The Governor said there are two reasons for the projected shortfall. First, federal tariffs are directly impacting spending and economic activity. Second, the income tax rate reduction cut $359 million for this fiscal year, representing one-half of the annual value.
The rate cut is effective January 2026. With this in mind, the Governor asked State Budget Director John Hicks to convene the Consensus Forecasting Group on Sept. 16 to make an official revision in the current year's revenue estimates for both the General Fund and the Road Fund.
"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.
"I've been receiving regular updates on our revenues and our projections for this year, and there is concern there will be a shortfall in total revenue collected. Some of this may be due to uncertainty surrounding federal tariffs and the choice we made to cut Kentucky's income tax rate. That was a choice we made in order to keep more money in the pockets of Kentuckians during tough and uncertain times. 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."
