Kentucky Gov. Beshear: Budget hole widening
By JOE BIESK
Associated Press Writer
FRANKFORT, Ky. (AP) - Kentucky's budget woes are worsening and may leave the state hundreds of millions shy of what's needed to satisfy the current spending authorized by the state budget, Gov. Steve Beshear said Thursday.
State revenues are on pace to fall short about $294 million in the current fiscal year, which ends June 30, Beshear said. The state's road fund is also expected to be more than $70 million short.
“The pain is not over,” Beshear said at a news conference. “The national economy has continued to worsen and, just like families, state government is feeling the impact.”
Kentucky was already facing a projected $900 million drop in state revenue over the next two fiscal years. Lawmakers earlier this year passed a two-year $19 billion state budget that called for spending cuts in numerous areas including social programs and public colleges and universities.
But revenue from Kentucky's corporate and individual income taxes is expected to dwindle more than previously expected, as is money from sales and use taxes, Beshear said. Money for roads, generated mainly through a tax on fuel and motor vehicles, is also dropping, the governor said.
“These dismal numbers run across the board,” Beshear said.
Earlier this year Kentucky lawmakers turned down Beshear's legislative proposals aimed at raising money without directly boosting taxes on all residents.
They rejected Beshear's plan to raise about $200 million by raising the state's tax on cigarettes by 75 cents, bringing it to $1 per pack. Lawmakers also ignored the governor's call for a constitutional amendment asking voters to legalize casino gambling in Kentucky - a move Beshear said could have generated up to $600 million a year in additional state revenue.
Beshear said he may call the legislature into a special session in early January during a scheduled three-week recess to address the problems. For now, Beshear said he's awaiting an official projection sometime next month from the state's panel of economists, known as the Consensus Forecasting Group.
If they predict a shortfall, that would trigger budget reduction steps outlined by the legislature that the governor must follow to reduce state spending.
The governor said he plans to come up with a long-term proposal to take directly to Kentuckians. Beshear said he would travel the state in an attempt to muster support for his plan.
“We need to discuss the issues that we're going to face and the matters that we propose with the people of this state,” Beshear said.
House Speaker Jody Richards, D-Bowling Green, said the news was “not surprising” given the national economy's problems. Richards, however, said there is plenty of time to address it.
“If there is a silver lining, it is that many other states are facing a crisis much worse than ours,” Richards said. “For now we will monitor the budget in the months ahead and will be prepared to work with the governor and the Senate to tackle this issue during the 2009 regular session.”
Story created Oct 31, 2008 - 12:10:44 EDT.
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