By Tom Latek
Kentucky Today
During his weekly press conference on Thursday, Gov. Andy Beshear warned that there could be a shortfall in state revenue for the current fiscal year, which ends June 30, 2026, and said there are two reasons for the projected shortfall.
“First, the federal tariffs, and the uncertainty surrounding these tariffs, are directly impacting our spending and our economic activity,” he said. “Second, the cuts in the state income tax are going to cost the Commonwealth $359,000,000 million for this fiscal year. That rate cut is effective January 1, 2026.”
Beshear said as a result, he had State Budget Director John Hicks contact the Consensus Forecasting Group to meet and provide a new forecast.
“He has made that request, and they agreed to convene on Sept. 16, to make an official revision in the current year’s revenue estimate for both the General Fund and the Road Fund. This will tell us if we have a shortfall, and if we do, we will immediately start taking steps to address it.”
The Governor noted, “Let me say I expect a shortfall, but I also expect that we can effectively and we will effectively manage it. There will be more to come when we get the response from the Consensus Forecasting Group, and then we will announce any steps that we may need to take. States, unlike the federal government, must balance their budget, and we are already making plans on how we might do that, if the Consensus Forecasting Group confirms the expected shortfall.”
The Consensus Forecasting Group is a group of ten economists who give their best estimate of what revenue the state can expect. Members normally meet quarterly before finalizing the estimates in December. That forecast is what the governor’s office and legislators will use in crafting Kentucky’s next two-year spending plan. They can also approve special estimates, such as what the Governor and State Budget Director are now seeking.