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Big dip in KY’s gasoline tax means less money for road projects

Transportation Secretary Mike HancockBy Jack Brammer
jbrammer@herald-leader.com

FRANKFORT — Kentucky motorists will pay less taxes for gas starting New Year’s Day, but the change will mean fewer road improvements, state officials warned Wednesday.

Kentucky’s tax on sales of gasoline, diesel and ethanol motor fuels will drop by 4.3 cents per gallon on Jan. 1, resulting in a loss to the Kentucky Road Fund of about $129 million on an annualized basis, according to the state Transportation Cabinet.

Kentucky’s gas tax fluctuates with the average wholesale price of gas, which has dropped in recent months.

“The gas tax accounts for more than half of the revenue in the Kentucky Road Fund,” state Transportation Secretary Mike Hancock said in a news release. “A loss of revenue is always concerning, but a revenue impact of this magnitude is crippling. It means less money for building, improving, maintaining and repairing our roads, streets and bridges.”

A loss of $129 million would amount to about 6 percent of Kentucky’s highway funding, which was forecast to collect $2.25 billion in the current fiscal year from all revenue sources, including state and federal motor-fuels taxes and a state usage tax on motor vehicles.

State revenue receipts show gain in October

By Jack Brammer
jbrammer@herald-leader.com

FRANKFORT — After four months of anemic growth, Kentucky’s General Fund revenue increased 4.6 percent in October compared to a year ago, State Budget Director Jane Driskell announced Monday.

Total revenue for the month was $755.7 million, compared to $722.5 million during October 2013.

Receipts have increased 1.9 percent for the first four months of the fiscal year, and need to grow 4.4 percent over the final eight months of this month to achieve the official revenue estimate of $9.8 million.

There is cause for concern but “no reason at this point to panic,” said Gov. Steve Beshear. “We will just be carefully monitoring the situation.”

The General Fund, which pays for most state programs, had a solid month after a first quarter in which receipts grew only 1.1 percent, Driskell said.

“October was clearly a strong month of revenue growth as nominal collections grew $33.2 million, an amount higher than the nominal growth in the entire first quarter of fiscal year 2015,” she said.

The main contributions to the healthy growth in October were the individual income tax and sales taxes, which grew 4.8 percent and 6.3 percent, respectively, while corporate and property receipts continued to underperform.

Road Fund receipts for October totaled $126.7 million, a 0.3 percent decrease. They can decline 2 percent over the next eight months and still meet the official yearly estimate of $1.54 billion.

Read more here: http://www.kentucky.com/2014/11/10/3531403/state-revenue-perks-up-in-october.html?sp=/99/322/&ihp=1#storylink=cpy

Motor vehicle usage tax receipts fell 4.3 percent for the month and have declined 1.4 percent so far this year. Motor fuels taxes increased 0.8 percent in October and have grown 1.4 percent for the year.

Driskell said October’s Road Fund performance is not unexpected.

“Road Fund collections continue to be weak, as we anticipated. Growth in motor fuels tax collections is limited by a decline in demand,” she said.

“Motor vehicle usage tax receipts have been hampered by the impact of recent legislation which provides for a new car trade-in. It is anticipated that the credit will reduce collections by $34 million in the current fiscal year.”

Cha-Ching! State begins new fiscal year on positive note

By Jack Brammer

jbrammer@herald-leader.com

FRANKFORT — Kentucky’s new fiscal year is getting off to a positive start.

State budget director Jane Driskell reported Monday that Kentucky’s General Fund, which pays for most programs, saw its receipts total $705.9 million in July, a 2.2 percent increase over the same month last year.

July was the first month of the state’s new 2015 fiscal year.

When the last fiscal year ended June 30, Democratic Gov. Steve Beshear had to plug a $91 million shortfall in the state’s $9.5 billion budget after a year of sluggish collections on state income taxes.

