Governor Ernie Fletcher’s Communications Office
Consensus Forecasting Group Predicts $401 Million in New Revenue
FRANKFORT, Ky. – State Budget Director Brad Cowgill today announced that the Consensus Forecasting Group (CFG) has revised its official revenue estimate for the current biennium, predicting that General Fund revenues will exceed the previous forecast by some $401 million.
“This is exceptionally good news for every Kentuckian,” said Governor Fletcher. “It means that, without raising taxes, our state government is on an even stronger financial footing than before, and will have the resources to address our urgent objectives.”
Cowgill said the new estimate confirmed the budget office’s expectations that revenues for FY07 will significantly exceed the CFG’s December 2005 estimate.
“At the end of Fiscal Year 2006, we observed that revenues were strong,” Cowgill said. “Then, at the end of the first quarter, we recognized that we were likely to have a revenue surplus this year,” referring to the budget office’s Quarterly Economic and Revenue Forecast, released in October, 2006.
The additional $401 million is expected to be received within the state’s current biennium. It represents the difference between the CFG’s new forecast for General Fund revenue and the prior “adjusted official forecast.”
Before today’s revision, the adjusted official forecast was based on revenue predictions adopted by the CFG in December, 2005, as adjusted to account for recent legislative changes, including the business tax cuts adopted in the Special Session of June, 2006.
The CFG’s revised estimate follows Cowgill’s recent announcement that General Fund receipts in December, 2006 reached $900.3 million, the highest one-month receipts in the history of the Commonwealth. The CFG forecast, however, provided additional information, showing that the revenue improvement is largely recurring.
Based on the CFG estimate, General Fund revenues for the current fiscal year will be $8.609 billion, which is $232 million more than the estimate rendered by the group in December 2005, as modified by actions of the 2006 Regular and Special Sessions of the Kentucky General Assembly. The estimate for FY08 is now $169.3 million above the previous estimate.
“We requested a new revenue forecast from the CFG in order to have a firm financial picture as we enter the next phase of this legislative session,” said Governor Fletcher.
The CFG also revised its outlook for the Road Fund, and as a result the official revised Road Fund estimate for the current fiscal year is $1.215 billion, and for FY08 the estimate is $1.289 billion. This represents a decrease of $23.6 million in FY07, but an increase of $26.9 million in FY08 when compared to the December 2005 estimate.