Revenue forecasts still call for major shortfall next two years

State News

Discussion

December 21, 2009

There are signs economy may be improving

By RONNIE ELLIS — CNHI News Service The Glasgow Daily Times Mon Dec 21, 2009, 05:13 PM CST

FRANKFORT, Ky. — Even when it’s good news on the fiscal front in Frankfort, it’s still bad news.

On Monday, the Consensus Forecast Group, a group of independent economists who predict state revenues, revised their estimates for the current and next two fiscal years up slightly. They even saw some growth in the next two-year budget period which begins next July 1.

The problem is the state is already spending more money than even the improved revenue estimates produce — about $9.09 billion in its general fund. That’s due to federal stimulus funding and one-time funds lawmakers utilized to balance the budget for the current biennium, which ends June 30, as well as more optimistic revenue estimates when the current budget was last revised.

But Larry Lynch, the CFG chairman, said there are signs the economy is improving and they think revenues may grow in the first year of the 2011-2012 budget cycle by 3.6 percent.

“The 3.6 percent is not terribly optimistic, especially coming out of a recession, but you have to get a bump out of a recession,” Lynch said.

The CFG predicts revenues in fiscal year 2011 of just more than $8.49 billion and more than $8.8 billion in the second year, a 3.7 percent increase. Those numbers are better than October estimates. They also revised downward the shortfall for the current fiscal year 2010 which ends June 30 – to just under $100 million. In October, the CFG preliminary estimates called for a $161 million shortfall in the current year.

That prompted Gov. Steve Beshear to ask government agencies to prepare for a 6 percent cut in the current fiscal year, but the new figures will lessen the hit at least a little for those agencies.

The next two years are another matter. The state is spending about $9.09 billion – relying heavily on federal stimulus money which will run out in December of 2010 – after reducing the budget by $800 million over the past two years. But that’s still more than $890 million more than either the 2011 or 2012 CFG revenue estimates. Earlier forecasts placed the two-year shortfall at more than $1 billion.

Just to keep spending at its present levels, the state will have to find $600 million in the first year and $290 million in the second on top of the projected revenues. Kentucky still has federal stimulus money available for that year which should cover at least part – but not all – of the $600 million hole. But that money runs out after December 2010 and won’t be available for the final 18 months of the two-year budget.

Beshear said the next budget will be “the most difficult Kentucky has faced in modern times.” He didn’t say how he will propose dealing with the bleak budget picture when he presents his budget to the General Assembly on Jan. 19.

Lynch, during the CFG deliberations Monday, noted that Kentucky’s economy tends to lag behind the national trend – it tends to feel the effects of recession later than the rest of the nation but then tends to be slower recovering. But he said the group sees signs of improvement.

“We all feel more optimistic now,” Lynch said after the meeting. “The national economy seems to be looking a little bit better and that seems to be translating to Kentucky.”

Ronnie Ellis writes for CNHI News Service and is based in Frankfort, Ky. He may be contacted by email at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

Text Only

State News

EVENING UPDATE: Supreme Court: Lawmakers to run in old districts
Legislative candidates will have to run in decade-old districts in this year’s elections, the Kentucky Supreme Court ruled Friday afternoon.

February 24, 2012
Stivers withdraws pseudoephedrine bill
In a move that surprised both supporters and opponents, the sponsor of a bill to require prescriptions for medications containing pseudoephedrine withdrew the bill in the state Senate Thursday.

February 23, 2012
Gambling talk, cold medicine dominates week
First it was redistricting which dominated every conversation in the 2012 General Assembly. Lawmakers couldn’t resolve that issue and it’s now before the state Court of Appeals which is expected to seek to transfer the case to the state Supreme Court.

February 17, 2012
Drug bill clears committee
It took some blunt testimony and visual evidence and the vote was close, but the Senate Judiciary Committee passed out a bill Thursday to require prescriptions for the purchase of products containing pseudoephedrine.

February 16, 2012
Senate committee looks at constables
A state Senate committee revised a proposed constitutional amendment which would have eliminated the office of constable Wednesday, choosing instead to offer a statute to allow local governments to define constables’ duties through ordinance.

February 16, 2012
Medicaid managed care groups reassure committee
Medicaid managed care organizations went before a restive Senate committee whose members have been bombarded with complaints from providers about late payments for Medicaid services.

February 16, 2012
Gambling amendment introduced
Gov. Steve Beshear and Republican Sen. Damon Thayer on Tuesday announced the much anticipated gambling amendment they hope to push through the legislature, an amendment that would allow up to seven casinos, five at existing horse racing tracks.

February 15, 2012
Activists gather to protest mountaintop removal
Their message was clear, though not everyone agrees with it.

February 15, 2012
Kentucky pharmacists unhappy with rates
A roomful of Kentucky pharmacists Monday made clear their dissatisfaction with some of their reimbursement rates under the newly implemented Medicaid managed care system before a legislative committee.

February 14, 2012
LRC appeals to Supreme Court
A lawyer for the governing arm of the state legislature has filed an appeal asking the state Supreme Court to dissolve a Franklin Circuit Court temporary injunction that 2012 candidates for the legislature run under 2002 district lines and set aside its ruling that the new district lines passed this year are unconstitutional.

February 14, 2012
More State News Headlines

State News

Search Results

Discussion

Revenue forecasts still call for major shortfall next two years

There are signs economy may be improving

Site Map