State’s financial picture looking rosier but there’s concern about revenue from coal severance tax

July 26, 2012 | | Comments 0

By Jack Brammer

FRANKFORT – State budget director Mary Lassiter had “good news to share” Thursday with legislators about Kentucky’s improving financial picture but she expressed concerns about less money than expected from coal severance tax receipts.

Lassiter told members of the legislature’s interim budget committee that the state ended fiscal year 2012 on June 30 with a 3.8 percent increase in revenue for the General Fund that pays for most state programs.

That marked the second consecutive year Kentucky has closed a fiscal year with revenue growth after two years of decline, she said.

The growth for 2011 was 6.5 percent. In the two previous fiscal years, Kentucky lost revenue – a 2.4 percent drop in 2010 and a 2.7 percent decline in 2009.

General Fund receipts for the recently ended fiscal year exceeded official estimates by $83.3 million, giving the state a surplus of $45.7 million. The General Fund revenues for the last fiscal year were $9.09 billion, or $331.5 million than in fiscal year 2011.

The surplus, Lassiter said, will be put in a budget reserve trust fund for necessary government expenses like natural disasters.

Lassister attributed the revenue growth for the last fiscal year to a 24.5 percent increase in receipts from corporation income taxes, a 5.4 percent increase in sales tax receipts and a 2.8 percent increase in receipts from the individual income tax.

But the state was expecting $326.7 million from coal severance tax receipts and took in $298.3 million, a difference of $28.4 million, Lassiter said.

Greg Harkenrider, deputy executive director of the Governor’s Office of Economic Analyis, told state lawmakers that coal severance receipts “have been on my watch list since December.”

He noted that coal sales have been down, while natural gas sales across the country are on the upswing.

The state budget officials had better news for the state Road Fund, which showed a 7.8 percent growth in fiscal year 2012.

The state had estimated that the fund would grow by $1.412 billion, but it actually took in more than $31 million expected. It is primarily funded by motor fuels tax at the pumps and motor vehicle usage tax on car sales.

Filed Under: KY General AssemblyState BudgetState GovernmentSteve Beshear

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