FRANKFORT — A group of economists predicted Thursday there will be a $192 million surplus for Kentucky's state government this fiscal year, which ends June 30.
The estimates released Thursday are preliminary. An official estimate for this fiscal year and for the next two years will be released later this year. The estimates are used by state lawmakers to write the two-year budget in January.
The group of economists known as the Consensus Forecasting Group met Thursday for a planning meeting and to get an update on the state of the Kentucky economy.
State law says the group must develop a planning forecast for the next five years. On Thursday, the group opted to stay with modest economic growth, as the state's finances appear to be on the rebound.
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That means it's likely that revenue for 2012 will be higher than originally budgeted, with an increase of about $192 million in the original projection of $8.8 billion. For the next few years, the unofficial estimates predict revenue growth of about 3.4 percent over the previous year.
After three years of decline, state revenue finally returned to pre-recession levels last fiscal year, said Greg Harkenrider, deputy executive director of the Governor's Office of Economic Analysis. Revenue was $8.6 billion in 2008, dropped to $8.2 billion in 2010 and rose to $8.8 billion in 2012.
Many states have not seen revenue return to pre-recession levels, Harkenrider said.
He said the state had 15 consecutive months of revenue increases. Those increases appeared to continue in July, which saw 6 percent to 8 percent gains from the previous year, Harkenrider said.
The state closed fiscal 2011 on June 30 with a surplus, depositing $121 million in the state's "rainy day" fund.
Although the state's economy appears to be recovering, there is a lot of instability in the global economy, state officials told the Consensus Forecasting Group.
Congressional leaders cut a deal to raise the federal debt ceiling this week, but there are few details on how the federal government will cut discretionary spending, which could affect Kentucky's economy, said Mike Jones, an economist with the Governor's Office of Economic Analysis.
"There will be fewer federal dollars coming to Kentucky," Jones said, particularly with cuts to student loan programs.
Jones also noted that countries in Western Europe are struggling to make debt payments. The instability with those countries' finances — or even a default — could trigger even more economic problems, he said.
The Consensus Forecasting Group will return in October to review more figures.