State Budget Director Mary Lassiter reported today that Kentucky’s General Fund and Road Fund receipts fell 4 percent in the month of October compared to last year. Total revenues for the month were $652.4 million, compared to $679.6 million during October 2008.  The budget director reports that receipts have now fallen 5.2 percent in the first four months of the fiscal year, which means state revenue would need to increase by 0.2 percent over the remaining eight months to achieve the official revenue estimate.

The state is projecting a $1.3 billion budget shortfall over the next two years.

“While this estimate is unofficial at this time, we are very concerned about the ability of revenues to meet budgeted levels,” Lassiter said in a press release. “The Beshear Administration remains committed to tight fiscal management as the Commonwealth endures what we hope is the tail end of this persistent economic downturn.”

With the start of the General Assembly session around the corner, expect lawmakers to grumble about necessary budget cuts while looking for new revenue streams. At an event hosted by Greater Louisville Inc., the Louisville Metro chamber of commerce, Kentucky Gov. Steve Beshear reportedly told business leaders that the state should “continue to look at increasing our cigarette tax.” The budget director’s report highlighted that the cigarette tax receipts grew 53 percent due to the previous rate increase that went into effect in April 2009.

The governor also put added pressure on Senate Republicans to pass legislation that would legalize video lottery terminals at race tracks.