Wednesday, May 12, 2010

Current year revenue in trouble

Fiscal year 2010 was always expected to be painful, with less revenue than the year before.  2.7 percent less, according to the estimate offered in December 2009.

On the other hand, the idea was that we'd start the year with revenue still declining in the early months, getting close to past figures in the middle of the year, and then see gains in the spring.

Just last month, it looked like that was happening: March 2010 general fund revenue was 2.2 percent higher than March 2009.  That put us in a nice situation: we could make the revenue estimate for the rest of the year even if April, May, and June each had a little drop.  If those months showed even a little growth, we would have been able to begin rebuilding a cushion for future years.

That would have been a nice step forward.

Instead, April 2010 general fund revenue was 5.4 percent lower than April 2009--and that's way off the track expected in the revenue projections.  Unless May and June show noticable growth--roughly 1.8 percent--we'll end the year well below the December estimate, and we'll end with no cushion for next year.  That report, out this week from the Office of State Budget Development, is here.

Preliminary word is that the state will not be doing another round of spending cuts. The Courier-Journal checked with Budget Director Mary Lassiter about that and reports this answer:
“It's difficult to cut operating budgets this late in a fiscal year,” she said. “But monies that otherwise would be carried forward into the next fiscal year would be at risk. So it would eat into the next fiscal year, making that year even tighter.”
We already know the House, Senate, and Governor are struggling to find a common approach to spending for the next two years.  A little extra money might have allowed everyone to get the main things they want and close the deal.  Each sign of a little less money surely makes the discussions even harder.

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