003. Luallen was named 2009 'Public Official of the Year' by Governing Magazine. Kentucky's audit reports may be searched online. 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) rates 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 6 states as worst. IFTA does 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 does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[14] Kentucky's CAFRs are published online by the Finance and Administration Cabinet and the Office of the Controller. Jonathan Miller is Secretary of the Finance Administration Cabinet and Edgar C. Ross is Kentucky State Controller.^[15]

[edit] Accounting transparency checklist

Comprehensive Balanced budget Timeliness Usability

[edit] The good

• The website has Comprehensive Annual Financial Reports (CAFR) dating back to 1998.^[16]
• An independent auditor’s report is published on page 12 of the document. ^[17]
• It provides supplements to the budget workup, such as non-major Governmental funds, starting on page 130 of the document.
• The budget is posted using organized and consistent methods of financial reporting.
• Kentucky law requires a balanced budget.^[18]
• It includes all costs incurred by the government, including future liabilities, starting on page 99 of the document.
• The CAFR compares estimated and actual budgetary numbers, such as on page 108 of the document.

[edit] The bad

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

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.^[19]

[edit] Budget Transparency

[edit] Website evaluation

Budget Usability Elected Officials Administrative Officials Ethics Audits Contracts Lobbying Public records Taxes

Kentucky.gov is the website for the state of Kentucky.

• Main article: Evaluation of state websites

[edit] The good

• State budget is published.^[21]
• Elected and administrative officials are listed with contact information.^[22]
• Audits are available in a searchable database.^[23]
• The state's checkbook register is online.^[24]
• State tax information is provided.^[25]
• Information available on legislative^[26] and executive branch ethics commissions.^[27]
• Open records request form and contact information are available.^[28]
• Provides legal information on lobbyists/lobbying.^[29]

[edit] The bad

• Site has a search function, but is somewhat difficult to navigate.
• Current state contracts are not available.
• Does not provide list of registered lobbyists and agency lobbying contracts.

[edit] Economic Stimulus Transparency

• The American Recovery and Reinvestment Plan of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[30]

• Kentucky will receive an estimated $2,090,341,858 ^[31]

• The economic recovery website to show how legislators and government officials in Kentucky are spending Federal funds is available here.

[edit] Error in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[32][33]

The ARRP tracking website sent money to nine non-existent Districts in Kentucky. According to recovery.gov, Kentucky's 7th District received more than $31 million from the stimulus package, despite being eliminated in the 1990 census.^[34]

[edit] News

Kentucky's comprehensive spending transparency website, called "Kentucky's Open Door,"^[35] continues to be updated with new state spending information. Information about state employee salaries, contracts, and grants is now available online.

The site was implemented at the recommendation of a task force^[36] created thanks to the executive order^[37] of Kentucky's Governor Steven Beshear.

Sign up for Show Me The Spending's weekly transparency e-updates. As transparency news about Kentucky becomes available, it will be sent out by email and posted on this page.

[edit] Government tools

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 has 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. Currently, 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.^[38] Data from other agencies will be placed online as that data is approved for release. See the official V.I.E.W. website for more details.

Kentucky's Open Door provides spending information including state expenditures on grants, contracts, and public employee salaries. Click here to visit the site.

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!
V.I.E.W.
Kentucky's Open Door

[edit] Limitations and Suggestions

The individuals who developed www.opendoor.ky.gov realize it's not perfect yet, and they welcome suggestions for improvements. According to the site, "Governor Beshear realizes that Kentucky’s Open Door will not be complete. Nor will it ever be. The site will be ever-evolving and ever-improving; it will be a continuing goal to refine and supplement the site, providing more and more information to Kentucky taxpayers in an easy-to-access format. And we treasure YOUR input."^[39]

Suggestions for improvement can be posted under this section, or submitted here.

[edit] Support for creation of the databases

National Taxpayers Union urged Kentucky legislators to pass House Bill 105.^[40]

Americans for Tax Reform urged legislators to adopt greater levels of transparency.^[41]

[edit] Independent transparency sites

Visit www.freedomkentucky.org to see an "open, collaborative database of information that seeks to inform Kentucky's citizenry about issues that are important to them. Through making knowledge accessible and easily understood, FreedomKentucky empowers Kentuckians to restore lost freedoms by holding public leaders accountable."^[42]

[edit] Public employee salary information

Kentucky's Open Door now provides salary information.

The Louisville Courier-Journal provides state employee salary information here.

The Herald Leader provides this database of salaries of state employees, Lexington-Fayette Urban County Government, and the University of Kentucky for the year 2006: Kentucky State Salary Database.

[edit] See Also

• Kentucky taxpayer-funded lobbying

[edit] External links

[edit] 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
• Stateline.org,"Kentucky State of the Commonwealth Address 2009," February 4,2009

[edit] References

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