Gov. Steve Beshear will infuse the state’s rainy day fund with $82.5 million, raising the fund’s balance to $209.4 million, the highest it’s been since 2008.
The cash comes from $165.4 million in excess revenue generated the last fiscal year, which ended on June 30. The rest of the surplus money beyond the $82.5 million went to pay necessary government expenses like corrections, fire suppression and disasters.
On Tuesday, Beshear applauded the state for growing revenues “the old fashioned way” by expanding the economy instead of raising taxes.
“Finishing this fiscal year with a significant surplus better positions our next governor to build on our successes in energizing our economy and improving life for our families for generations to come,” Beshear said.
But Kentucky’s financial problems are far from over—the state is still in the midst of a pension crisis. The main retirement fund for state workers, the Kentucky Retirement Systems, only has 22 percent of the money it needs to make future payments. The teacher pension system is 54 percent unfunded.
The rainy day fund’s $209.4 million is about 2 percent of the state’s $10.3 billion budget for the 2016 fiscal year, well below the 15 percent funding level recommended by the Center on Budget and Policy Priorities.
“We’ve got the economy on the right track. That doesn’t say that we’ve solved all of the budgetary issues. Obviously, we have pension issues in this state,” Beshear said on Tuesday.
The state’s general fund grew by more than 5 percent for the first time since 2011, primarily due to more money collected from income and sales taxes.
Income tax revenue increased by $320.2 million, and sales and use tax revenue grew by $136.2 million in the 2015 fiscal year.
But the Kentucky Center For Economic Policy says income taxes won’t likely grow through the next fiscal year, and that revenue growth through the first half of this fiscal year will be small.
Last year, Kentucky faced a $91 million shortfall that led Beshear to cut spending.