It may not have drawn much attention outside of the Capitol, but work on next year’s state budget formally got underway last Friday, when the Consensus Forecasting Group finalized how much revenue it expects the state to have next fiscal year.
The group’s 10 economists sifted through pages of state and federal data to come up with their total, which now must be used by the governor and the General Assembly when enacting the next state spending plan.
In normal times, the group would just be gauging whether their projections are still on track, but these are not normal times. Because of COVID-19, legislators understandably just approved a one-year budget back in April, so we could have more information in hand before tackling the upcoming fiscal year.
While the pandemic has created havoc with some state revenues, the steep decline initially feared never materialized, thanks in large part to targeted budget cuts, a better-than-expected economy and the federal CARES Act that became law earlier this year.
For more than four months now, state budget officials have reported generally positive news. State revenues overall are up five percent, and sales tax receipts are up almost seven percent, a sign that consumer spending remains strong. Friday’s Consensus Forecasting Group report predicts that steady trend to continue, and it estimates the 2022 fiscal year will have 2.2 percent growth. This assumes no more federal stimulus packages, even though there are encouraging signs that a bipartisan deal is being worked out in Congress. If that occurs, there’s reason to believe Kentucky’s budget numbers will improve even more.
So far, we seem to be doing better than many other states. According to the Center on Budget and Policy Priorities, a nonpartisan research and policy group, Georgia’s government has cut spending by 10 percent; Maryland’s has slashed spending by more than $400 million; and Florida’s governor vetoed $1 billion in spending and told agencies to prepare for 8.5 percent further reductions this fiscal year.
Nationally, charts used by the Consensus Forecasting Group indicate that the 15 million jobs the country has lost since March should be back at that level at some point in 2022. It will take a lot longer, though, for manufacturing to get back to pre-pandemic levels, and that also holds true for Kentucky as well.
It is critical to note that recovery is far from even. Many businesses, especially restaurants and others that have shuttered their doors, are still bearing a sizable burden because of public-health measures, and jobless numbers in many communities are still high. If Congress doesn’t act by the end of the year, hundreds of thousands of Kentuckians will exhaust unemployment insurance benefits and lose protections tied to housing and student loan repayment. This, on top of record numbers of COVID infections and deaths, points to a tough winter ahead, even as the first doses of a viable vaccine arrive this month.
My hope is that we can find ways to hold on and keep ourselves safe until this pandemic is behind us. It won’t be easy, but it is a challenge we are equipped to handle.
I want to thank you for your part in this collective effort, and I hope you and your family are able to stay safe through the holidays and beyond. Don’t hesitate to let me know if there is any way I can help. My email is joe.graviss@lrc.ky.gov, or use the toll-free message line at 800-372-7181. The line is open during normal business hours each weekday.
Thanks for all you do and holler anytime.
Joe Graviss
56th District Representative
Kentucky House of Representatives
P.O. Box 1002
Versailles, KY 40383
859-433-4392