The $456 Million Shortfall Prediction
In late 2008, as the financial crisis took hold, Governor Beshear asked the Consensus Forecasting Group (CFG) to return and predict the "worst case scenario" for revenues.
Remember, this was the prediction made in the budget:
| Forecast Revenues | ||
| 2008 | 2009 | 2010 |
| $8.633 | $8.824 | $9.096 |
| (in billions) | ||
Also recall that 2008 revenues actually reached $8.664 million.
The CFG created a new projection for FY 2009 that General Fund revenues would only total $8.430 billion, $394 million short of the original prediction and $234 million less than actual revenues in 2008.
Here is the first contradiction in the information we have available to us. The revenue prediction was reduced $394 million, yet it takes hold publically as a $456 million shortfall.
There are other contradictions between the information contained in the budget and the information publically presented as the shortfall is being created.
The budget includes mandated lapses, in other words a requirement that the executive branch not spend some amount of the appropriated money. The legislature is simultaneously telling the governor to spend $X, but also to avoid spending all of $X.
In a presentation to House and Senate A&R, the Governor's budget office details that executive appropriations are reduced $176 in 2009 and an additional $180 million in lapses are mandated. According to the budget, executive branch appropriations are reduced $119 million and $190 million in lapses are mandated for 2009. This is a $47 million total discrepancy between these "reduced spending" numbers.
We point this out not to confuse things, but to point out how little good information about the state's budget is available to the public (and the need for real transparency in state spending). Since these numbers don't line up, let's use the original budget as our baseline.
If the new revenue forecast is $8.430 billion, then total resources for 2009 are reduced by $394 million:
| Total Resources | |
| 2008 | 2009 |
| $9.793 | $9.210 |
| (in billions) | |
Remember that total spending for 2009 was $9.331 billion, with a $285 million reserve after the 2008 surplus was added, a total budget of $9.616.
The difference of $9.616 billion budgeted and $9.210 billion in resources is a shortfall of $406 million.
If the shortfall would be more than $406 million, it would not be because revenues were short of the original prediction, it would have to be because spending increased.