He did that by dipping into budget accounts of several state agencies, taking $21.2 million from the state’s $98.2 million” rainy day” or emergency fund and cutting $3 million in state spending.

Driskell said the General Fund growth of 2.2 percent in July is “a positive sign – especially since our two largest taxes – individual income and sales tax – grew at robust levels of 5.9 percent and 7.6 percent, respectively.

“Our expectations are that the underlying economic momentum continues to build.”

The official revenue estimate for fiscal year 2015 calls for revenue to increase 3.6 percent compared to last year’s actual receipts.

Based on July’s results, General Fund revenues need to increase 3.7 percent for the remainder of the fiscal year to meet the official estimate.

Among the state’s major accounts in July, individual income tax receipts rose 5.9 percent, sales tax revenue grew 7.6 percent, cigarette tax collections rose 2.3 percent and the payment to the state from the lottery increased by 3.1 percent.

But corporation income tax collections fell 64.6 percent. The state attributed that to a large one-time payment received in July 2013.

In July 2014, coal severance tax revenues declined 14.8 percent and property tax receipts fell 45 percent. Driskell noted that a small share of property tax receipts is received in July.

Driskell also announced that Road Fund revenues for July totaled $125.4 million, an increase of 5.1 percent compared to last July.

“Growth in the important Road Fund accounts was small but positive in July,” she said. “That is good news given that the forecast for fiscal year 2015 has Road Fund receipts declining slightly.”

For July, motor fuels tax receipts rose 2.8 percent, motor vehicle usage tax jumped 1.4 percent and license and privilege taxes grew 36.3 percent. Non-tax receipts dropped 30.9 percent.

The official revenue estimate for this new fiscal year calls for revenues to decline 0.9 percent compared to last year’s actual receipts.

Based on July’s receipts, revenue can fall 1.4 percent for the rest of the fiscal year and still meet budgeted levels.

No ‘Comment’ this weekend; ‘KY Tonight’ will discuss state budget

“Comment on Kentucky,” a public-affairs show of the Kentucky Educational Television network, will be preempted this weekend because of the Fourth of July.

On the Monday, July 7, edition of “Kentucky Tonight” at 8 p.m. on KET and at KET.org/live, host Bill Goodman and guests will discuss the state budget and tax reform.

Scheduled guests are state Rep. Rick Rand, D-Bedford, chair of the House Appropriations and Revenue Committee; state Sen. David Givens, R-Greensburg, vice chair of the Senate Appropriations and Revenue Committee; Jason Bailey, director of the Kentucky Center for Economic Policy; and Bryan Sunderland, senior vice president of public affairs for the Kentucky Chamber of Commerce

Viewers with questions and comments may send e-mail to kytonight@ket.org or use the message form at KET.org/kytonight. Viewers may also submit questions on Twitter @BillKET or on KET’s Facebook page, facebook.com/KET. All messages should include first and last name and town or county. The phone number for viewer calls during the program is 1-800-494-7605.

“Kentucky Tonight” programs are archived online, made available via podcast, and rebroadcast on KET and KET KY. Archived programs, information about podcasts, and broadcast schedules are available at KET.org/kytonight.

“Kentucky Tonight” is a weekly KET production, produced by Deidre Clark. Bill Goodman is host and managing editor.

–Jack Brammer

State expects $57 million net gain over three years from tobacco settlement



By Jack Brammer

jbrammer@herald-leader.com

FRANKFORT — Kentucky will reap an extra $57.2 million over the next three years from settling litigation involving the 1998 Master Settlement Agreement between states and tobacco companies, Gov. Steve Beshear and Attorney General Jack Conway announced Thursday.

In a joint news conference in the Capitol, Beshear said the end of the legal dispute between 23 states, including Kentucky, and tobacco manufacturers over 10 years of disputed claims and litigation is “a victory not only for Kentucky farmers, but also for critical health care and childhood services.”

