Kentucky Faces Big Budget Cuts Amid Plunging Tax Collections

FRANKFORT, Ky. (AP) — Economic damage caused by the coronavirus will force more than $450 million in cuts to Kentucky’s General Fund, plus a potential special legislative session to downsize the Road Fund.

The necessity for deep budget cuts was officially set in motion Friday when a panel of economists reduced its revenue projections for the current fiscal year, which ends June 30. The panel’s forecasts would result in significant shortfalls in both funds with reduced spending.

The job of cutting about $457 million, or 4%, from the General Fund will fall to Gov. Andy Beshear. The General Fund pays for most state services, including education, health care and public safety.

But a special legislative session is needed for a budget reduction plan for the Road Fund, Beshear said. That’s because the panel’s new projection for Road Fund revenues amounted to a larger percentage drop. The revised forecast will cause cuts of about $161 million from the Road Fund.

Beshear said he’s talked with legislative leaders about what he hopes can be a “short, targeted” special session. The Democratic governor said he wants “buy in” from the GOP-led legislature before calling lawmakers back to the state Capitol.

“We want to talk to them again, make sure we have it all hammered out, make sure we do it in as short of a time as possible,” Beshear said during his daily coronavirus briefing.

As for General Fund cuts, he said he wants to do so in the least painful way for the state.

“We evaluate the amount of harm that would occur to people out there because almost every budget cut does result in a little more difficulty or challenge for folks and want to make sure we can minimize that,” the governor said.

The grim budget situation, he said, underscores the need for additional federal relief to cushion state and local governments from plunging tax collections caused by the pandemic. Without another round of federal aid, the cuts will be significant, Beshear said.

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