Thanks to larger than expected receipts from income, sales and business taxes, Kentucky officials Friday reported a record surplus for the 2021 fiscal year.
In all, payments to the state’s General Fund totaled $12.8 billion for the 2021 fiscal year, which ended June 30. The 10.9% increase from the 2020 fiscal year was the biggest jump the state has seen in 26 years.
It also beat the state’s estimate by more than $1.1 billion, which Budget Director John Hicks said beat the previous high-water mark by more than three times.
“The ($1.1 billion) 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% of General Fund spending,” Hicks said in a statement.
The Rainy Day Fund’s current position is a marked improvement from where it stood just a couple years ago. According to The Pew Charitable Trusts, Kentucky’s reserves for the 2019 fiscal year would have then covered state expenses for just four days.
Income, sales and business taxes account for 80% of the General Fund. Business taxes, which had grown annually by less than 2% over the last five years, shot up by 38.1% to $882.8 million in FY21.
Sales and use taxes rose by 12% from 2020 to nearly $4.6 billion. That marks the highest annual growth rate since the state raised the rate to 6% in 1990.
Kentucky reported $5.1 billion in personal income tax revenue for the year, a nearly 8% increase from 2020.
The final quarter of the fiscal year, which occurred as Kentucky loosened and finally ended restrictions tied to the COVID-19 pandemic, saw General Fund receipts jump by 24%, spurring the record growth for the year.
In a video statement, Kentucky Gov. Andy Beshear called the surplus was “nothing short of incredible” for the state’s economy.
“Folks, this economy is on fire,” he said. “We’re going to make sure it reaches every part of Kentucky, and most importantly, it benefits each and every one of our families.”
Not all General Fund accounts saw an increase from the 2020 fiscal year. Cigarette tax receipts dropped by $5 million to $349.9 million last year, and the coal severance fund received $56.1 million, missing the 2020 total by $2.7 million.
The General Fund wasn’t the only state budget that saw an increase. The state’s Road Fund reported $1.6 billion in revenues for an increase of 10.1% over receipts from 2020.
The growth was spurred by a 43.8 percent spike in receipts for the fourth quarter.
The state collected nearly $621 million in motor vehicle usage taxes in the 2021 fiscal year, a 24.4% jump from 2020.
Gas tax revenues still rose, even though the pandemic depressed travel for most of the fiscal year. The $748.4 million collected last fiscal year was $6.8 million more than 2020.
This article was originally posted on Kentucky reports record budget surplus