Feds to send more than $2.1B to Kentucky state government

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FRANKFORT, Ky. (AP) — State government in Kentucky will receive more than $2.1 billion from the latest round of federal coronavirus aid — a smaller-than-projected amount due to the state's improving economic performance, Gov. Andy Beshear said Monday.

The U.S. Treasury announced state allocations based on a formula that included each state's share of the nation's unemployed from October through December 2020, Beshear said. Kentucky performed better than expected during that period, he said.

As a result, Kentucky's allotment will be $2.18 billion, down from an initial estimate that state government would receive $2.44 billion, he said.

"In other words, Kentucky has recovered stronger than the federal government anticipated, faster than most and it impacted a little bit on the dollars that will be available to us," Beshear said Monday at a news conference.

Beshear has pointed to a recent series of upbeat economic developments — from record sales tax collections to a credit rating agency's upgraded assessment of the state's financial outlook — in touting Kentucky's prospects as more people take the COVID-19 vaccines.

The Democratic governor has used the economic news to try to deflect criticism from some prominent Republicans calling for a much faster pace in lifting remaining virus restrictions.

Meanwhile, Beshear said the lower amount of federal money for state government won't affect his agreement with the GOP-led legislature on how to use nearly $1.3 billion of the aid.

Lawmakers agreed to use portions of the federal money on expanded broadband service, clean water projects and school construction. Beshear has said that infusion of federal money will create thousands of jobs and improve quality of life for Kentuckians. The federal aid also will enable the state to repay a federal loan that kept Kentucky's unemployment insurance program afloat.

That still leaves plenty of decisions on how to spend hundreds of millions of additional federal funds that will flow to state government.

Kentucky House Speaker David Osborne urged caution Monday, pointing to the multiple rounds of federal assistance for shoring up the state's economy.

"We have to be realistic and recognize that this economic performance is not one driven by job growth and business investment but one driven by federal stimulus, making it even more important that we are good stewards of taxpayer dollars," Osborne said in a statement.

The massive federal aid package was championed by President Joe Biden and passed by congressional Democrats — including Kentucky's lone Democratic congressman, John Yarmuth.

When including funding for local governments, Kentucky will receive more than $3.7 billion from the American Rescue Plan, Yarmuth said Monday.
Yarmuth, chairman of the House Budget Committee, said the package seeks to "get government back in the business of helping the people who elect us. This is a massive step in the right direction."

The latest influx of assistance comes as Kentucky's tax collections continue to surge.

State sales tax receipts in April reached $486.5 million, an all-time monthly high and more than 40% higher than the same month a year ago, Beshear said.

Beshear's administration recently estimated that the state is poised to end the current fiscal year with an approximately $586 million surplus in its General Fund. The General Fund pays for most state services, including education, health care and public safety. Such a surplus would push the state's rainy day fund past $1 billion, the governor said.

"We've never had that much, never even close, in terms of actual dollars or percentage of the budget," Beshear said Monday.

Fitch Ratings, a credit rating agency, recently upgraded its assessment of Kentucky's financial outlook, saying the change reflects the state's "solid economic recovery to date from the pandemic trough."

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