FRANKFORT — The state will see moderate growth in revenues over the next two years, according to the group of outside economists who develop the projections, but not quite as much as they’d hoped when they last looked at the numbers in October.
The Consensus Forecasting Group – independent economists who advise the General Assembly on expected revenues before each budget cycle – said Thursday it expects the state General Fund to grow by 2.6 percent in each of the next two years.
That works out to about $246.2 million more next year than what is budgeted for the current year, which ends on June 30, 2014, and about $252.3 million more the following year.
That assumes total revenues for the General Fund of $9.79 billion next year and $10.04 billion in fiscal year 2016.
But the growth isn’t expected to keep up with demands, according to the governor’s budget office. Lawmakers have committed to putting at least $100 million new dollars into the employee pension fund while the teachers’ pension fund is looking for $400 million more next year. On top of that, the current budget was balanced by using some non-recurring funds which will also have to be replaced with new money in the next two-year budget. Medicaid costs are also expected to grow.
Lawmakers convene on Jan. 7 for the biennial exercise in crafting a state spending plan for the following two years, and they do so after having cut out $1.6 billion from the budget in the past six. That’s left public schools, universities and nearly every cabinet, state agency and department asking for more money next year.
Gov. Steve Beshear said earlier this week he wants to boost funding for education which has remained flat for five years as well.
Some of the revenue growth is attributable to tax changes made in the last session of the legislature rather than economic growth – about $100 million of the new revenue comes from those changes.