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Experts say revenue shortfall raises risk that spending cuts will be needed


FRANKFORT, Kentucky — Some experts are warning that a recently announced shortfall in revenues raises the risk that spending cuts will be needed to balance the 2014-2016 state budget.

Kentucky Center on Economic Policy Director Jason Bailey told The Courier-Journal ( that a shortfall in one year "has a kind of a domino effect on the next years." He says revenue would have to increase more than expected and that's unlikely to happen.

Gov. Steven Beshear's administration announced this month that a significant shortfall is expected when the fiscal year ends June 30.

Budget Director Jane Driskell says Beshear has several sources of funding that he could use to balance this year's budget without making cuts. She says the bigger concern is for the future.

"It puts pressure on us through the next two years because in order to balance, revenues will now need to grow more than we've projected," said Rep. Rick Rand, a Bedford Democrat who heads the House budget committee.

Republican Senate Majority Leader Damon Thayer said it's not clear whether lawmakers will have to adjust the budget. "But I know that we're still in a weak economic recovery and revenues are spotty."

The budget approved earlier this year by lawmakers assumes General Fund revenues over the next biennium would see growth of 2.6 percent over last year's revenues of $9.5 billion. However, the base for calculating next year's revenues is lowered by the extent to which this year's revenues fall short.

"That puts pressure on us over next year and the second year of the new budget to grow by a higher percentage than the experts project to meet the dollars that have already been projected in the new budget," Rand said. "And that gives me concern because of the volatility we've seen in our revenue stream in recent months."

Driskell said officials will closely monitor the situation to see what kind of trend there is in the first three months before deciding whether cuts are necessary.

Information from: The Courier-Journal,

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