Looking at Budget Possibilities for FY 2010
To look ahead to 2010, we need to make some assumptions
- The Governor did make a reduction in baseline spending by $147 million.
- The federal stimulus did not require any increase in baseline spending (a popular claim).
We also need to make a revenue forecast for FY 2010. We will not pretend to be economic sages.
The original forecast was an increase of 3.1% versus FY 2009. If FY 2009 revenues end up matching FY 2008 revenues, that would be a forecast for $8.933 billion in FY 2010. We'll call this the "high". For a "midpoint", we'll use $8.664, the 2008 revenue level that also happens to be approximately a 3% increase over the CFG forecast for FY 2009. For a "low" we'll use the CFG forecast for 2009 of $8.430 billion. To all of these estimates, we'll add the $159 million estimated revenues from the tax increases.
Now, let's look at the numbers from the original budget document with the adjustments and assumptions listed above. 2008 numbers are adjusted for final revenue numbers, the application of half the surplus to reserves and spending the other half of the surplus. That spending is considered a one-time expense and not added to future baselines.
2009 numbers are listed at the CFG forecast and the current trend of flat revenues. Both are adjusted for new revenues from the tax increases, and the spending is adjusted to reflect Beshear's $147 million reduction in baseline spending.
Finally we show how the various revenue scenarios for 2010 outlined above play out. For the "low" 2010 numbers, we'll assume the CFG estimate is met in 2009. For the "high" 2010 numbers, we'll assume the current trend for 2009. For the "midpoint" we'll run it both ways.
| Revenues | ||||||
| 2008 | CFG 2009 | Current 2009 | Low 2010 | Mid 2010 & CFG | Mid 2010 & Current | High 2010 |
| $8.664 | $8.482 | $8.716 | $8.589 | $8.823 | $8.823 | $9.092 |
| (in billions) | ||||||
| Reserves | ||||||
| 2008 | CFG 2009 | Current 2009 | Low 2010 | Mid 2010 & CFG | Mid 2010 & Current | High 2010 |
| $289 | $245 | $245 | $40 | $40 | $225 | $225 |
| (in millions) | ||||||
| Total Resources | ||||||
| 2008 | CFG 2009 | Current 2009 | Low 2010 | Mid 2010 & CFG | Mid 2010 & Current | High 2010 |
| $9.815 | $9.274 | $9.508 | $8.961 | $9.195 | $9.430* | $9.699* |
| *includes additional $50 million in carryover from FY2009 (in billions) | ||||||
| Executive Branch Appropriations | ||||||
| 2008 | CFG 2009 | Current 2009 | Low 2010 | Mid 2010 & CFG | Mid 2010 & Current | High 2010 |
| $9.143 | $8.865 | $8.865 | $9.120 | $9.120 | $9.120 | $9.120 |
| (in billions) | ||||||
| Total Appropriations | ||||||
| 2008 | CFG 2009 | Current 2009 | Low 2010 | Mid 2010 & CFG | Mid 2010 & Current | High 2010 |
| $9.469 | $9.184 | $9.184 | $9.472 | $9.472 | $9.472 | $9.472 |
| (in billions) | ||||||
| Reserves & Carry Over | ||||||
| 2008 | CFG 2009 | Current 2009 | Low 2010 | Mid 2010 & CFG | Mid 2010 & Current | High 2010 |
| $346 | $90 | $324* | ($511) | ($277) | ($42) | $227 |
| *$50 million more than expected in the budget (in millions) | ||||||
So there you have it.
Our worst case scenario -- in which the 2009 CFG forecast actually comes true and then 2010 revenues are flat as well:
A $511 million deficit.
A scenario in which the 2009 forecast comes true then FY 2010 recovers to FY 2008 levels:
A $277 million deficit.
A scenario where revenues are flat in 2009 and 2010:
A $42 million deficit.
A scenario where revenues are flat in 2009 and grow in 2010:
A $227 million surplus.
Anything else:
Someone has increased spending above the amounts listed in the 2008 budget.
Analysis next.
