by FRANKFORT, Ky. (AP) — Democratic Governor Andy Beshear on Thursday touted robust revenue collections in Kentucky as another sign of a surging state economy, building on a theme he has made a cornerstone of his re-election bid in a state that Republicans have dominated in recent years.
Referring to general fund receipts that totaled $15.1 billion in the just-ended fiscal year, Beshear said the state was poised to post its largest-ever revenue surplus of about $1.4 billion. And he was quick to point out that the money kept pouring in even after the individual income tax rate was lowered.
“Simply put, we are booming,” the governor said at his weekly press conference. “And this sales figure shows how fast we are growing at unprecedented levels.”
The general fund pays for most government services, including education, health care, and public safety. Although he announced the surplus in his official capacity as governor, the huge surplus bolstered his campaign strategy to tout 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 into voter sentiment heading into the 2024 election to determine control of the White House and Congress.
Cameron and other Republicans say the governor routinely takes credit for growth-enhancing policies championed by the GOP-dominated legislature. To counter Beshear’s rosy economic message, they have pointed to the low workforce participation rate, which has left some companies struggling to find enough workers.
Beshear’s Republican critics have also slammed him on social issues, including his opposition to legislation targeting transgender youth.
The governor’s campaign rolled out a TV ad in which a Republican entrepreneur praised his track record as “great for business.” The businessman says he opposed Beshear four years ago when he removed incumbent Republican Matt Bevin, but now supports the Democratic governor.
Beshear usually starts his weekly press conferences by promoting the latest economic development announcements. On Thursday, he said the sales growth reflected a strong economy generating more jobs, higher wages and corporate profits.
“It’s an exciting time with a lot of potential to get to grips with 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.”
Kentucky has overcome the severe shock of the COVID-19 pandemic, posting record economic development rates and historically low unemployment rates during Beshear’s tenure. His government has secured huge projects related to the electric vehicle sector.
The state ended the fiscal year with an overall surplus of more than $1 billion for the third consecutive year, the governor said. The exact amount will be known later this month once the accounting for the expenses has been completed.
General Fund tax revenue exceeded $15 billion, easily beating expectations even as the state’s individual income tax rate fell. A 10% interest rate cut took effect last January and was in effect for the last half of the fiscal year, the Beshear administration said. The lower rate was a step toward achieving a Republican-led goal of phasing out individual income taxes in Kentucky. While income tax revenues declined as a result of the rate reduction, sales tax revenues grew by double digits for the third consecutive year.
Beshear signed a rate reduction bill early this year after he vetoed a bill last year that overhauled parts of the tax code and led to an initial reduction in the individual income tax rate. The governor objected to that bill because it expanded the sales tax to more services, but Republican lawmakers overruled his veto.
Beshear’s re-election prospects could benefit from broader signals that rising inflation has cooled, boosting Democratic hopes that the economy could be a favorable issue for them. A recent government report showed that inflation reached its lowest point since early 2021: 3% in June compared to a year earlier, although the figure was still above the Federal Reserve’s target of 2%.
Beshear has said that high inflation made it difficult for Kentucky families to meet their basic needs. Republicans have attempted to link the governor to President Joe Biden’s economic policies, a strategy seen again Thursday as Cameron’s campaign responded to Beshear’s optimistic report.
“Kentuckians are being crushed financially in Joe Biden’s economy and Andy Beshear is trying to get it from both sides,” Cameron’s campaign said. “He wants to take credit for the revenue surplus while battling Republican tax and budget policies.”
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This story has been updated to correct the time Beshear signed the tax cut bill.