Conway said the settlement his office worked on “restores certainty to Kentucky’s annual payments” from the 1998 agreement.

“Under the terms of the settlement, we avoid the possibility of costly litigation and the potential loss of the entire annual Master Settlement Agreement payment.”

Money from the settlement agreement already is designated for farm projects and health issues like lung cancer research.

Beshear acknowledged that the extra money for the state will not have an impact on a budget shortfall Kentucky expected at the end of this fiscal year on June 30.

Kentucky faces revenue shortfall in General and Road Funds

By Jack Brammer
jbrammer@herald-leader.com

FRANKFORT — State government is raking in less tax revenue than expected, making a budget shortfall for the fiscal year that ends June 30 “inevitable,” state budget director Jane Driskell warned Tuesday.

Driskell said the state’s General Fund which pays for most state programs, and the Road Fund, which pays for road work, would fall short of expectations. She said the magnitude of the shortfall will not be known until early July, but that it would be “significantly larger” than $28 million.

“We are preparing for the year-end close out, directing state agencies to closely monitor all activities and reviewing all potential options to address the shortfall;” she said.

Driskell reported Tuesday that May’s receipts for the General Fund fell 2.1 percent compared to May 2013. Total revenue for the month was $777.3 million, compared to $793.9 million during May 2013.

General Fund receipts grew 1.1 percent during the first eleven months of the fiscal year, but the enacted budget calls for 2.2 percent revenue growth for the entire fiscal year.

To meet the official revenue estimate, receipts must increase 11.7 percent over the final month of the fiscal year.

Tax receipts jump in March for state General Fund and Road Fund

HERALD-LEADER FRANKFORT BUREAU

FRANKFORT — Revenue for the state’s General Fund, which pays for most state programs, and the Road Fund showed growth in March, the state budget director’s office reported Thursday.

Receipts for the General Fund in March increased 2.4 percent compared to March of last year, an increase of $17.7 million. Total revenues for the month were $753.5 million, compared to $735.8 million in March 2013.

Receipts have grown 1.5 percent for the first nine months of fiscal year 2014, which began last July 1.

The official revenue estimate calls for 2.1 percent revenue growth for the entire fiscal year, which ends June 30. To meet the estimate, receipts must grow 3.9 percent over the last three months of this fiscal year.

State budget director Jane Driskell noted that General Fund revenues have rebounded in recent months.

“After growing 3.3 percent in the first quarter of the fiscal year, General Fund receipts declined 0.7 percent in the second quarter and increased 2.1 percent in the third quarter,” Driskell said. “We remain confident that the official estimate is within reach but revenues in excess of the official projection are becoming less likel.”

For March, sales and use tax receipts increased 5.6 percent and have grown 3.1 percent year-to-date.

Corporation income tax receipts grew 49.1 percent and have increased 17.8 percent for the year.

Individual income tax collections grew 2.7 percent in March, while property tax collections decreased 4.9 percent and cigarette tax receipts fell 2.9 percent.

Coal severance tax receipts declined 7 percent in March and have decreased 14.9 percent through the first nine months of this fiscal year.

Road Fund receipts jumped 19.9 percent in March with collections of $137.1 million. That is $22.8 million more than last March.

The official Road Fund revenue estimate calls for an increase in revenues of 6.1 percent for the fiscal year. Based on year-to-date tax collections, revenues must increase 2.7 percent for the remainder of this fiscal year to meet the estimate.

–Jack Brammer

Lawmakers strike deal on state budget, but Rupp Arena out of luck

State Sen. Robert Stivers, R-Manchester

By John Cheves
Jcheves@herald-leader.com

FRANKFORT — Top Kentucky lawmakers emerged from a closed room about 5:30 a.m. Sunday to announce they had reached a deal on a $20.3 billion, two-year state budget that does not provide major money for a proposed renovation of Rupp Arena.

