In July, Gov. Ernie Fletcher announced that Kentucky ended its fiscal year with a $214 million budget surplus. But the extra cash won’t send state government on a spending spree — $90 million of that sum is allocated to a rainy-day fund, and the government faces a $132 million Medicaid deficit for 2006.

Meanwhile, state agencies and special interest advocates have begun jockeying for state funds in the 2006-2008 budget cycle. Last month the Council on Postsecondary Education recommended that state government increase its budget for higher education by 17.7 percent, to $193.1 million. On Nov. 28, Arts Kentucky, which lobbies for public and government support of the arts, sent an e-mail message to 1,500 people on its mailing list, asking recipients to send a letter to the governor’s office in support of the Kentucky Arts Council’s request for a $2 million budget increase for the next two-year budget cycle. The council distributes nearly three-quarters of its budget in grants to help arts organizations throughout the state meet operating expenses.

“We don’t see our grant dollars growing, and that has been a concern,” says Lori Meadows, KAC executive director.

From 1996 to 2004, KAC’s total budget increased only 8.3 percent. Meadows and Arts Kentucky Executive Director Trish Salerno attribute that to the state’s inability to keep budget increases in line with inflation. From 1996-2004, inflation rose 18.4 percent while state allocations increased 15 percent.

They also say budget growth has lagged because of a diminishing National Endowment for the Arts’ budget, which has reduced the money NEA allocates to states. As the country experienced a culture war from 1996-2004, the NEA portion of the council’s budget fell from 18.6 percent to 13.5 percent.

Salerno says that if Kentucky Arts doesn’t see the increase when the governor announces his budget to the legislature on Jan. 16, the organization will work to persuade legislators of the need for the increase.