FRANKFORT, Ky. (KT) – The Consensus Forecasting Group says a preliminary estimate shows a slight growth in state revenue for the next two years and should be useful when lawmakers begin biennial budget talks next year.
The group, made up mostly of economists from state universities, met Tuesday afternoon in Frankfort and projected general fund revenue to reach nearly $11.5 billion, a 0.8 percent growth, in the 2020 fiscal year ending on June 30. The group anticipate a two percent increase in 2021, followed by 1.7 percent in the 2022 fiscal year.
Kentucky’s road fund is forecast to bring in more than $1.56 billion for FY 2020, which would be a 0.2 percent decrease from the previous year. That growth could double in 2021 with 0.4 percent increase, followed by a 1.2 percent increase in FY 2022.
Consensus Forecasting Group Chairman Frank O’Connor, an economics professor at Eastern Kentucky University, says there is no real big change from when they met August. “Maybe a slight bit more positive for the current fiscal year and slightly less positive for the following two years, but not material changes.”
O’Connor added, “Watch out in December, as there will be an official forecast, plus there are things happening on the national stage that influence things here, but so far we haven’t seen much.”
The ongoing trade dispute with China is one of the factors that could impact economic growth.
“If that [situation] improves,” O’Connor said, “[it] ends a lot of uncertainty and will cause people to be a lot more optimistic looking forward. We’ll also have to see what happens in Europe. If Brexit works out, that will improve things there,” and in the United States as well.
State Budget Director John Chilton explained where things go from here, as state agencies begin their budget planning. “With these numbers, we notify the executive, legislative and judicial branches.”
Deputy Budget Director Greg Harkenrider added, “We send out letters to all the branches, as is part of state law. They will have the numbers we need to tentatively balance to when we get the budget submissions, knowing full well the official numbers will come in December.”
Chilton said although the legislature ultimately approves the budget, the report will give everyone a starting point, and although there is no statutory language on who gets what percentage of the budget, “the largest branch by far is the executive branch.”
It will be mid to late January before the Governor elected in November presents his spending plan to lawmakers.