“I think it’s responsible. It makes a pretty significant and strong statement toward education,” Senate President Robert Stivers, R-Manchester, told reporters after the conclusion of an 18-hour negotiating session between House and Senate leaders.

One high-profile casualty was the $65 million in bonds Gov. Steve Beshear proposed in January for the renovation of Rupp Arena and the attached convention center in Lexington. Instead, the state budget will include “a small sum,” to be matched with local funds, so Lexington can move ahead with more planning, engineering and programming on the project, Stivers said.

If Lexington publicly produces a formal financing plan for the Rupp Arena renovation and a signed lease agreement with the University of Kentucky, which uses the venue for its men’s basketball games, then it can return for more money in the 2015 legislative session, Stivers said.

“There are mechanisms in place for it to go forward,” Stivers said.

greg-stumbo-3Some lawmakers on the budget conference committee said they were unimpressed by a personal appeal Lexington Mayor Jim Gray made for Rupp Arena funding on Saturday. Gray said UK has not yet signed a future lease deal for the arena, and he said he could not publicly disclose the proposed terms of UK’s next lease or his own plan to pay for the renovation project.

State Rep. Kelly Flood, D-Lexington, said she believes Gray did the best he could Saturday fielding queries from lawmakers.

“There are some very good questions about the plan that right now the mayor simply cannot answer,” Flood said Sunday afternoon. “I sense right now that the Senate really does want to keep the project moving forward, but they want more assurances about how the financing would work. If he (Gray) can come back, even in our next session (in 2015), having rolled out a formal financial plan, there could be some more help then. I don’t think it would have to wait until our next budget in 2016.”

Gray had not seen details of the budget agreement as of early Sunday afternoon, said spokeswoman Susan Straub.

“We need to see it and make sure we understand it before we comment on it,” Straub said.

Gray also has asked lawmakers to let Lexington raise its hotel and motel tax from 6 percent to 8.5 percent, which would yield about $3.5 million a year for the $328 million reinvention of Rupp. That proposal, which is not part of the state budget, appears to face an uphill battle in the Senate during the final days of this year’s legislative session.

House and Senate leaders, who spent the night cloistered in a committee room of the Capitol Annex, reached a consenusus on hundreds of differences in their proposed budgets. Most were relatively minor, but some involved huge sums of money or made significant changes to state policy, including:

KCTCS campus presidents tout Beshear’s use of bonds to upgrade facilities

By Jack Brammer
jbrammer@herald-leader.com

FRANKFORT –Presidents of the 16 campuses of the Kentucky Community and Technical College System said Monday they can raise money from their communities and other public and private sources to help pay for agency bonds to provide campus improvements.

The KCTCS campus presidents appeared with Gov. Steve Beshear and KCTCS President Michael McCall at a Capitol news conference Monday to tout Beshear’s budget proposal to issue $145.5 million in agency bonds to KCTCS to provide infrastructure at each campus that Beshear said is “desperately needed.”

Beshear said the bonds will be supported by KCTCS revenues. The bonds will be used to fund up to 75 percent of the projects. At least 25 percent of the remaining cost will come from local communities and other public and private sources.

McCall said students will have to pay an $8-a-credit-hour fee to pay for the bonds. He said that may be $4-an-hour in the fall semester this year and might be in addition to a tuition increase.
The KCTCS system now has more than 92,000 students.

Stivers calls debt in Beshear’s budget ‘large’

Senate President Robert Stivers, R-Manchester

By Jack Brammer
jbrammer@herald-leader.com

FRANKFORT –Senate President Robert Stivers on Thursday described the debt in Gov. Steve Beshear’s two-year budget plan as “large.”

Stivers, R-Manchester, was quick to say Senate Republican leaders have not yet decided how to respond to Beshear’s budget because they still are analyzing it.

Stivers also noted that action on Beshear’s budget will begin in the House. The House version of the budget then will go to the Senate for its consideration. Both chambers must agree on a compromise budget before it can take effect.