Budget Numbers on the Eve of Tax Hike Week
According to this report, the January revenue numbers are in, and they increase the likelihood that we will never reach a $456 $459 million shortfall.
As you may recall, Kentucky was frozen for a substantial portion of January. And that is reflected in the 4% year-on-year decline in general fund revenues for January. We saw the effect of the cold reflected, for example, in national numbers where inventories rose slightly in January after months of decline (which is the natural economic result of the deflation we have probably been feeling for months...).
This is not to say there would not have been a decline, only that the freeze froze commerce to a significant degree, which was reflected in revenue numbers. One only need look at the thaw this weekend when people were shopping like Christmas to have a sense of the truth here. But my superficial economic analysis digresses from the legitimate points to be made...
General fund revenues were down 4% in January, leaving revenues up 1.1% on the year. There are only five months left in the fiscal year. In order for Kentucky to meet the prediction of a $459 million shortfall, revenues must end up down 2.7%, not up 1.1%.
Last time we checked on the numbers, we noted that "the state must average a 7.5% reduction in revenues over the last half of the year." Now, the number required to meet the projection is to average 9.1% lower revenues over the last five months.
Let's say January is a precursor and state revenues remain down 4% for the next five months. That would leave the state with a $277 million shortfall, only 60% of the prediction.
As you may recall, Kentucky was frozen for a substantial portion of January. And that is reflected in the 4% year-on-year decline in general fund revenues for January. We saw the effect of the cold reflected, for example, in national numbers where inventories rose slightly in January after months of decline (which is the natural economic result of the deflation we have probably been feeling for months...).
This is not to say there would not have been a decline, only that the freeze froze commerce to a significant degree, which was reflected in revenue numbers. One only need look at the thaw this weekend when people were shopping like Christmas to have a sense of the truth here. But my superficial economic analysis digresses from the legitimate points to be made...
General fund revenues were down 4% in January, leaving revenues up 1.1% on the year. There are only five months left in the fiscal year. In order for Kentucky to meet the prediction of a $459 million shortfall, revenues must end up down 2.7%, not up 1.1%.
Last time we checked on the numbers, we noted that "the state must average a 7.5% reduction in revenues over the last half of the year." Now, the number required to meet the projection is to average 9.1% lower revenues over the last five months.
Let's say January is a precursor and state revenues remain down 4% for the next five months. That would leave the state with a $277 million shortfall, only 60% of the prediction.
