FRANKFORT, Ky. — Democratic Gov. Andy Beshear touted robust revenue collections in Kentucky as another sign of a surging state economy Thursday, building on a theme he has made a cornerstone of his reelection bid in a state that Republicans have dominated in recent years.
Citing general fund receipts that totaled $15.1 billion in the just-concluded fiscal year, Beshear said the state was poised to record its largest-ever revenue surplus of roughly $1.4 billion. And he was quick to point out that the money kept rolling in even after another cut to the state income tax.
“Put simple, we’re booming,” the governor said at his weekly news conference. “And this revenue figure shows how much we’re booming at unprecedented levels.”
The general fund pays for most state services, including education, health care and public safety. Although he announced the surplus in his official capacity as governor, the massive surplus reinforced his campaign strategy of touting his economic stewardship as Beshear tries to fend off a tough challenge from Republican Attorney General Daniel Cameron in the November election.
The closely watched race could provide insight about voter sentiment heading into 2024 elections to determine control of the White House and Congress.
Cameron and other Republicans say the governor routinely takes credit for pro-growth policies championed by the GOP-dominated legislature. Looking to counter Beshear’s rosy economic message, they have pointed to sluggish workforce participation rates that left some businesses struggling to find enough employees.
Beshear’s Republican critics have also hammered him on social issues, including his opposition to legislation aimed at transgender youth.
The governor’s campaign has rolled out a TV ad featuring a Republican business owner praising his record as “great for business.” The businessman says he opposed Beshear four years ago, when he unseated Republican incumbent Matt Bevin, but now supports the governor.
Beshear typically begins his weekly news conferences by promoting the latest economic development announcements. On Thursday he said the revenue growth reflects a strong economy producing more jobs, higher wages and business profits.
“It’s an exciting time with a lot of potential out there to grab ahold of and make sure we make this state everything we’ve always dreamed of,” Beshear said. “That we turn our brain drain into a brain gain.”
Overcoming the severe jolt from the COVID-19 pandemic, Kentucky has posted record economic development numbers and historically low unemployment rates during Beshear’s term. His administration has reeled in massive projects tied to the electric vehicle sector.
The state finished the fiscal year with a general fund surplus topping $1 billion for the third straight year, the governor said. The exact amount will be known once accounting records for expenditures are completed later this month.
General fund tax receipts topped $15 billion, easily surpassing expectations, even as the state’s individual income tax rate continued to drop. A 10% rate cut took effect this past January and was in place for the last half of the fiscal year. The lower rate was a step toward achieving a Republican-driven goal to phase out individual income taxes in Kentucky. While individual income tax receipts declined due to the rate reduction, sales tax receipts had double-digit growth for the third straight year.
Beshear signed the rate cut in January after vetoing a bill last year that revamped parts of the tax code and led to an initial drop in the individual income tax rate. The governor objected to that bill because it extended the sales tax to more services, but Republican lawmakers overrode his veto.
Beshear’s reelection prospects could benefit from broader signs that surging inflation has cooled, buoying Democratic hopes that the economy could be a favorable issue for them. A recent government report showed inflation reaching its lowest point since early 2021 – 3% in June compared with a year earlier, though the figure was still above the Federal Reserve’s 2% target.
Beshear has said high inflation made it tough for Kentucky families to meet basic needs. Republicans have tried to link the governor to President Joe Biden’s economic policies, a strategy that was on display again Thursday as Cameron’s campaign responded to Beshear’s upbeat report.
“Kentuckians are being crushed financially in Joe Biden’s economy and Andy Beshear is trying to have it both ways,” Cameron’s campaign said. “He wants to take credit for the revenue surplus while he fought the tax and budget policy set by Republicans.”
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