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Kentucky faces revenue shortfall in General and Road Funds

By Jack Brammer

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


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

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

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

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.

State General Fund dips 3.5 percent in December; Road Fund shows 4.2 percent gain

By Jack Brammer

FRANKFORT – Kentucky’s General Fund took in 3.5 percent less money last month than it did in December 2012, a decrease of $33.2 million, the state budget director’s office said Friday.

Total revenues for the month were $912.6 million, compared to $945.8 million in December 2012.

General Fund receipts have increased 1.2 percent for the first six months of the fiscal year that ends June 30. The official revenue forecast for this fiscal year is 2.1 percent growth.

Revenues would need to grow 3.1 percent for the last six months of this fiscal year to meet that estimate.

State budget director Jane C. Driskell said the December 2013 decline was not all that weak.

“December 2012 collections contained approximately $25 million in amnesty money that created an artificial headwind to overcome this year,” she said. “Additionally, property tax collections are subject to timing and large month-to-month variations.

“Taken together, these events created a nearly $45 million hole which the remaining tax collections could not overcome. We will continue to monitor receipts and are optimistic we can meet the revenue estimates.”

Meanwhile, receipts for the state Road Fund increased 4.2 percent with collections of $121.1 million.

Official Road Fund estimates call for an increase in revenues of 6.1 percent for the fiscal year.

Based on year-to-date growth of 7 percent, revenues need to increase 5.2 percent for the next six months to meet the estimate.

Driskell noted that even though Road Fund collections are ahead of pace to meet the official estimate, “receipts will slow down in the second half of the year” because the tax rate on motor fuels will decline 1.5 cents per gallon from January through March due to reductions in wholesale fuels prices.

Beshear: State budget proposal won’t rely on tax changes or gambling revenue

Gov. Steve BeshearBy Jack Brammer and John Cheves

FRANKFORT — Gov. Steve Beshear said Tuesday that he’ll present a two-year budget plan to lawmakers next month that will not assume any changes in the state’s tax code or the legalization of casino gambling, though he’ll push for both of those initiatives.

Beshear also said he’s “determined that we’re going to find a way” to restore some of the funding K-12 schools lost during multiple rounds of state budget cuts since the 2008 recession.

The Kentucky Department of Education plans to lobby for an extra $336 million in the next two-year budget to return local school districts to pre-recession funding levels. Roughly half would go to the SEEK formula, the state’s primary per-pupil funding source, and the rest would assist districts with teacher training, technology, textbooks and other items.

How much of that $336 million the schools will get has yet to be determined, Beshear told reporters at a year’s end news conference in his Capitol office.

“If we’re going to be able to reinvest in education at all, it’s going to require some cuts in other agencies,” the governor said.

“I’m determined that someway, somehow, we’re not going to fall backward,” Beshear said. “Our education community has done an amazing job … in continuing to move this state forward with little to no money, we’ve not given them many tools with which to do their jobs, but they’ve done it anyway.”

State revenue drops in October for General Fund and Road Fund

By Jack Brammer

FRANKFORT –Revenue for the state’s General Fund, which pays for most state programs, dipped slightly in October while receipts for the Road Fund showed a bigger drop.

State budget director Jane Driskell said Tuesday that October’s General Fund receipts fell 0.4 percent compared to October 2012 collections.

Total revenues for the month were $772.5 million, compared to $725.5 million last October.

Receipts have increased 2.4 percent for the first four months of this fiscal year, which began July 1. They need to grow 1.6 percent over the final eight months of fiscal year 2014 to realize the official revenue estimate for the year of $9.52 billion.

Driskell said major revenue accounts continue to perform well, especially the sales and use tax. It increased at a 5.3 percent pace in October and has grown 3 percent through the first four months of this fiscal year.

“Despite the small decline in aggregate General Fund revenues in October, the major accounts performed well and revenues are slightly ahead of pace to meet the budgeted total,” Driskell said.

Beshear touts state’s Medicaid managed care system

Gov. Steve Beshear

By Jack Brammer

FRANKFORT — Six months after unveiling a plan to quickly resolve payment disputes between medical providers and Medicaid managed care companies, Gov. Steve Beshear said the program is working.

“In both health outcomes and financial savings, Medicaid managed care is succeeding in Kentucky,” Beshear said Thursday at a Capitol news briefing.

In April, Beshear vetoed a bill designed to help hospitals and doctors receive prompt payment from three Medicaid managed care companies, saying it could have unintended consequences. The proposed law had the backing of many in the medical community but the legislature did not have time to consider overriding the veto.

Instead, Beshear implemented his own plan to address complaints by health providers. As a result, complaints are down, more payments are processed quickly and health outcomes continue to improve, said the Democratic governor.

Mike Rust, president of the Kentucky Hospital Association, was not immediately available for comment.
Beshear noted that next month marks the two-year anniversary of managed care in most parts of Kentucky, a practice now used in 47 states.

State General and Road Funds show ‘encouraging’ gains in August

By Jack Brammer

FRANKFORT — Kentucky had a good month financially in August.

State budget director Jane C. Driskell reported Tuesday that receipts for the General Fund, which pays for most state programs, increased 3.8 percent in August compared to the same month last year.

Total revenue for the month was $663.7 million, compared to $639.1 million during August 2012.

General Fund receipts have increased 2.9 percent so far this fiscal year, which began July 1.

The official revenue estimate for this fiscal year calls for revenue to increase 1.9 percent compared to last year’s receipts. Based on August results, General Fund revenue needs to grow 1.7 percent for the rest of the fiscal year to meet the official estimate.

Sales tax collections grew by 5.8 percent in August, which Driskell said was “particularly encouraging” given declines last year.

“An increase in construction activity appears to have helped boost August collections,” she said.

Meanwhile, the state Road Fund, which pays for road projects, grew 8.3 percent in August with revenue of $141.3 million.

Road Fund revenue estimates call for a 5.1 percent increase in receipts for this fiscal year. Based on year-to-date collections, revenues must increase 5.1 percent for the rest of this fiscal year to meet the estimate.