Kentucky could be looking at another budget surplus for the current fiscal year, based on preliminary revenue estimates.
The Consensus Forecasting Group (CFG) met yesterday morning to update its estimates from an August meeting with new preliminary numbers. CFG noted that General Fund revenues – which form the basis of state funds for expenditures like education, pensions, and government programs – grew by 12 percent in the first quarter of Fiscal Year 2022. With revenues from a recent legal settlement incorporated, first quarter revenues grew by a total of 20 percent.
CFG’s preliminary estimates showed a projected total general fund surplus of more than $1.5 billion for the current fiscal year.
In July, state officials announced that Fiscal Year 2021 ended with a $1.1 billion surplus. Those dollars were sent to the Budget Reserve Fund, which currently sits at close to $2 billion.
The estimates for the current fiscal year are preliminary and could change based on a variety of economic factors. So far in Fiscal Year 2021, only three months of revenue have been reported. CFG also received an update on the state and national economic outlook, which highlighted how factors such as inflation, supply chain disruptions, federal legislation, and labor force trends could impact state revenues. Labor force trends could be especially important for Kentucky’s economic future. The Kentucky Chamber Foundation recently released a report on the Commonwealth’s workforce challenges, which can be viewed here. CFG will offer official state revenue estimates in December.
CFG also offered estimates on the state’s road fund. Modest growth in road fund revenues is anticipated for Fiscal Year 2022, while negative growth is projected for fiscal years 2023 and 2024.
Materials from yesterday’s meeting can be accessed here.