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Coronavirus Could Create Nearly $500M Crater In This Year's State Budget

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AP Photo/Bryan Woolston
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Kentucky could face a budget shortfall close to $500 million this fiscal year alone, as a result of the novel coronavirus pandemic. That's the prediction in a state economic analysis released Thursday. The bleak budget projections come on the same day as a Kentucky think tank reports as many as a third of Kentucky workers may be out of a job.

"We don't know where this thing is going," Kentucky House Appropriations and Revenue Committee chair Steven Rudy told colleagues in late March. "We also don't know the variables of federal relief."

That precarious budgeting perch remains relatively unchanged a month later. Thursday, lawmakers finally caught a glimpse at the projected decline in state revenue through June 30 — estimated between $318 million and $495 million.

The figures are likely to mean even more urgent calls from Gov. Andy Beshear for direct federal aid for state government, an action Senate Majority Leader Mitch McConnell appears reluctant to embrace.

"I don't believe he is close to it," Beshear said, referring to McConnell's view of a potential federal stimulus package aimed at states. "I think he wants to see other things in an ultimate bill. So I want to push for the things we need. I don't want to be in the middle of a Washington, D.C. negotiation or debate."

The Senate Majority Leader has said there's not much appetite among Republicans to fix state budget woes not directly tethered to COVID-19.

"I would certainly be in favor of allowing states to use the bankruptcy route. It saves some cities. And there’s no good reason for it not to be available," McConnell told radio host Hugh Hewitt. "My guess is their first choice would be for the federal government to borrow money from future generations to send it down to them now so they don’t have to do that. That’s not something I’m going to be in favor of."

As the Beshear administration keeps the pressure on, the governor continues to detail how the state expects to cautiously reopen sectors of the economy. One area notably absent from the first round of planned reopenings is childcare, which could complicate efforts to get Kentuckians back to work.

On that question, the governor said restarting childcare simply risks too much contact early in the process.

"We're at a stage where it's too dangerous if we want to be able to be healthy at work," he explained. "It's not in Phase 1, but we're going to engage in talks and we want to hear different thoughts about ways we can do this differently and safely to potentially be in Phase 2."

The first phase of reopening is slated to run from May 11 through May 25.

Further complicating matters is a dire unemployment picture. Thursday the liberal-leaning Kentucky Center for Economic Policy estimated that nearly one-in-three workers in the commonwealth may be unemployed. The center said the state's actual jobless rate could be as a high as 32 percent — easily overshadowing the nearly 12 percent high seen during the Great Recession in 2010.

Beshear did announce an expansion, however, for beneficiaries of the Supplemental Nutrition Assistance Program, or SNAP. Those benefits can now be used to purchase groceries online through Amazon or Walmart.

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