Frankfort, KY – Kentucky lawmakers have plugged a one billion dollar budget gap mostly by using money from the federal government. But an economist at the University of Tennessee is warning states the stimulus money won't last long enough. Dr. Bill Fox says recessions are never one or two year events. He says tax revenues fall below trend for at least three or four years.
"What's going to happen is states will have this stimulus money for Fiscal 2010 and Fiscal 2011, but their revenue growth and revenue performance will still be below their normal level even as they go in to fiscal year 2012."
The Kentucky Senate in special session approved 740-million dollars in stimulus funds to erase this year's budget shortfall. Fox encourages states to find more long-term fixes for future budget cycles.