On the same day the stock market dropped 512 points, the Consensus Forecasting Group – a group of economists that help state lawmakers write the budget – predicted Kentucky will have a $192 million surplus for fiscal year (FY) 2012, which ends June 30. On Thursday, the group said the state’s economy is still showing signs of recovery despite relatively high unemployment figures. Business taxes – including corporate income, limited liability entity, and coal severance taxes – have rapidly recovered since the recession began, significantly contributing to the state’s $166 million surplus in FY11. Revenue growth has continued into this fiscal year, with last month marking the 15th consecutive monthly growth increase.
The group also discussed Congress’ recent debate on the debt ceiling, acknowledging the political wrangling that nearly led the country to default makes revenue forecasting more difficult. The economists said spending cuts will result in less dollars coming to Kentucky, but it’s too early to predict the impact on Kentucky’s economy. Global economic instability is also a concern, though economists were encouraged that most of Kentucky’s trade partners are fiscally sound.
For more on Thursday’s meeting, click here.