For Immediate Release
July 19, 2002
Contact: Dr. Jim Ramsey (502) 564-7300

State Issues Final Budget Reduction Order for FY 02

Frankfort, KY - The Office of State Budget Director released today the final Budget Reduction Order for Fiscal Year 2002, the fiscal year that ended June 30, 2002. “We have previously announced revenue collections for the ’02 fiscal year; today we are announcing the final actions necessary to ensure a balanced budget for the ’02 fiscal year,” stated State Budget Director Jim Ramsey. “The state’s statutes provides for a statutory “closeout period” for the payment of the ’02 expenditures. We now know the final numbers for both the revenue and expenditure sides of the budget, which allows us to take the actions necessary to achieve the Constitutional mandate of a balanced budget.” 

Ramsey continued by saying that FY02 has been an extraordinary year for Kentucky and all other states. “No other time in recent history has witnessed such a rapid decline in tax collections, creating intense fiscal stress for states. Our final Budget Reduction Order, that we are announcing today, is our fourth budget reduction plan for the year with total budget adjustments for the General Fund totaling nearly $700 million.”  

Having just returned from the annual summer meeting of Governors in Boise, Idaho, Governor Patton noted that over 40 states were currently experiencing budget shortfalls. “While many other states have had to cut services to meet budget obligations, I’m pleased our administration has been able to manage our way through these shortfalls without affecting education or the services our people expect,” Patton said. 

Ramsey also commented that through end-of-year appropriation reductions and lapses, the state’s beginning balance into the new fiscal year is approximately $23.5 million. “We are pleased that in such extraordinary times we have been able to achieve a balanced budget and provide for a significant beginning balance into the new fiscal year to help provide for expenditures in FY03. We are hopeful that we will soon see a meaningful rebound in the national economy and a resumption of the strong economic growth that we have experienced in Kentucky from 1983 through the end of 2000,” said Ramsey. 

“The primary actions taken to ensure a balanced budget for FY02 include the lapse of appropriated revenues, especially unneeded debt service. A strong municipal bond market and aggressive use of our debt management program allowed us to realize significant debt service savings in the last fiscal year; savings critical to our ability to balance the budget without deeper programmatic cuts,” Ramsey said. He also noted that state government agencies, in recognition of the difficult fiscal environment, deferred discretionary expenditures and constrained costs through aggressive management. Ramsey added that the Administration’s final Budget Reduction Order was consistent with prior actions ensuring that K-12 education was spared budget cuts in the FY02 fiscal year. Ramsey noted, “Education, our most important budget priority, did not require current year budget cuts and higher education was cut only 1.91 percent. Our actions throughout the year to ensure a balanced budget were focused on protecting our highest priority areas. We were forced to use a combination of one-time resources, including the Budget Reserve Trust Fund and fund transfers, and make significant adjustments in the ‘rest of government’ to protect our commitment to education, and we have successfully done so.” 

Dr. Ramsey will be available this afternoon to answer any specific questions from the press.