FRANKFORT, Ky. (KT) – The Consensus Forecasting Group has painted a bleak outlook for state revenue during the remainder of the 2020 Fiscal Year that ends June 30, but not quite as bad as predicted earlier this spring.
The group, which is made up mostly of economists from the state’s universities, met via teleconference Friday afternoon in Frankfort and predicted general fund revenue would total $10.991 billion, leaving a budget shortfall of $456.7 million. That is $39 million less than the preliminary estimates by the State Budget Office of up to $495.7 million, released at the end of April.
The coronavirus, of course, is the main reason behind the numbers.
The meeting was requested by Budget Director John Hicks on April 30, even before it was reported that general fund receipts for April dropped precipitously, not only due to the impact of the coronavirus but because of delaying the income tax filing deadline until July 15. Collections last month fell 33.6 percent, compared to April of 2019.
Budget Office staff normally present three scenarios to the Consensus Forecasting Group, which are termed optimistic, control, and pessimistic. This time, no optimistic scenario was included, just pessimistic and control, which is a middle case.
After hashing out blends of various percentages between the control and pessimistic scenarios, which had shortfalls of $324 million and $456.7 million respectively, the panel voted to go with 100 percent pessimistic, which represents a 4% drop from the budget enacted by lawmakers.
It was a similar situation involving the Road Fund, with just control and pessimistic scenarios presented, and the Consensus Forecasting Group again went with 100 percent optimistic. Total revenue is now forecast to be $1.39 billion, a drop of 10.4 percent from the enacted figure of $1.55 billion.
According to state law, legislative action is needed to deal with any shortfall of over five percent from the enacted budget, but it was unclear if Gov. Andy Beshear will have to call a special session or wait until lawmakers return in January.
Before adjourning last month, lawmakers enacted only a one-year budget instead of the usual two years, due to the pandemic. The economists did not address the 201 Fiscal Year spending plan, just the remaining 40 days of the current fiscal year.