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Revenue Dip Creates $113M State Budget Hole

LRC Public Information

A $113 million dollar shortfall in Kentucky’s General Fund has the governor’s office weighing more cuts in the final months of the fiscal year.

Already slimmed-down state agencies could be in line for more cutbacks as the commonwealth grapples with a 3.2 percent drop in third quarter revenue collection.

The latest data from state Budget Director John Chilton signals the end of a three-year streak of uninterrupted growth. The downturn is being blamed in part on stagnant job numbers, which are projected to continue through early 2018.

Janet Harrah with the Center for Economic Analysis and Development says Kentucky’s fortunes are tied to national and international trends in auto and aircraft manufacturing, along with coal mining. And right now the mood in those markets in one of caution, as all eyes fix on potential disruptions overseas.

"Nationally, I think there's kind of a wait-and-see attitude among large sectors of the economy to see what's going to happen in France," she says. "Depending on who wins in France, that's going to affect the stability of the EU, which obviously will have a large impact on international markets."

For now, Harrah warns not to expect any major rebounds for Kentucky until the national picture improves.

The revenue slump puts the governor’s office in a tight spot, with few options aside from dipping into the rainy day fund or ordering another round of belt tightening.

Josh James fell in love with college radio at Western Kentucky University's student station, New Rock 92 (now Revolution 91.7). After working as a DJ and program director, he knew he wanted to come home to Lexington and try his hand in public radio.