Next year, 2008, could be the Year of the Busted Budgets for many state governments. This was the findings of three of the most prestigious public state organizations in America.

The National Governors Association and the National Association of State Budget Officers joint report was released on December 5, 2007.  They warned:

“…that while most states experienced healthy revenue growth during fiscal year 2007, some states already have seen significant deterioration of their fiscal conditions and expect revenue and expenditure pressures from a variety of sources, including  (1) increased funding demands related to health care and Medicaid and (2) to long term challenges such as demographic shifts, employee pensions and infrastructure  costs.

In addition, most states will feel the pinch of the nation’s weakening housing market, both from lower sales tax revenues and indirectly as local governments struggle with declining property values and decreasing property tax revenues.”

“Steadily rising health care costs, softening in the housing sector and the need to address looming issues such as aging populations are putting mounting pressure on states at the same time as federal funding for critical programs is leveling,” said NGA Executive Director Raymond C. Scheppach. www.stateline.org

Already, private sources in Frankfort are warning of large problems with the 2007-2008 state budget which could spill over into the 2008-2009 budget.

 Informed sources are speculating a possible Kentucky state government 2008-2009 budget shortfall of somewhere between $800 million to $ 1 billion.