Domino Effect

The resignation of Senate Majority Floor Leader Dan Kelly has had a domino effect of sorts for the State Senate in terms of leadership positions and committee chairs. Last week, Sen. Robert Stivers was elected to succeed Kelly as Majority Floor Leader, which left open his position as Chairman of Judiciary.

Today these appointments were made:

- Sen. Tom Jensen has been appointed Chair of the Judiciary Committee, which leaves open his position of Chairman of the Natural Resources Committee. Jensen is an experienced legislator, attorney, and Chairman so the transition should be relatively smooth.

- Sen. Brandon Smith has been appointed as Chair of the Natural Resources Committee. Sen. Smith has been Chairing the Special Subcommittee on Energy, so many of the topics his committee has been dealing with will be pertinent to his new role with the Natural Resources Committee.  







 Photos courtesy of the LRC.

Kelly appointed to judgeship

The politics in the Kentucky State Senate continue to unfold as Senator Dan Kelly (R) the former Senate Majority Floor Leader accepts a judicial appointment from Democrat Governor Steve Beshear leaving a vacant Senate seat. This open seat will be hotly contested as the balance of power in the State Senate hangs in the balance.

With Kelly's resignation, the Republicans hold the Senate 19 to 17 Democrats and 1 Independent. The winner of Kelly's open seat will either strengthen the Republican control of the Senate or shrink the majority down to a very narrow one-seat margin.

Here is the article from the Herald-Leader.
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Kelly appointed to judgeship: "FRANKFORT -- Democratic Gov. Steve Beshear appointed Republican state Senator Dan Kelly to an open judgeship on Monday in an effort to further erode the Republican Party's slim majority in the state Senate.



In an executive order, Beshear appointed the long-time senator from Springfield to an open circuit court judgeship in the 11th Judicial District in Central Kentucky, paving the way for a special election.

Beshear set the special election for Kelly's 14th Senate District seat and for an open house seat for Dec. 8.

A seven-person judicial nominating commission on Friday picked Kelly and two other lawyers as possible nominees. Republicans and Democrats alike have said they expected Beshear to appoint Kelly as a way to slim the Republican majority in the state Senate."

Governor Beshear's Weekly Address - Bridges

About Kentucky 10.16.2009 - Bridges: "

	About Kentucky 10.16.2009 - Bridges Governor Beshear's weekly address.

Kentucky Is Not Alone

This report from Stateline shows that Kentucky's not alone with its budget woes.

State tax revenues plunge in record drop:

State tax collections were down by a record $63 billion for the fiscal year ended in June, which is roughly twice the amount states received during the year from the federal stimulus package, a new report (PDF) shows.

Total state tax collections from April through June dropped by 16.6 percent compared with the same period a year earlier and the worst since data was collected in 1963, the Nelson A. Rockefeller Institute of Government said in its latest analysis of Census tax data.

Double-digit declines were reported in 36 states for the second quarter. Alaska suffered the worst, with a drop-off of 86.5 percent due to the recent drop in oil prices, the report said. Vermont fared the best, with a 2.2 percent growth in tax revenues, primarily due to a one-time estate-tax settlement. South Dakota suffered a drop-off of only 0.8 percent in the second quarter.

The national economy and stock market may be rebounding, but Rockefeller said states can expect budget gaps for the next two years and possibly the next four.

Report shows states' revenue sources

Click on the link to see a report from Stateline.org on state tax base. Pretty interesting - -

Report shows states' revenue sources: "Sales and property tax payments account for more than 60 percent of state and local government tax revenue, according to a new analysis that also singles out the states that rely most heavily on one kind of tax."

CFG & State Revenues

The Consensus Forecasting Group met today in Frankfort to review tax receipts for the 1st quarter Fiscal Year 2010 and to revise their previous revenue forecasts made in May and August of this year. The group is made up of the state's economists and they come together several times a year to forecast the revenues that the state budget is based upon.

The CFG remained overall not optimistic about Kentucky's economy over the next three fiscal years and their forecast for the General Fund reflects that. The bottom line is state revenues are still substantially below the 2008 levels and look to remain that way at least until 2012.  Federal Stimulus funds helped close the gap between expenditures and revenue this past year, but only a small amount remains for the next biennium.

1st Quarter FY 2010 Receipts

The first quarter of FY 2010 ended September 30, 2009 and the General Fund tax receipts were down 5.6% over the same period a year ago. Most of the reason for the decline is negative growth in the sales tax, Kentucky's 2nd largest revenue source, and the individual income tax, which is the largest source of state revenues. The sales tax was down 6.6% and the individual income tax was down 9.9% in September 2009 alone.

The Road Fund's first quarter receipts were down 3% over the same period a year ago. Revenues were buoyed somewhat by a 2.7% increase in motor fuels taxes over the first quarter, which is the largest component of road fund revenue.

Click Here to see the full details on the 1st quarter receipts.

CFG Estimates

Click Here to access the CFG handouts.

General Fund
The CFG revised their previous revenue estimates for FY 2010 further down to a 3.5 % decline resulting in a decrease in General Fund revenues of around $160 million. This due in large part to the slumping sales tax receipts that have been negative for 4 straight quarters.

For FY 2011-FY 2012 the economists lowered their levels of increasing revenues from previous estimates. They do see revenue growth in these fiscal years, but not at the levels they predicted two months ago. They forecast revenue growth of  2.2% for FY 2011 and 3.7% for FY 2012.

Road Fund
The CFG revised their previous revenue estimates for FY 2010 up slightly from a -4.0% to -1.6% which will result in an increase in road fund revenues of roughly $ 28 million. The primary reasons given for this bump in FY 2010 is due to an increase in the motor fuels tax set to roll on this month and fewer people are taking advantage of the changes to the automobile tax credit put ion place by the legislature this summer. Only $1.4 million of the $25 million credit has been used as of Friday, October 9, and the economists had predicted the cap would be used up more quickly.

For FY 2011-FY 2012 the economists see moderate growth in Road Fund revenues of 4.2% in FY 2011 and 6.6% in FY 2012. This is due to the likelihood of an increase in the motor fuels tax for these years, because the average wholesale price is predicted to stay above the current floor. 

If you have any questions please let me know.