Kentucky’s budget priorities for 2015 could require nearly $1 billion in revenue that the state doesn’t have.
House Speaker Greg Stumbo told a group of business leaders earlier this month that the cost of funding priority issues like education, public employee raises and more could total an estimated $800 million.
“It would probably be more of a number like $700 to $800 million--and some would argue larger than that. It just depends upon how big a bite of the apple you want to take, but I don’t think we can do that.”
Stumbo says the recession is the driving force behind the shortfall, and Kentucky’s economic growth rate will return to pre-recession levels in about two to three years in the absence of tax reform.
Gov. Steve Beshear will submit his budget proposal to the General Assembly next month.
New revenue in Kentucky’s upcoming biennial budget will not be enough to account for an estimated $450 million shortfall.
Lawmakers expect about $230 million in new revenue to be available for the budget. But House Speaker Greg Stumbo recently told a group of Kentucky’s top business leaders that more than half of that money will be used to pay down the state’s pension debt
“In about a $12 billion budget, it looks like there might be somewhere around a $100 million of new dollars, which is not even gonna allow us, quite frankly, to maintain status quo because just the cost of inflation," the Democratic House Speaker said.
Stumbo’s comments echoed those made by State Budget Director Jane Driskell, who has warned that budget cuts can be expected.
The Consensus Forecasting Group will meet this Thursday to provide the legislature with final budget numbers.
Despite the end of the economic recession and a growth in state revenue, Kentucky’s budget will remain tight. Former Budget Director, now Cabinet Secretary Mary Lassiter will address a joint House and Senate budget committee Tuesday.
She is expected to say state programs and agencies should not expect cuts in recent years to be restored in the next State budget. Lassiter tells the Courier-Journal, “There’s no money for anything.”
Lassiter says any new revenue in the state budget passed in 2014 budget will be consumed by additional spending required for pensions, Medicaid, and replacing one-time funds being spent on recurring needs in the current budget. She declined to say if the tight long-term revenue outlook will also be the theme of the State of the Commonwealth address Gov. Steve Beshear is to deliver Wednesday night.
Despite accounting mistakes and unforeseen disaster relief expenses, state government is closing the 2012 budget with another surplus. Originally, the budgetary surplus was $83 million. Now it's almost halved to $45 million.
A slowly recovering Kentucky economy has pushed tax revenues beyond what had been projected by a panel of economic experts over the past year. Budget Director Mary Lassiter said Tuesday the state's General Fund tax revenue for the fiscal year that ended June 30 was $83 million more than expected.