By Ronnie Ellis
CNHI News Service
FRANKFORT —
Kentucky’s budget director got some good news from July’s General Fund and Road Fund receipts which rose 4.6 and 13.1 percent, respectively.
But while Mary Lassiter is pleased, she pointed out that those comparisons are to last July when receipts declined in the general fund and the state continues to face fiscal challenges.
“When last July’s poor performance — a decline of 4 percent — is factored in, revenues are in line with what the Consensus Forecasting Group predicted,” Lassiter said. The CFG is a group of economists who estimate future state revenues for the administration and lawmakers. Their official forecast calls for an increase in Fiscal Year 2011 which began July 1 of 4.2 percent for the year compared to 2010 fiscal year receipts.
“Serious budgetary challenges still face the commonwealth,” Lassiter went on, “so starting the fiscal year on a strong note is a welcome sign and hopefully an indication that the economic recovery will continue.” Still, Lassiter said, state revenue receipts and collections have grown and strengthened over the past four quarters, indicating the economy is slowly emerging from recession.
General Fund receipts for July, the first month of fiscal year 2011, totaled $648.7 million. Road Fund revenues in July were $102.3 million, up 13.1 percent over July 2009, largely due to the increase in motor fuel taxes passed last year by the General Assembly. Those tax receipts rose 17.7 percent over the same time last year. Motor vehicle taxes increased 2.3 percent while license taxes are up 4.6 percent.
In the General Fund, individual income taxes grew 3.3 percent while sales tax revenues increased 8.1 percent. Greg Harkenrider, Deputy Executive of the Budget Office, said those two taxes are the ones to keep an eye on in evaluating the performance of the state economy as it struggles to emerge from the deep recession.
“Watch the individual income and sales taxes. The sales tax is the one we’re looking at,” Harkenrider said. He cautioned that the increases are comparisons to a period last year when the economy was in the tank but it still represents improvement. “It’s progress even though it’s a comparison to last year. But economic conditions are clearly better than a year ago.”
That doesn’t mean tough times are over, however, Lassiter said “serious budgetary challenges” still confront the state.
Corporation income taxes rose 25.2 percent. Property taxes, however, fell 9.8 percent in July compared to last year and cigarette taxes — which were also increased slightly at the same time as the fuel taxes — declined 5.6 percent.
Coal severance taxes increased by half a percent and lottery revenues grew by 3.6 percent.
Lassiter said the General Fund revenues must continue at a 4.2 percent rise for the remainder of the year to meet the official estimate on which the state budget is based.
Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/ cnhifrankfort. The Richmond Register is a CNHI newspaper.
