Calamitous Predictions for Kentucky's Finances
There's alot of disaster-talk going on in discussions about the future of Kentucky's state budget.
Yesterday, at the first meeting of the Consensus Forecasting Group, Greg Harkenrider discussed the long impact of decreased employment in Kentucky. Seeming to concentrate on national statistics, WTVQ reported:
The panel was told that personal income won't start its rebound in Kentucky until this coming fiscal year and employment won't begin a turn around until 2011. Harkenrider says employment "has been hammered" and improvement will lag behind the country's recovery from a recession.
We've shown you that, for a shortfall prediction of anything more than $500 million, three things will have to be true:
Revenues for FY 2009 will have to meet the CFG prediction over the next two months, despite currently being on track to come out ahead,
Revenues for FY 2010 will have to be lower than FY 2009, a two-year decrease that has not happened in Kentucky in at least the last 25 years,
andGovernor Beshear will have to have increased spending above the amount appropriated in 2008.
Harkenrider contends that consumption, which has been steady throughout this economically turbulent time will not translate into increased production and employment because inventories have been stockpiling. Maybe. But that still doesn't really suggest that employment will do anything other than level off as we shift into recovery...
Regardless of predictions, we can be assured that Governor Beshear will use them to justify greater spending on the part of government.
Once again, we have Senate President David Williams saying that any shortfall should be addressed through reduced spending and promising to hold the line against tax increases:
"For those bloggers who are here who want to see a battle over taxation and spending, you're about to see Armageddon," Williams said, generating one of the biggest rounds of applause of the night.
"We've given this governor as much money as he's going to get," he said. "He's going to have to manage his money and be responsible and tighten his belt the way every household in the commonwealth has done."
It seems we have the same discussion we were having one and a half years ago, just with more disaster. Let's hope for a real conversation about reducing spending responsibly and reforming taxes so that Kentucky is attractive to economic growth.
