- Associated Press - Wednesday, May 6, 2020

FRANKFORT, Ky. (AP) - Kentucky’s tax collections took a nosedive in April, when General Fund receipts dropped nearly $433 million below collections a year ago as the coronavirus outbreak stalled much of the economy.

The state’s budget director warned Wednesday that the grim situation will continue for the rest of the fiscal year, which ends June 30. The downturn could force Gov. Andy Beshear into making painful budget cuts at a time when Kentucky’s economy is trying to recover from the health crisis.

Total General Fund revenues last month were $857 million, compared to nearly $1.3 billion in April 2019 - a 33.6% drop, the budget director’s office reported Wednesday. Due to the April plunge, state tax receipts have fallen 1.2% for the first 10 months of the fiscal year, it said.

Nearly 90% of the April decline was from individual and corporate income taxes, it said.

State Budget Director John Hicks recently projected a potential General Fund shortfall of $318.7 to $495.7 million for the current fiscal year, based on an unofficial revenue estimate.

Hicks said Wednesday that the coronavirus outbreak and delayed income tax filing deadlines combined to cause tax revenues to drop. He predicted that the fiscal pain will continue.

“Looking ahead to the last two months of the fiscal year, the economic consequences of job losses, impacts on business and significant curtailment of consumer activity are expected to continue,” he said in a release.

The state’s Consensus Forecasting Group - made up of economists - will meet to revise official state revenue estimates, Hicks said. The new estimate will guide Beshear’s actions in balancing the current year’s budget, he said.

Anticipating the dropoff, the state’s Republican-led legislature scaled back on spending in the recently concluded legislative session. Beshear’s campaign pledge to give teachers a pay raise was among many spending initiatives that fell by the wayside.

Beshear said recently that projected revenue shortfalls pose a threat as the state combats the virus and the economic damage it caused. The shortfalls are also a threat to “helping us rebuild,” he said, warning that without more federal aid, “our recession will be longer, our unemployment will be greater.”

Beshear and other governors are pressing for additional federal assistance for state and local governments. Kentucky’s senior senator, Senate Majority Leader Mitch McConnell, will be at the center of the debate as Congress considers whether to take up another round of coronavirus relief.

In Kentucky, the virus outbreak has shuttered scores of businesses and put hundreds of thousands of people out of work. The governor has announced plans for phased reopenings of many businesses, factories and churches this month.

The budget office’s report brought the state’s grim fiscal situation into focus.

In April, Kentucky’s corporation income and limited liability entity tax receipts fell $122.2 million, or 70.1%, the report said. Individual income tax collections fell 42.2% or $264.2 million. Sales and use tax receipts declined 6.4%, while property tax collections fell 39.5 percent, it said.

The state Road Fund also took a hit, with April receipts dropping by $43.9 million, or 30.1%, Hicks said. The usage tax from vehicle sales fell by 60% and the motor fuels tax by nearly 12%, he said.


Follow AP coverage of the pandemic at https://apnews.com/VirusOutbreak and https://apnews.com/UnderstandingtheOutbreak.

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