(The Center Square) – Kentucky once again had a banner year for tax collections as the state’s General Fund received $15.57 billion in revenue for the 2024 fiscal year, which ended on June 30.
In a release Thursday, the Office of State Budget Director reported the fund grew by $423.6 million, a 2.8% increase, from the previous fiscal year. It also beat the December estimate by $16.8 million, making that projection the most accurate since the state began its budget forecasts 28 years ago.
Speaking to reporters Thursday, Gov. Andy Beshear noted Kentucky is expected to finish the fiscal year with a surplus greater than $1 billion when the final accounting is completed later this month. That would be the fourth consecutive year for that to occur, and the state is expected to report the second-largest surplus ever.
The surpluses have been fueled by a combination of federal funding from COVID-19 relief programs and a series of measures implemented by the Republican-led General Assembly.
“This unfailing commitment to acting as stewards of taxpayer dollars provided the opportunity to invest more than $2.7 billion over the next two years to improve road, rail, river, air, and water infrastructure, as well as make targeted investments in school facilities, public pensions, tourism, and community development,” House Appropriations and Revenue Chairman Jason Petrie, R-Elkton, said in a statement.
While both Republican lawmakers and Beshear, a Democrat, said the report is proof that Kentucky’s economy is growing, they have butted heads on how to utilize the additional dollars.
For example, Beshear has repeatedly tried to get 10% raises for teachers and other staff members at the state’s public schools. Republicans, who hold veto-proof majorities in both the House and Senate, have rebuffed those efforts.
“At a time when a lot of our country is gripped by pessimism, what I’m seeing across Kentucky, from people of all parties is an optimism we ought to embrace,” Beshear said Thursday. “We ought to recognize that not knowing how long this window will be open, we ought to sprint as hard as we can forward.”
That likely won’t occur based on the responses from the Legislature’s budget leaders. Senate Appropriations and Revenue Chairman Chris McDaniel, R-Ryland Heights, credited his fellow Republicans in Frankfort for stopping “the long and failed tradition of a tax-and-spend approach.” He also noted that the General Fund gains have come at the same time lawmakers have moved to cut state income taxes.
“The Legislature has withstood progressive and executive branch pressures to blow through budget reserves, and we have successfully overridden gubernatorial vetoes aimed at stopping commonsense legislation while remaining steadfast in our goal of fiscal restraint,” McDaniel added.
Revenue from personal income taxes beat forecasts by more than $29 million, totaling $5.81 billion. That edged out sales and use taxes as the top generator for general fund dollars by roughly $5 million.
While most of the General Fund revenue is generated by taxes, Budget Director Mark Hicks said the state has experienced significant financial gains through its investments.
“The emergence of investment income as a significant General Fund revenue source has occurred in a span of just two fiscal years: $300 million in FY24 and $150 million in FY23, due to higher investible balances and favorable rates of return,” Hicks said. “By way of comparison, for the 10-year period from FY13 until FY22, investment income averaged negative $2.4 million annually.”
The state’s Road Fund also saw year-to-year growth. At $1.87 billion for the fiscal year, the fund finished nearly 7% higher than it did in the 2023 fiscal year.
