The financial news out of Frankfort these days is better than most of us probably expected.
But will it last?
John Hicks, the state’s budget director, reported this month that General Fund receipts were up 5.9% in August compared to August 2019.
In dollars, that’s $833.8 million compared with $787.2 million.
Since July 1, receipts have increased 6.5%.
The road fund took in $140.8 million — down 1% from August 2019.
But through the first two months of the fiscal year, collections have increased 2.9%.
And that’s during a pandemic with thousands of Kentuckians laid off and businesses struggling.
But Hicks warns that “the primary revenue concern is keeping up the momentum in economic activity in spite of the expiration of much of the federal fiscal policies designed to help the economy.”
He added, “Without another round of federal fiscal stimulus, it will be difficult to maintain the growth in collections we have seen thus far.”
A blog on the Economic Policy Institute’s website says, “State and local governments still desperately need federal fiscal aid to prevent harmful austerity measures.”
It says that the nation lost 22.1 million jobs in March and April — and 11.5 million of them still haven’t returned after six months.
The authors say, “Without federal aid now, more jobs — in both the public and private sectors — will be lost down the line.”
They add, “Between the pulling back of enhanced unemployment insurance benefits and the near-total inaction on aiding state and local governments’ fiscal situation, the next few months will see the economy suffer the effects of having sailed over a pronounced fiscal cliff.”
Hicks said the growth in tax collections in the past two months was “supported by substantial federal relief payments to individuals and businesses. Sales and use, and the individual income taxes have been the main drivers of the improvement in collections.”
The state budget report is available at http://www.osbd.ky.gov.
Keith Lawrence, 270-691-7301, firstname.lastname@example.org