Kentucky’s economy continues a steady and sustainable climb into the best times it has ever known, fueled by good policy, good fortune and hard work. The $15.1 billion in state revenue for fiscal 2023, which closed out June 30, was $1.5 billion more than had been estimated.
The commonwealth’s income tax rate dropped 10% at midyear but collections still topped projections by 9.4%, which was $504 million.
“The underlying strength of Kentucky’s economy is borne out by this revenue report,” Kentucky Budget Director John Hicks said. “More jobs, higher wages and salaries, another year of double-digit growth in sales tax revenues, and continued business profits.”
The stepped cuts to income tax, which require hitting budget goals that include surpluses, is part of the good state fiscal policy helping generate growth. Kentucky had the two best years in history for economic development in calendar years 2021 and 2022, and many of the major fruits of those announcements are yet to arrive. Those years’ announcements have put thousands of very good jobs in the pipeline that are going to keep state revenue rising and tax rates dropping to generate further growth.
The state’s gross domestic product has hit $260 billion a year, according to the federal Bureau of Economic Analysis. GDP growth is a wealth generator with a compound interest benefit—it grows the pie and raises the ceiling for everyone. It creates the resources to improve public services, yielding higher productivity for businesses and better quality of life.
Lower taxes enhance the state’s economy as do improvements to Kentucky’s education and healthcare systems. Frankfort policymakers have the opportunity unseen in more than a generation to make further wise decisions that will drive growth and benefit all Kentuckians.
In the past decade, Kentucky has gotten its pension systems out of the ditch and on track to meet its obligations. It has focused on pursuing and winning billion-dollar economic development projects in the automotive manufacturing sector, logistics and bourbon. It has a strong site-development program in place and is funded to sustain momentum.
The state’s budgetary rainy-day fund has grown 2,700% the past few years and stands at $3.7 billion. Even before the recent $1.5 billion bump to the fund, Kentucky’s bond rating improved, which saves the state money in financing projects and expands its options to take on beneficial capital projects.
The commonwealth’s best days are right in front of us.
While there is some political competition in Frankfort to claim credit for the success, nonpartisan collaboration has played an important role. Kentucky overall has a solid, public-minded team of leaders in state government. They are at their best when they seek collaboration rather than conflict. Political processes do involve conflict but our leadership understands that inclusive thinking brings the best policy decisions. Conflict brings short-term attention but distracts from the opportunity to achieve long-term progress that improves incomes and creates wealth.
Kudos to our leaders in Frankfort for steering away from divisive partisan conflict in many instances. Maintaining the focus on finding collaborative solutions will continue to propel Kentucky’s economy and improve the quality of life for everyone.