FRANKFURT, Ky. (AP) — Democratic Gov. Andy Beshear touted strong revenue collection in Kentucky as another sign of a booming state economy Thursday, building on an issue he has made a cornerstone of his re-election bid in a state that Republicans have dominated in recent years.
Citing general fund receipts that totaled $15.1 billion in the just-ended fiscal year, Beshear said the state was on the cusp of posting its biggest revenue surplus of about $1.4 billion. And she was quick to point out that the money kept coming even after another cut in state income tax.
“Simply put, we are booming,” the governor said at his weekly news conference. “And this revenue figure shows how much we are growing 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 bolstered his campaign strategy of promoting his economic stewardship as Beshear tries to fend off a difficult challenge Republican Attorney General Daniel Cameron in the November election.
The closely watched race could provide insight into voter sentiment ahead of the 2024 election to determine control of the White House and Congress.
Cameron and other Republicans say the governor routinely takes credit for the pro-growth policies advocated by the GOP-dominated legislature. Seeking to counter Beshear’s rosy economic message, they pointed to sluggish workforce participation rates that left some companies struggling to find enough employees.
Beshear’s Republican critics have also criticized him on social issues, including his opposition to legislation aimed at transgender youth.
The governor’s campaign released a television ad featuring a Republican businessman praising his record as “great for business.” The businessman says he opposed Beshear four years ago, when he ousted Republican incumbent Matt Bevin, but now supports the governor.
Beshear typically begins his weekly press conferences by touting the latest economic development announcements. On Thursday he said revenue growth reflects a strong economy producing more jobs, higher wages and business profits.
“This is an exciting time with a lot of potential to build on and make sure we make this state everything we’ve ever dreamed of,” Beshear said. “That we turned our brain drain into a brain gain.”
Weathering the severe shock of the COVID-19 pandemic, Kentucky has posted record numbers of economic growth and historically low unemployment rates during Beshear’s tenure. His administration has faltered on massive projects tied to the electric vehicle sector.
The state ended the fiscal year with a general fund surplus that exceeded $1 billion for the third straight year, the governor said. The exact amount will be known once the accounting records of the expenses are completed later this month.
General fund tax revenue topped $15 billion, easily exceeding expectations, even as the state’s individual income tax rate continued to fall. A 10% rate cut went into effect last 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 of phasing out individual income taxes in Kentucky. Although personal income tax collections decreased due to the rate reduction, sales tax collections posted double-digit growth for the third consecutive 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 opposed that bill because it extended the sales tax to more services, but Republican lawmakers overrode his veto.
Beshear’s re-election prospects could benefit from broader signs that the increase inflation has cooled, raising Democratic hopes that the economy could be a favorable issue for them. A recent government report showed inflation hit its lowest point since early 2021: 3% in June compared to a year earlier, though the number was still above the Federal Reserve’s 2% target.
Beshear has said that high inflation makes it difficult for Kentucky families to meet their basic needs. Republicans have tried to link the governor to President Joe Biden’s economic policies, a strategy on display again Thursday when Cameron’s campaign responded to Beshear’s upbeat reporting.
“Kentuckians are being financially crushed in the Joe Biden economy and Andy Beshear is trying to have both,” Cameron’s campaign said. “He wants to take credit for the revenue surplus while he was fighting against the fiscal and budget policy established by the Republicans.”