By RONNIE ELLIS
FRANKFORT — An independent group of economists Friday projected the state’s revenue shortfall for the fiscal year beginning July 1 at $996 million, and Gov. Steve Beshear said he will call a special session beginning June 15 to deal with it.
But Senate President David Williams, R-Burkesville, said the projected General Fund revenues of $8.3 billion represents only a $129 million or 1.5 percent decrease from the revised budget for fiscal year 2009 and a special session is unnecessary.
There also may not be sufficient support for allowing electronic slot machines at horse tracks, something which some thought might be on the agenda of any special session but which looked increasingly in doubt Friday.
The Consensus Forecasting Group also projected a shortfall of $239 million in the state’s road fund, but again Williams said the road fund is only $54 million short of the 2009 revised budget.
At issue is interpretation of budget instructions in the enacted budget which tell the governor to call lawmakers into special session to deal with a revenue shortfall of 5 percent or more of the budgeted projections. Williams contends the second year of the two-year budget is based on the first and effectively revised when lawmakers revised the first year of the budget.
That’s not the way Beshear interpreted the numbers and the instructions.
“I will be issuing the official call for the special session and announcing my budget proposal for the General Assembly’s consideration,” Beshear announced in a written statement shortly after the CFG produced its revised forecast.
“We’re in a very manageable situation,” Williams said. “There’s no crisis and we don’t need to come up here on June 15 because the governor already has the authority to slow spending.”
Williams said he spoke with Beshear on Thursday and they continue to have “an amicable” relationship and Williams hopes to persuade Beshear in the next few days no special session is necessary.
CFG Chairman Lawrence Lynch said the $996 million shortfall (compared to the 2010 budget) is probably the largest revenue shortfall in the state’s history. He said the members of the group generally agreed on a somewhat pessimistic view of how long the recession is likely to last in Kentucky.
“The general feeling is that we’re going to be slow coming out of the recession based on Kentucky’s history,” Lynch said. In past recessions, the effects have been felt in Kentucky later than in other parts of the country but the recovery also took longer.
House Speaker Greg Stumbo, D-Prestonsburg, issued a statement which – like Williams – said the state can use federal economic stimulus money to “cushion the impact of this deficit, though no one should expect the next two years to be easy.”
But Terry Brooks, cirector of Kentucky Youth Advocates, said the “budget gap is too deep to close with budget cuts alone.” He called for a “balanced package of solutions which includes revenue options and proportional cuts in targeted programs.”
However, Beshear, Stumbo and Williams have all said there is no support for increasing taxes in the midst of a recession.
One other option widely discussed since the end of this spring’s regular session has been Stumbo’s proposal to allow electronic slots at race tracks. Beshear has declined to say if he’ll include the measure on the session agenda.
But Derrick Graham, D-Frankfort, said Friday afternoon he understands the measure won’t be on the call.
He said members of Democratic House leadership called rank and file members earlier in the week gauging support for the measure in the House.
“There’s just not enough interest is what they told me,” said Graham.
He said he could support the measure to avoid additional spending cuts or personnel reductions. But his view isn’t shared by enough House members, he said, and he doesn’t expect the measure to be included when Beshear issues his call.
Only the governor can call a special session and it’s the governor who sets the agenda. He can later amend his call, adding items for lawmakers to consider.
Ronnie Ellis writes for CNHI News Service.
