Almost on cue, the revenue forecast got worse Wednesday.

The Consensus Forecast Group, economists who try to forecast future state revenues based on economic trends, lowered their estimate of state revenues for the current year by another $11 million. That’s on top of the $121 million decline in revenues previously forecast, meaning the total decline in anticipated revenue is now $132 million.

They also lowered revenue expectations for next year by an additional $54 million and by $104 million the following year, the two years of the biennial budget lawmakers must pass this session.

According to Gov. Steve Beshear, revenues for next year were already anticipated to fall $524 million short of the current year’s spending. Beshear estimates the total deficit this year at more than $400 million, combining revenue shortfalls and expenditures over budget.

“It doesn’t surprise me at all,” said Speaker of the House Jody Richards, D-Bowling Green. “I think we were expecting that.”

But lawmakers, despite the daunting task before them, aren’t likely to offer many solutions until after Jan. 29.

That is an important date for two reasons: It’s the filing deadline for fall legislative races and incumbent lawmakers want to avoid controversial votes until they see whether they have an opponent or who it might be.

It’s also the date when Beshear will deliver his budget address to the legislature, revealing how he plans to “tighten our belts,” and where the cuts will come.

“We have to wait and see what the governor’s proposals are and then we will take the budget and address it,” Richards said.

Some lawmakers have called for an increase in the cigarette tax — now 30 cents and below those in surrounding states — but Beshear has said he is opposed to raising any taxes “at this point” because Kentuckians “are already taxed enough.” Senate President David Williams, R-Burkesville, has also said he detects little sentiment for raising taxes and that the budget dilemma is “manageable.”

Richards said he’s been surprised by the number of House members who are at least considering support for an increase in the cigarette tax.

“I’m surprised at the number of people who tell me they would prefer that to cutting higher education or education at all,” Richards said. “I did not come here to go backward in education.”

Rep. David Watkins, D-Henderson, a physician, has previously said he wants to offer a bill to increase the tax, but he said Wednesday he has been advised to wait until after Jan. 29 before doing so. He said, however, he’d have a better idea of what he will ultimately decide after meeting with Beshear on Thursday morning.

Richards said some House members might be more inclined to vote to increase the tax if the Senate might support such an increase.

Meanwhile, representatives of the Kentucky League of Cities and the Kentucky Association of Counties told the House task force on expanded gambling that any amendment and enabling legislation to allow expanded gambling should funnel some of the proceeds back to local communities, even those in which no casinos are located.

Denny Nunnelley, Deputy Director of KACO, said local officials “want options” for spending such revenue. Some counties might need to spend money on jails but others might need a hospital, he said, urging lawmakers not to restrict the use of the proceeds too rigidly.

KACO Director Bob Arnold said local officials would spend the money on “roads, sewer lines, parks and things they don’t have money to do now.”

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com.

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