, Corbin, KY

State News

August 16, 2013

State projects meager General Fund income growth

CORBIN — By Ronnie Ellis / CNHI News Service

The group of independent economists who predict state revenues for the legislature is looking at a relatively modest increase of $259 million dollars in the first year of the next budget and about $533 million over the next biennium in the state General Fund.

But there’s a hitch.

In July, state Budget Director Jane Driskell told lawmakers that roughly $400 million in new revenue is needed just to cover increased payments required by pension reform legislation, medical cost inflation and replacing one-time sources of money used in the current budget to pay for recurring expenses.

On top of that, the state hasn’t funded school textbooks, teacher professional development and other educational programs for several years while holding basic school operational funding steady in spite of enrollment growth and rising costs.

A 1 percent increase to the school funding formula — SEEK — would cost $29 million and restoring funding for textbooks, professional development and school safety will cost another $64 million.

What it all adds up to is there really won’t be a lot of “new money” laying around for lawmakers to spend.

Things aren’t even that good for the Road Fund. The economists are predicting gas tax revenues will fall during the next two years.

Budget analyst Greg Harkenrider told the Consensus Forecasting Group while Kentucky weathered the “the great recession” of 2008 better than many states because of federal transfer payments like social security and other forms of assistance, it also typically is slower to recover from a recession.

CFG Chairman Frank O’Connor, Economics Professor at Eastern Kentucky University, said the economic recovery “continues to be quite sluggish.”

And while individual and corporate income taxes are rising — a sign of recovery — sales tax revenues have fallen for three of the past five years. Prior to 2008, that had happened only once since 1979, he said.

Part of the growth in the income taxes, Harkenrider said, was because of a one-time tax amnesty program that brought in about $24 million and won’t be there in the out years. And cigarette taxes are almost certain to continue declining.

Coal severance taxes have fallen each of the last three years and fell by 22 percent in Fiscal Year 2013. Budget analyst Thomas Jones predicted another 8.8 percent decline during the current year, but then he sees a “leveling off” over the next four years with much smaller declines.

Revenues for the Road Fund are expected to fall because of drivers changing gas consumption habits and a new law that reduces sales taxes on the purchase of new cars. The law, passed this year, allows the purchaser to deduct the value of any trade-in vehicle from the total price of the new car on which sales taxes are calculated.

Thursday’s figures don’t represent the final word on revenues for the next state budget. The CFG will meet again in October and December and can revise their projections at those meetings.

The figures the group settles on in December will be used by lawmakers to draw up the 2014-15 two-year budget in the 2014 General Assembly that convenes in January.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at Follow CNHI News Service stories on Twitter at

Text Only
State News
  • Healthcare signup in state extended

    While the national health exchange established by the Affordable Care Act — known to some as Obamacare — suffered glitches, crashes and delays, the Kentucky-run exchange, Kynect, was often used as a national model.

    April 4, 2014

  • Kentucky budget passed with little debate

    The Kentucky General Assembly, divided between chambers along party lines, overwhelmingly passed a $20-billion, new two-year budget not only on time but with almost no debate.

    April 1, 2014

  • Lawmakers agree on snow bill

    Kentucky school officials, parents and students finally have what they’ve been asking for: A bill to allow them to get out of school before the summer fully sets in, even if they don’t make up some of the days they missed during the severe winter.

    March 31, 2014

  • Tensions rise during budget negotiations

    Tensions increased Friday between the Republican Senate and Democratic House over continuing negotiations on a new, two-year budget. It even got personal at times.

    March 31, 2014

  • Kentucky Power plan a potential landscape-changer

    Electrical ratepayers, local governments and those employed in the coal industry might have a hard time understanding the complicated transaction through which Kentucky Power Company is purchasing half the generating capacity of a coal-fired West Virginia plant.

    March 28, 2014 2 Stories

  • Senate passes budget with no locked-in gas tax hikes

    The state Senate on Tuesday passed its version of a two-year revenue measure, and unlike the House version, it does not lock in gas tax increases.

    March 26, 2014

  • House passes bill aimed at saving Big Sandy Plant

    Backers of a bill to require the Kentucky Public Service Commission to “reconsider” its previous order approving Kentucky Power’s purchase of a West Virginia generator say all they are asking “is for them to take a second look and look at all the facts.”

    March 26, 2014 1 Story

  • Judge: Companies can’t use eminent domain for pipeline project

    Franklin Circuit Judge Phillip Shepherd on Tuesday ruled that companies building a natural gas liquids pipeline across parts of Kentucky cannot invoke eminent domain to force private property owners to provide easements.

    March 26, 2014

  • Still no snow day solution from lawmakers

    Senate and House negotiators, working on a bill to give school districts flexibility in making up snow days, each accused the other of moving the goal posts – but it’s the local school districts who may be penalized.

    March 25, 2014

  • Senate sets budget with ‘wiggle room’

    It was no surprise the Republican-controlled Kentucky state Senate altered the $20 billion, two-year state budget approved by the Democratic-controlled House, but there may have been a few who were surprised by how little it was changed.

    March 25, 2014