State expected to see little revenue growth in coming years, shortfall expected in 2018
Kentucky is expected to see some growth in revenues in the coming years under a pessimistic forecasting model adopted by economists Friday.
The Consensus Forecasting Group chose the most pessimistic of the three options they were presented at the meeting Friday, citing the difficultly predicting potential changes on federal taxes in Congress, especially on corporate income taxes.
The pessimistic forecast projects that based on the state’s current tax code, Kentucky will see revenue growth of 1.8% in 2018, 2.7% in 2019 and 2.9% in 2020. That growth levels out at 2.5% in the two years that follow.
However, because the group decided to go with the pessimistic model, the state will face a $206.2 million shortfall this fiscal year based on those numbers. The group had originally estimated 2.4% growth for 2018.
Among the areas of revenue discussed at the meeting, it was stated that Kentucky’s wages and salaries are expected to grow, while coal severance and cigarette taxes continue to decline steadily.
As for the state’s Road Fund, the Consensus Forecasting Group chose to go with the “control” model for projecting revenue rather than the optimistic or pessimistic forecasts. The declining revenue in fuel sales was discussed by the group as well as the concern over a growing number of vehicles not using fuel, but many did not feel that number would grow to a point of concern over the next two years.