The shortfall and the stimulus

A possible billion dollar budget shortfall is, of course, disturbing news.

As a very small limit on how bad it is, the billion-dollar estimate is based on the state budget before the tax increases and spending cuts made in recent months. When those efforts are factored in, the gap should be at least a little smaller.

The fiscal stabilization part of the stimulus bill may limit the education impact in two ways.

First, states must maintain at least their 2006 level of P-12 and postsecondary funding. That may limit the education share of Kentucky cuts.

Second, $532 million of the stabilization money must come to education over the two years. that means that if P-12 and postsecondary are cut below the 2008 level, that federal money will flow in to replace what's taken away.

I'd much rather have that money go to add new strength to education, but if the revenue gap is indeed as big as the recent projection, it may have to go just to limit the losses. (More on how the fiscal stabilization works here.)