Friday, September 9, 2011

August Revenue Report - GF Down & RF Up

The State Budget Director's Office released the August tax receipts report today. Click HERE to see the full report, here are the highlights:

- The General Fund broke a string of 15 months of increasing revenues, as August General Fund receipts came in 3.0% below August 2010, $623 million compared to $642 million a year ago.

- The Road Fund on the other hand continued its streak of revenue growth for the 14th consecutive month with a 5.4% increase in August resulting in $134 million in revenue.

Analysis:

- General Fund: At the most recent meeting of the Consensus Forecasting Group, the state's economists predicted that revenues would increase and that based on current budgeted expenses Kentucky could possibly have a significant surplus of $192 million in June 2012. To meet the official forecast revenues would need to grow 1.2% over the rest of this fiscal year. Certainly one down month won't necessarily have a large impact, but given the national economy it will be interesting to see if this forms into a trend.

If so it could drastically impact the General Assembly's work on the 2012 budget in January if they have less revenue than expected. Since 2008, the General Assembly and Governor Beshear have had to deal with less revenue year over year, and it appeared with the recent $121 million deposit into the rainy day fund and possible surplus next year things were looking up. However, they may not be able to take a break from the budget cutting just yet.

- Road Fund: Lead by continued growth in motor fuels tax 4.4% and a strong growth month from motor vehicle usage tax 10% the fund continues to grow. Only two months into this fiscal year and revenues could decline 0.7% over the rest of the fiscal year and the fund would still meet its revenue forecast. Certainly, more monies in the Road Fund could aide in the overall politics of the state budget when the legislature takes it up in the 2012 Session. But it is a long time between now and January and with the overall apprehension about the national economy anything could happen.

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