State Budget Outlook Complicated By Slow-Growing Revenues

Dec 17, 2013

The outlook for Kentucky’s next budget has been called “bleak” by observers, but a number of factors could still affect the bottom line.

Forecasters expect spending needs to easily surpass revenue when the General Assembly meets to formulate a budget in January. Lawmakers will begin the new year facing a shortfall despite an estimated $230M in new revenue in the first year of the next budget.

Senator David Givens told a panel on KET’s Kentucky Tonight Monday those dollars will be quickly eaten up by prior commitments.

"You take the first $100M off for pension fixes that we've committed to do, and I think everyone is behind us doing that. The next $100M is basically going to be Medicaid costs. We're going to lose about $45M under the master settlement agreement where we were found to be non-diligent in enforcing that, so pretty quickly you're down to zero," Givens said.

Gov. Steve Beshear says a lack of stimulus funds and regular cost inflation will also present challenges as lawmakers set priorities. But some divisions of government, such as the Department of Agriculture, have successfully scaled back requests for funds.

Federal funding adds another level of uncertainty with the fate of the Farm Bill still in question and only a modest budget deal in the works.