Despite a crippled economy and predictions of another state budget shortfall, Kentucky’s general fund receipts are coming in at a higher clip than expected.

Budget Director Mary Lassiter’s office announced Friday receipts in March almost evenly matched those of March 2008, although Lassiter cautioned last March was a very poor month. Receipts in March 2009 were $637.8 million compared to last March’s numbers of $637.7 million. For the year, receipts are even with those of 2008.

“While general fund collections in March did not lose ground relative to last year’s activity,” Lassiter said in a press release, “that is primarily due to a poor performance last March in which receipts were down 5.7 percent.”

On top of that, she said, individual income tax receipts – which are tied to the state’s economic activity – continue to decline.

Nonetheless, with three months left in the fiscal year which ends June 30, state receipts are running even with last year, contrary to a forecast of the Consensus Forecast Group composed of private and university economists. The CFG predicted receipts might decline by as much as 2.7 percent for the entire year.

That group could be called together again to adjust projections, but Gov. Steve Beshear said this week he’ll probably wait until the end of the month to do that. He and lawmakers have said a special session may be necessary to deal with a larger revenue shortfall in next year’s budget than the $456 million shortfall that prompted the General Assembly to increase cigarette and alcohol taxes this spring.

That came after Beshear enacted 4 percent cuts in most departments and agencies of state government.

“I think once we see how (April receipts) are coming in we may be able to make a decision and move forward and get a forecast,” Beshear said. “It’s really too early to tell because we don’t know the size of the problem we face.”

When lawmakers adjourned three weeks ago, there was talk of a June special session – either to look at House Speaker Greg Stumbo’s bill to allow electronic slot machines at horse tracks or to take a look at tax reform. Senate President David Williams, R-Burkesville, downplayed the likely need for a special session.

During the session, two lawmakers from opposite ends of the political spectrum offered bills to change the state’s tax code. Rep. Bill Farmer, R-Lexington, wants to eliminate individual and corporate income taxes and extend the sales tax to services. His legislation anticipates the actual sales tax rate might also be reduced.

Rep. Jim Wayne, D-Louisville, wants to extend the sales tax to some services used primarily by the affluent and to make income taxes more progressive, taxing upper income levels at higher rates while reducing taxes for the lower end of the income spectrum.

Both Beshear and Stumbo said at the close of the session they are willing to look at tax reform during the interim period before the legislature convenes in January, but some lawmakers have said it could be taken up during a special session.

“We have committed to looking at tax reform and various (other) options that are out there,” Stumbo said.

Senate Appropriations and Revenue Committee Chairman Charlie Borders, R-Grayson, said this week that “everything would be on the table” as lawmakers deal with Kentucky’s seemingly chronic revenue shortfalls and a faltering economy.

Borders and House A&R; Chairman Rick Rand, D-Bedford, have been talking of ways the state can respond to any additional shortfall, Stumbo said. The new Speaker said he’s advising House Democrats to prepare for the worst.

“What I’ve said to our members is let’s take a look at a worst case scenario – let’s believe it’s going to be as bad as it can be and plan for that,” Stumbo said. “If it gets better, then obviously we’ll be prepared for it.”

Rep. Harry Moberly, D-Richmond, and Rand’s predecessor as House budget chairman, said he will offer ideas on tax reform if he sees the legislature is serious about tackling the issue.

“If it actually gets to be where we’re seriously considering tax reform, I’ll likely come up with a proposal,” Moberly said, adding he’d proposed such legislation in the past.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com.