State weathers Wall St. woes

By Roger Alford - Associated Press

FRANKFORT — Finance Secretary Jonathan Miller said Friday that Kentucky is weathering Wall Street's financial woes better than some other state governments.

In California, for example, financial officials warned this week that the nation's frozen credit markets are threatening the state's ability to do short-term borrowing to pay immediate expenses, and that the state could run out of money by the end of October.

"We're not in a California-type situation," Miller said. "We have sufficient liquidity. We have plenty of cash to allow us to pay our bills, to pay state salaries, and to continue to provide government services. There's no immediate crisis on the horizon."

Congress approved an unprecedented government bailout of the battered financial industry on Friday. Miller said he's hopeful the move will ease the credit crisis and boost the market for government bonds.

Miller said Kentucky plans to sell $325 million worth of bonds next week to pay for a variety of construction projects, most of which will be on university campuses. Some of the projects have been on the drawing board since the 2005 legislative session. Others were approved earlier this year.

Friday's congressional action, Miller said, should bolster the bond sale.

Like other states, Kentucky has felt the impact of the ailing economy for several months. Budget forecasters have been warning since January that Kentucky will amass a $900 million revenue shortfall over the next two years. The shortfall required widespread cuts in government services to balance the state's $19 billion budget.

Senate Appropriations and Revenue Committee Chairman Charlie Borders said new construction funded by the proceeds from the bond sale "will be a shot in the arm" for the state's economy.

Proceeds from the bond sale also will provide $36.5 million for an arena at the Kentucky Horse Park, $17.5 million for work on a series of locks and dams on the Kentucky River, and $69 million for a research facility at the University of Louisville.

"I don't think the timing is bad," said Borders, R-Grayson. "In fact, it could be a good time to do this."