KY Budget Shortfall -- Some Research
After reading a story over at Page One about the upcoming special session and the $1 billion shortfall, I decided to do some research. Make the jump to see what I found (with charts, real numbers, and a few not-yet-real numbers) --
First of all, let me note that I have only looked at income, not expenses, AND that I have only looked at actuals. However, the actuals tell an interesting tale.
Through April, the receipts into the General Fund were 7,044 million, compared to 7,157 a year earlier. Here’s an interesting fact, though — through MARCH the two years were identical. Here's a chart showing receipts by month by year. (Click thumbnail for larger image.)
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What happened? In April of 2008, we had the largest one-month GF receipts of all time — something called “an anomaly” by the state budget director at the time. Thus the shocking headline “Tax Receipts Fall 12% in April.” They did decline 12.1% in 2009 compared to 2008; the question is, will we make it back up in May?
Let’s play what-if and say we are off 12.1% for May and June -- not necessarily a worst-case scenario, but certainly a bad situation. That would put GF receipts for the year ending June 30 at $8368 million, compared to $8664 for the year before. A drop, yes, but not a billion-dollar drop. (A 3.4% drop for the year, for those keeping score at home.)
The Road Fund, on the other hand, has been running behind all year. Through April, it’s 6.5% behind last year (984 to 1053). If that pace continues, it will end the year about 82 million behind last year. Here's a cumulative graph for the Road Fund.
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So, just based on GF and RF receipts — if the road fund continues running behind at its current pace, AND the general fund has two more -12% months, then we’ve got a drop from last year of about $378 million in revenue. Here's the spreadsheet with the numbers, and the projections I've mentioned:
I’ve not compared actual revenue to budgeted, nor have I dug into budgeted expenditures. So, there may very well be numbers I haven’t found yet. But the bottom line of what I’ve seen so far is: I can’t find a billion dollar shortfall. Not yet, anyway.
Any one out there got an explanation, or even better, a spreadsheet?
Policy and Politics | tagged Budget, Kentucky, Research 
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Reader Comments (2)
And just a quick follow-up note:
Nothing in this story should lead the reader to believe that (a) I don't think the state government needs more money, or (b) I think something fishy is going on with the announced shortfall.
(B) first -- as noted in the story, I would like for someone who knows to explain where the "$1 billion" came from. I can't find it, but that doesn't mean it's not there. Of course, if it indeed ISN'T there, then someone needs to explain that, too.
As for (A) -- I have long advocated for an overhaul of our tax structure. We need to tax services, we need to make sure corporations pay their fair share and don't get around being taxed by the way they use their corporate structure, and we need to do a better job of both raising and managing our money.
Good work, Bruce. You are doing what Gov Beshear should be doing with the far greater resources he has at his disposal. He needs to explain to the people of Ky first that we are in a financial mess and then how we got into this mess.
One good way to explain the problem is to draft two budgets (ncluding any proposed tax changes): the first is the one the Gov proposes and a second is based on what will happen if no changes are made. David Williams and the R's will always claim more and more cuts can be made. The Gov needs to call their hand. Make them show the cuts they say can be made but were not made under the Fletcher Adm.
The Gov also needs to show the effect all the tax breaks are having. A report at the end of Gov Patton's adm shows that in 12 years Ky enacted over $600M in tax breaks.
A big part of the problem is the expenses particularly when compared to income. In raw $s unadjusted for inflation both the General Fund and the Road Fund receipts this FY 09 will be slightly less than FY 06. Expenses have gone up every years unless, for starters, all the Commonwealth employees want to reduce their pay to what it was 3 years ago. Any takers?
Also, there was some rainy day fund or the like I read about which was transferred from next FY (09-10) to this FY (08-09).
So, Gov Beshear and Sen Williams, start 'splainin'.