CFG Economists Forecast State General and Road Fund Revenues

The Consensus Forecasting Group (CFG), a statutory group of 10 economists and professors throughout the commonwealth, met to forecast Kentucky’s General Fund and Road Fund revenues for the upcoming biennium. The CFG operates independently of the legislature and establishes the forecast legislators use to develop the state’s biennial budget. 

The CFG’s outlook predicted a slight increase in revenues for fiscal years 2027 and 2028 of 2.5% ($383.1 million) and 2.2% ($350.2 million) in FY 2028 from the current year.  

Much of the discussion centered on the state of the economy. The U.S. Consumer Sentiment, a measure of how consumers feel about the economy, fell to its lowest level in the last three years in November, and only slightly increased in December. Further, U.S. federal economists have signaled an increased probability in a small recession in 2026 or 2027.  

Nonetheless, the CFG conferred that current revenue collections could withstand any potential slowdown. The selected forecast aligns with the group’s more risk-averse views due to a slowing labor market, stubborn inflation, and weakening consumer views on the economy. 

The group also adopted the final revised estimates for FY 2026. The final General Fund estimate was $15.5 billion, a decline of 1.3% from FY 2025. The decrease in the FY 2026 estimate is due, in part, to declines in the revenue collections for the Corporate and Limited Liability Entity Tax (LLET). Staff from the Office of the State Budget Director (OSBD) noted that the tax can experience large annual changes and that most states are experiencing similar trends with their state’s business tax.  

The table below details the CFG’s General Fund forecast.  

The group also adopted the FY 2027 and FY 2028 estimates for Kentucky’s Road Fund. CFG estimates show a slight decrease of 0.4% ($8 million) in FY 2027, but a greater growth of 4% ($73.4 million) in FY 2028. The OSBD attributes the growth in FY 2028 to increases in the motor fuels tax rate and greater motor fuels consumption.  

The adopted FY 2026 estimate for the Road Fund was $1.844 billion, a 1% decline ($20.5 million) from FY 2025.  

The table below details the CFG’s Road Fund forecast.  

The estimates set by the CFG for FY 2027 and 2028 will be used by the Kentucky General Assembly to adopt the upcoming biannual budget for both the General Fund and Road Fund.  

View the December meeting’s official CFG estimates here.