Kentucky recorded a record $15.57 billion in revenue for the 2024 fiscal year, ending on June 30, marking another banner year for the state’s General Fund. This represents a $423.6 million increase, or 2.8%, from the previous fiscal year. The fund also exceeded the December estimate by $16.8 million, making it the most accurate projection since Kentucky began its budget forecasts 28 years ago.
Governor Andy Beshear announced that Kentucky is expected to finish the fiscal year with a surplus exceeding $1 billion, marking the fourth consecutive year of such surpluses. This year’s surplus is anticipated to be the second-largest in the state’s history. These surpluses have been driven by federal COVID-19 relief funding and measures implemented by the Republican-led General Assembly.
“This unfailing commitment to acting as stewards of taxpayer dollars provided the opportunity to invest more than $2.7 billion over the next two years to improve road, rail, river, air, and water infrastructure, as well as make targeted investments in school facilities, public pensions, tourism, and community development,” said House Appropriations and Revenue Chairman Jason Petrie, R-Elkton.
Both Republican lawmakers and Governor Beshear agree that the report highlights Kentucky’s economic growth. However, they disagree on how to use the additional funds. Beshear has repeatedly advocated for 10% raises for teachers and other public school staff, efforts that have been rebuffed by Republicans who control the House and Senate with veto-proof majorities.
“At a time when a lot of our country is gripped by pessimism, what I’m seeing across Kentucky, from people of all parties, is an optimism we ought to embrace,” Beshear stated. “We ought to recognize that not knowing how long this window will be open, we ought to sprint as hard as we can forward.”
Despite this optimism, legislative leaders indicate that significant changes in spending are unlikely. Senate Appropriations and Revenue Chairman Chris McDaniel, R-Ryland Heights, credited Republicans for moving away from a “tax-and-spend approach” and for maintaining fiscal restraint while cutting state income taxes.
“The Legislature has withstood progressive and executive branch pressures to blow through budget reserves, and we have successfully overridden gubernatorial vetoes aimed at stopping commonsense legislation while remaining steadfast in our goal of fiscal restraint,” McDaniel said.
Personal income taxes were the largest source of revenue, exceeding forecasts by over $29 million and totaling $5.81 billion. This slightly outpaced sales and use taxes, which generated approximately $5 million less. Budget Director Mark Hicks highlighted the significant financial gains from state investments, which contributed $300 million to the General Fund in FY24, compared to $150 million in FY23.
“The emergence of investment income as a significant General Fund revenue source has occurred in a span of just two fiscal years: $300 million in FY24 and $150 million in FY23, due to higher investible balances and favorable rates of return,” Hicks noted. “By way of comparison, for the 10-year period from FY13 until FY22, investment income averaged negative $2.4 million annually.”
Kentucky’s Road Fund also experienced growth, finishing the fiscal year at $1.87 billion, nearly 7% higher than the previous year.