FOR IMMEDIATE RELEASE
CONTACT: Rusty Cheuvront or Chris Kellogg, 502-564-2611 

Federal Fiscal Relief for States Important to Kentucky

(May 23, 2003)--Governor Paul Patton today, as chairman of the National Governors’ Association, expressed appreciation to Congress for inclusion of fiscal relief for the states in the Jobs and Growth Tax Relief Reconciliation Act of 2003.  The relief for states includes $10 billion in flexible grant funds for states to address budgetary pressures and $10 billion in enhanced Medicaid funding.  The flexible grant funds will be distributed to states based upon population, and the Medicaid increases will be provided through increases in the federal medical assistance percentage (FMAP) for five quarters. 

Kentucky’s share of the flexible grants total $137.4 million, and the increased Medicaid federal funds total $138.9 million.  Governor Patton said that the flexible grant funds will help Kentucky weather the continued economic downturn and offset predicted revenue shortfalls in the current biennium.  “However,” Patton said, “these are one-time funds, and we continue to have a structurally imbalanced budget which will have to be addressed.”  A recent report from the State Budget Office predicted an $81.7 million revenue shortfall in the fiscal year that ends June 30. The impact of a revenue shortfall in FY 2003 on revenues in FY 2004 has not yet been determined.  

The Medicaid FMAP increase will significantly help the Commonwealth address the remaining deficits in the Medicaid program, estimated to be $169 million in FY 2004.  While the Medicaid Program will need to continue the cost containment efforts announced earlier this year, the legislation provides much needed short-term relief.   “This one-time federal allocation will provide the Commonwealth the opportunity to further assess the structure and fiscal outlook for the Medicaid Program,” Governor Patton said.

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