FRANKFORT — Economists predicted Thursday that Kentucky will have a $219.2 million surplus in its General Fund when the fiscal year ends June 30, but they also forecast a shortfall of $139.2 million in the state's Road Fund.
An independent, non-partisan panel of economists, known as the Consensus Forecasting Group, also made preliminary projections on how much the state will receive in its two major funds for the next two fiscal years. The General Fund pays for most state programs and the Road Fund pays for upkeep and expansion of the state's roadways.
The panel will meet again in October to finalize its forecasts. The new governor, who will be elected in November, and state lawmakers will use those projections to craft the state's next two-year budget.
Concerning this fiscal year, predictions look good for the General Fund, which is projected to take in nearly $10.3 billion, an increase of $219.2 million over what was forecast two years ago.
Economists attributed the rosier forecast to better-than-expected improvement in Kentucky's economy.
But the state's Road Fund is expected to take in $1.42 billion this year, which is $139.2 million less than forecast.
The gloomy prediction is due to several legislative changes, including the way the motor fuels tax rate is calculated, trade-in credits on new vehicle purchases and exempting resident military service members on duty in Kentucky from the usage tax on vehicles purchased in the state.
Since the state's constitution requires a balanced budget, the Transportation Cabinet will likely have to delay some road projects if there is a shortfall in the Road Fund.
Looking further ahead, the forecasting group projected a 2.7 percent increase in the General Fund in fiscal year 2017, bringing its total to $10.6 billion, and 2.8 percent growth in fiscal year 2018, upping the total to $10.9 billion.
For the Road Fund, receipts for fiscal year 2017 are expected to be $1.44 billion, or 1.7 percent higher than in 2016, and $1.48 billion in fiscal year 2018, a 2.6 percent increase.
Gov. Steve Beshear called the General Fund projections for this year and the next two years "good news."
"This economic forecast is more tangible evidence of the impact of the improving economy," he said in a statement.