• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Kentucky Center for Economic Policy

Kentucky Center for Economic Policy

   

  • About Us
  • Press Room
  • Donate

Research That Works for Kentucky

  • Topics
    • Budget & Tax
    • Criminal Justice
    • Economic Security
    • Education
    • Health Care
    • Jobs & The Economy
  • Types
    • News
    • Op-Ed
    • Research

   

  • About Us
  • Press Room
  • Donate

Copyright © 2021 KyPolicy Privacy Policy Terms & Conditions Sitemap

Analysis

Official Revenue Estimate for Next Budget Slightly Worse than Weak October Forecast

Anna Baumann | December 20, 2013

The group of economists charged with predicting how much revenue Kentucky will have in the coming budget cycle approved a very modest revenue forecast for the next budget that’s slightly weaker than the preliminary forecast released in October. The estimate confirms that lawmakers will have scarce resources to meet basic costs in the new budget unless they also generate new revenue.

Compared to the October estimate, the new forecast shows $31 million less General Fund revenue in 2014, $14 million less in 2015, and $17 million more in 2016, for a net reduction of $28 million. The forecast predicts that General Fund revenue will grow by 2.6 percent in 2015 to 9.8 billion and again by 2.6 percent in 2016 to $10 billion. That means $246 million additional dollars the first year of the new budget and $252 million the second.

More On Budget & Tax: Tax Breaks for Facebook, Amazon and Google? Beshear Vetoes Bill Meant to Lure Data Centers

Continued slow economic growth is a major factor driving the modest revenue receipts. With the economy still in recovery from the Great Recession, sales tax growth is sluggish. After several years of strong growth due to high corporate profits, the forecast expects corporate income tax receipts to grow slowly and then decrease as businesses begin re-investing profits in production. Revenue from coal severance, cigarette, and limited liability entity taxes are expected to level off or even decline.

The $246 million in new revenue for 2015 won’t be enough to cover even basic costs in the budget much less re-invest in education, health, human services and other areas that have been cut deeply in recent years. The state needs $157 million to fill the hole created from the use of one-time money in last year’s budget, $100-$120 million to make the full payment to the state employees’ retirement system (not counting teachers’ retirement) and $100-$150 million to pay for cost growth in Medicaid.

On top of General Fund problems, as a result of a recent arbitration ruling that Kentucky did not uphold part of the Master Settlement Agreement in 2003, the state expects its 2014 tobacco settlement payment to be just $45 million, half of what was budgeted for the year. That will likely mean cuts to the agricultural, early childhood and health programs that tobacco settlement monies fund. Pending the outcome of further arbitration, the 2016 payment could also be reduced.

Kentucky’s official revenue estimate for 2014-16 casts an even longer shadow on what was already a dark outlook for the 2014-16 Budget of the Commonwealth. Without new revenue, the General Assembly will have to further cut services that Kentucky relies on to maintain our quality of life and strengthen our economy.

FacebookTweetLinkedInEmail

Primary Sidebar

Get KyPolicy news updates in your inbox

Sign Up

Sidebar

Perspectives

American Rescue Plan Is a Lifeline for Kentuckians

The 2021 General Assembly Can Meet the Moment with Policies that Advance Racial Equity

Letter to the Kentucky House of Representatives on Raising the Inadequate Tax Rate on HHR Slot Machines

Voucher Would Drain Much-Needed Resources from Kentucky’s Public Schools

Coalition Letter to Kentucky General Assembly: End the Tax Break on Slot Machines

Other Budget & Tax Items

KY house 1

Analysis

Corporations Were the Primary Focus of One-Time Monies in General Assembly

Analysis

Governor Should Veto Expensive, Poorly Targeted Tax Breaks for Remote Workers and Data Centers

Analysis

Legislature Spends Additional Federal and General Fund Monies on Session’s Last Day

Ky. Policy

Footer

Research that works for Kentucky

433 Chestnut Street, Berea, KY 40403

Phone: 859-756-4605

General information and inquiries: info@kypolicy.org

   

Help us make the facts free and accessible to everyone. That’s how Kentucky will thrive.

Donate

  • Topics
    • Budget & Tax
    • Criminal Justice
    • Economic Security
    • Education
    • Health Care
    • Jobs & The Economy
  • Work
    • News
    • Op-Ed
    • Research
  • About Us
  • Press Room
  • Contact

Get KyPolicy news updates in your inbox

Sign Up

Copyright © 2021 KyPolicy Privacy Policy Terms & Conditions Sitemap

made by P&P
Share this ArticleLike this article? Email it to a friend!

Email sent!