Gov. Andy Beshear announced Wednesday that the state is looking to close out fiscal year 2020 without a shortfall, despite the continuing challenges presented by efforts to fight the novel coronavirus 2019 (COVID-19).

The Governor also provided an update on the state’s efforts to fight the pandemic as cases here and across the country have surged in recent days.

“It is just so critical that we do the right thing, right now. Today I got a grim report. There is at least one casket maker that is having every single bit of its capacity sent to Georgia and Alabama and Texas, not on the delivery trucks that they’re used to using, but on 18-wheelers,” said Gov. Beshear. “Let’s make sure that Kentucky doesn’t end up in that position. What we’re dealing with is life or death, but the good news is we are taking the type of aggressive action that should work.”

Dr. Steven Stack, commissioner of the Kentucky Department for Public Health, noted that among Kentucky’s quick and aggressive actions is its robust testing regime. However, he warned against believing that alone is a panacea in this fight.

“We have come light years away from where we were a couple months ago on testing, but we cannot test our way out of poor decision making,” said Dr. Stack. “We cannot test our way out of bad judgement. You don’t solve an infection with a test. You prevent an infection with a mask.”

While staying focused on the pandemic fight, the Governor said he was pleased to report some good economic news.

Gov. Beshear credited the hard work of Cabinet leaders and state agency officials as the state’s General Fund revenues for fiscal year 2020 came in far higher than was expected only months ago. The Governor praised the administrators of all state agencies, who were asked to reduce spending by a 1% annualized amount in the last two months. He said they did better than that, by limiting hiring and holding the line on discretionary expenses without reducing levels of service.

The Governor said the official numbers for fiscal year 2020 – the filing for which was extended from April 15 to July 15 this year due to the pandemic – will show a surplus. He noted that it is a marked improvement from May 22, when a revised revenue estimate expected a shortfall of $457 million. He said the Office of the State Budget Director will issue final end-of-the-fiscal-year numbers and details after the books officially close this weekend.

In immediate practical terms, this improved economic footing means:

• No budget cuts to K-12 education, post-secondary education, and health and public safety, and
• No cuts to the Judicial or Legislative branch budgets.

Gov. Beshear said the cost-saving moves also were expected to result in a more than 18% increase of the state’s rainy day fund, the Budget Reserve Trust Fund, and an increase in lottery revenues would result in another $15 million for need-based student financial aid this coming school year.

Gov. Beshear emphasized that despite these encouraging signs, the economic outlook in Kentucky remains extremely difficult and successfully fighting to stop the spread of COVID-19 remains the most important component to safeguarding our economy.

The key to protecting both the health and safety of Kentuckians and the state’s economy, Gov. Beshear said, was everyone adhering to guidelines, in particular his recent mandate on face coverings in most public places.

He noted that the governors of Ohio and Indiana in recent days have followed Kentucky’s lead in announcing statewide face covering mandates.

“They have followed our lead. The step that we took is the right step. This is going to help and make Kentucky’s response more effective,” said Gov. Beshear. “These are two governors that I respect. This region requiring facial coverings should help all of us and it should show you that there is no political division in what is the right public health response. This is the difference between life and death.”

He pointed to recent analysis by Goldman Sachs that found the simple act of wearing a mask, if adopted widely, would save 5% of Kentucky’s Gross State Product – a total of more than $10 billion.

Despite the better than expected year-end fiscal news, Gov. Beshear said threats to the fiscal year 2021 budget remain.

Among the challenges:

• Fourth quarter General Fund revenues, from April through June, declined by almost 8%, which is the worst fiscal quarter Kentucky has experienced since the Great Recession.
• Road Fund revenues during the same quarter declined by 23.5%.

Gov. Beshear also reiterated his appeal to congressional leaders to provide additional federal relief through the Coronavirus Aid, Relief and Economic Security (CARES) Act or other means. Without such funding, the Governor warned that budget cuts in fiscal year 2021 would be deeper even than those implemented during the Great Recession.