Kentucky ends fiscal year with record $1.1 billion surplus

The general fund increase was the highest annual growth rate in 26 years

(Photo Provided)

FRANKFORT, Ky. (KT) – The state of Kentucky wrapped up the fiscal year that ended June 30 with a record surplus in the General Fund, according to information released Friday by the state budget director’s office.

General Fund receipts totaled $12.8 billion, a 10.9% increase over FY20 collections, exceeding the budgeted estimate by $1.1 billion.  At the same time, Road Fund revenues totaled $1.6 billion, an increase of 10.1% over last year, resulting in a $64.6 million revenue surplus.

State Budget Director John Hicks said the general fund revenues for FY21 set many milestones.

“The FY21 General Fund revenue surplus is over $1.1 billion, the highest ever by a multiple of three,” he said.  “The revenue surplus will be deposited into Kentucky’s ‘Rainy Day Fund,’ the Budget Reserve Trust Fund, bringing it up to nearly $1.9 billion, or over 16 percent of General Fund spending.  The $1.9 billion balance is up from just $303 million at the end of last year.  The final surplus amount will be known once the accounting records for expenditures are completed later this month.”

Gov. Andy Beshear reacted with excitement during a 58-second video posted on Facebook.

“The economic news today related to our state budget is nothing short of incredible,” he said.

The general fund increase was the highest annual growth rate in 26 years, as a combination of vaccination progress, federal government aid to individuals and businesses, and employment growth, all of which contributed to an improved Kentucky economy.

All three of the largest tax areas, individual income, sales, and business tax receipts; which account for 80 percent of total General Fund receipts, grew significantly.  Sales tax receipts grew by 12.0%, the highest annual growth rate since the tax rate was raised from five to six percent in 1990.  Individual income taxes grew by 7.9%, while business tax receipts from the corporation income tax and the limited liability entity tax grew 38.1%, after yearly growth of less than two percent over the prior five years.

General Fund revenues stayed higher than the budgeted estimate all year, which called for a 1.2% growth rate.  General Fund growth rate had been hovering around 5.5% through the first nine months of FY21, then the final three months spiked by 24 percent, leading to the 10.9% growth rate for the year.

Road fund revenue growth of 10.1% followed last year’s 4.8% drop, due to a large decline in vehicle travel and sales because of COVID-19.  A record year for the motor vehicle usage tax receipts, equivalent to a sales tax on vehicle purchases, accounted for most of the Road Fund’s jump.  The $64.6 million Road Fund surplus will be deposited into the Highways budget and used to support projects in the 2020-2022 biennial highway construction program.

Beshear said he is going to make sure the strong economy “reaches every part of Kentucky and, most importantly, it benefits each and every one of our families. Good news today for Kentucky, so buckle up, we’re going places.”

The state legislature will consider a two-year budget when it meets in the 2022 General Assembly in January.