Beshear addresses ‘potential shortfall’ in Kentucky annual revenue

FRANKFORT, Ky. (FOX 56) — Amid announcements of his podcast joining SIRIUS XM and the continued success of legal sports betting in the Commonwealth, Beshear alerted the public to concerns of a potential shortfall in revenue for Kentucky.

“Let me say I expect a shortfall, but I also expect that we can effectively and we will effectively manage it,” Beshear said on Sept. 4 during a Team Kentucky briefing.

In a news release on Thursday, Beshear’s office wrote that he updated Kentuckians on a projected shortfall in revenue for 2025. Beshear said the potential shortfall has come about for two main reasons.

Federal tariffs

State leaders said on Thursday that federal tariffs were directly impacting Kentucky’s economic activity through an impact on spending.

Income tax rate

Beshear wrote that the income tax reduction cut $359 million for the 2025 fiscal year, which will go into effect in January 2026.

He had shared concerns with the choice as early as last year.

“We can absorb another cut to the income tax. But as we look further into the future, there will be a point where revenue will not keep up,” Beshear told FOX 56 in December 2024.

What’s being done to address the projected shortfall?

Officials said that the governor has asked State Budget Director John Hicks to convene the Consensus Forecasting Group on Sept. 16 to revise the 2025 revenue estimates for both the General Fund and Road Fund.

GOP leadership in the General Assembly shared the following statements after the governor’s comments on Thursday.

“We are aware of the governor’s announcement earlier today. However, the Consensus Forecasting Group is already scheduled to deliver an updated economic outlook, and we continue to monitor economic conditions and revenue numbers with our economists,” House Speaker David Osborne (R-Prospect) wrote. “If this is genuinely a concern, why not bring it to us earlier, particularly since the governor’s budget director testified before lawmakers just two weeks ago? To be frank, we are somewhat skeptical that this is yet another attempt to politicize the budget when we know a responsible, measured approach is far better for Kentucky.”

Kentucky operates on a two-year budget cycle. Budget bills for both the general fund and road fund were passed by the General Assembly in 2024.

Beshear said in Thursday’s release that while the tariffs pose an uncertain risk to the state’s economy, the choice to cut Kentucky’s income tax rate was made to help residents during tough times.

“Since I took office, I have been committed to making Kentucky fiscally responsible, and that means balancing a budget. Together, we’ve celebrated the three largest budget surpluses in Kentucky’s history,” said Gov. Beshear. “The Consensus Forecasting Group will let us know if we will have a shortfall, and if so, we can begin taking steps to address it.”

What is the Consensus Forecasting Group?

Per Kentucky law, the estimates for the state’s general fund and road funds are based upon a “consensus revenue forecast.” The group responsible for providing this forecast is the Statutory Committee Consensus Forecasting Group, comprised of citizen members, analysts, and administrators.

Senate President Robert Stivers told FOX 56 that state leaders were confident in their responsible budgeting and stand ready to make changes if needed.

“The legislature built safeguards and reserves into the current budget. We will review any revisions to the current-year revenue forecast when the Consensus Forecasting Group meets on September 16 and again in December, as already scheduled,” Stivers wrote.

More information on the consensus group can be found at the Kentucky General Assembly website.