FRANKFORT, Ky. (FOX 56) – With the conclusion of the state fiscal year on June 30, Kentucky’s revenue surplus totals more than $1 billion, just shy of 2021’s $1.1 billion record.
The Kentucky Legislative Research Committee noted this puts Kentucky in a solid position to cut the state’s income tax to 4.5% in January 2023 and 4.0% in January 2024.
This tax cut was passed during the 2022 regular session, marking the state’s commitment to move to a more modernized state tax structure that is described by the LRC as being “more competitive” and would “create economic opportunity.
“The $1.0135 billion budget surplus is great news but comes as no surprise to those of us in the legislature. This is what happens when you commit to sound fiscal policies and responsible tax reforms in order to foster economic growth as we have over the past five years. While there are some, including the Governor, who seem committed to spending every available taxpayer dollar, the House will continue to pass budgets aimed at meeting today’s needs while planning for the future. This announcement is the result of these efforts to build a stronger Kentucky. In fact, despite the Governor’s best efforts to veto the tax modernization package, the next step will come in January 2023 when Kentuckians will keep more of their hard-earned money as they see the first drop in the incremental elimination of the personal income tax,” House Speaker David Osborne said.
House Bill 8 calls for incremental tax cuts until the personal income tax is eliminated completely.
HB8, which passed in April, overriding Gov. Andy Beshear’s veto, is expected to leave an additional $600 million to $650 million in taxpayer pockets as a result of the 2023 tax cut.
Rep. Jason Petrie, the sponsor of HB8, said lawmakers anticipated the budget surplus and crafted HB8 around it, as well as the budget that was passed last year.
Petrie also said that the legislature made major contributions to the budget reserve trust fund which currently sits at the highest level ever. This fund can be used to assist with both challenges, such as the eastern Kentucky flooding, and economic investment opportunities.
“We’ve been intentional in every step and the results of these efforts can be measured in this surplus. While we know there are some who would like to use these dollars on projects that benefit their special interests, we’ll continue to take our role as trustees of the people’s resources seriously,” Petrie said. “Earlier today we heard a state official tell a budget subcommittee that the cabinet they lead is ‘very good at spending money,’ which seems to represent the state’s budget philosophy until we adopted a conservative approach to state spending. These resources belong to the people of Kentucky and they expect and deserve better.”