Thursday, October 10, 2002

State expects revenue shortfall

Budget director says gap could reach $200 million

By The Associated Press

LOUISVILLE - State budget director Jim Ramsey says his preliminary estimate shows a revenue shortfall for the state of $150 million to $200 million this year.

Mr. Ramsey gave the news Tuesday to the trustees of the University of Louisville, where he is also serving as acting president.

“If that's the case, what happens? Nobody knows, to be quite honest with you,” he said.

Mr. Ramsey said the Council on Postsecondary Education has asked universities to plan for budget cuts of up to 3 percent this year. That would mean a reduction of $34 million from the state's $1.13 billion allocation for universities, including $5.3 million from U of L's $176.7 million state appropriation.

Mr. Ramsey said the state's official revenue projections will be revised later this fall by the Consensus Forecasting Group.

Since July 1, Kentucky has been operating on Gov. Paul Patton's $6.6 billion emergency spending plan because the General Assembly, deadlocked over whether to provide public funding for next year's campaigns for governor, never passed a budget.

A revenue shortfall this year would come after shortfalls of $687 million in 2001-'02 and $185 million the year before. To cover the shortfalls, the state reduced spending and depleted its $280 million Rainy Day fund.

Mr. Ramsey did not suggest how the state might cover a budget shortfall this year.

Jessica Loving, chairwoman of the UofL trustees, said she thinks the school can reduce spending “without cutting any of the muscle.”

“We don't have any fat, or very little fat,” Ms. Loving said after a daylong trustees' retreat on campus. “But there are ways to trim the belt.”

Mr. Ramsey said the revenue receipts for the first quarter of this fiscal year, which will be released today, “look very good” but are misleading. The total includes at least $41 million from the two-month tax-amnesty program that ended Sept. 30 and $32 million in sales taxes from the sale of a private company.

Both of those figures represent one-time revenue, he said.

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- State expects revenue shortfall