Over the past few weeks there have been several news items of interest regarding Kentucky's budget and economic situation and we thought we would just combine them all into one post.
State Budget Director and Secretary of the Cabinet Mary Lassiter released the tax revenue receipts for March 2011. The news for the General Fund and Road Fund was good and followed the trend of 11 consecutive months of increasing revenues. We always caution by saying that most of this revenue growth was budgeted for, so any surplus for FY 2011 will be minimal. Here are the highlights:
- General Fund revenues were up 3.7% and Road Fund revenues were up 6.9% over March 2010.
- In order to meet the budgeted General Fund revenues of 4.5%, revenues would need to increase 2.2% over the next 3 months. Based on internal estimates Lassiter believes revenues will hit 4.9% for FY 2011 and there will be a small General Fund surplus.
- The General Fund growth is being lead by the sales tax, up 4.3% YTD, and individual income tax, up 6.2% YTD.
- The Road Fund continues to exceed the budgeted estimate for FY 2011, which was 4.9%. Revenues could actually decline 14.6% and still meet that estimate. The Road Fund is up 12.3% YTD for FY 2011.
You can download the full report HERE.
Here is a story from the Herald-Leader on March receipts: Small surplus likely as state revenues continue upward trend: "FRANKFORT -- Kentucky tax revenues increased in March for the 11th consecutive month, leading officials to predict a small surplus when the fiscal year ends June 30...State Budget Director Mary Lassiter said the nearly year-long growth in General Fund receipts shows that Kentucky may be inching its way out of one of the worst recessions in decades."
More on State Revenues
Ryan Alessi, CN2 had a good interview with James McCabe, one of the economists that makes up the Consensus Forecasting Group, who look at economic indicators and predict the revenues the state bases its budget on. The full article can be accessed by the link below or you can watch the video clips:
Kentucky should meet revenue projections for 2012, economist says: "
Barring any unforeseen bottoming out of the economy, Kentucky should be on pace to reach the roughly $8.8 billion in tax revenue economists predicted for 2012, said economist James McCabe...
Kentucky's Bond Rating
During the recent Special Session much was made of Kentucky's debt levels and particularly the issue of debt restructuring. House and Senate leaders in the Budget Conference committee during the 2011 regular session and in the House and Senate versions of HB 1 during the session limited the Governor's ability to restructure debt. When two rating agency's recently downgraded Kentucky's bond rating this has lead to more discussion about Kentucky's overall financial condition.
This Herald-Leader article provides more insight: Downgrades in Kentucky's bond rating ignites partisan debate: "FRANKFORT — Two financial rating houses — Moody's and Fitch — have recently downgraded Kentucky's bond rating, citing increasing costs in the state's pension systems and too much reliance on one-time money to balance the state's books.On March 30, Moody's downgraded Kentucky's ability..."
State Budget Deficits
This Stateline article does a good job of giving some basics on state busgeting and how budget deficits are calculated. State budgets explained: Why deficit figures don't always add up: "In some states this year, disagreement over how to calculate budget deficits has made for confusing debates. Here’s a primer on what budget shortfalls are, the math behind them and why those calculations have become controversial."