By Associated Press
Frankfort, KY – Kentucky's tax collections bounced back in the past year to post their strongest growth in five years, a turnaround that Gov. Steve Beshear trumpeted on Tuesday as a sure sign of economic recovery in a state battered by the recession.
The state's general fund receipts rose for the first time in three years and surpassed pre-recessionary figures, he announced.
Beshear, in the midst of his re-election campaign, touted the stronger-than-expected revenue figures at a Capitol press conference.
"While the economic picture remains challenging for our families and our businesses, we are continuing to see clear signs of economic recovery," Beshear said in an upbeat report about the state's fiscal condition after rounds of spending cuts as tax revenues lagged.
He added that the revenue numbers offered more proof that Kentucky "has weathered the storm better than many other states."
Beshear tempered his assessment with concerns about the state's stubbornly high unemployment rate.
The economy looms as the central issue of the governor's race, pitting Beshear against GOP nominee David Williams, the state Senate president. Williams and other Republicans have hammered away at Beshear for presiding over a statewide jobless rate that exceeds the national rate and the levels in neighboring states.
In what he saw as a hopeful sign, the governor said an upswing in business tax revenues means companies are returning to profitability.
"Hopefully more of them will soon be reinvesting in new jobs," he said. "Nothing will help this state's economy more."
In another sign that the state could be shifting to more solid financial footing, Beshear said that much of the extra revenue collected in the past year will go into the state's rainy day fund.
State general fund tax receipts for the fiscal year ending June 30 totaled $8.76 billion, up 6.5 percent from the prior year and nearly 2 percent above the official revised revenue estimate.
Beshear said unbudgeted excess revenues amounted to $135 million, and more than $100 million will go into the rainy day fund.
Revenue collections grew in each quarter, capped by a 9.6 percent upswing in the fourth quarter, Beshear said.
Individual income tax receipts for the full year rose by $263.3 million, or 8.3 percent, from the prior year.
Sales and use tax collections increased 3.7 percent, or $102.2 million, which Beshear said was a sign that consumer spending is rebounding though the receipts fell short of the estimate by 1.5 percent.
Corporate income tax collections rose $62.9 million, or 26.4 percent, while coal severance taxes increased by 8.8 percent.
Cigarette tax receipts fell $16.1 million, or 5.7 percent.
Beshear noted that he has cut more than $1 billion in state spending during his term and has shrunk the executive branch work force to its smallest size in two decades. Many state agencies have endured budget cuts of 25 percent to 30 percent, and face more reductions in the budget for the next year. Kentucky operates on a two-year budget, and this coming year is the second year of the cycle.
"While balancing the budget will continue to be a challenge for the foreseeable future, today shows that we're headed in the right direction," Beshear said.
Meanwhile, state Road Fund revenues for the past fiscal year totaled $1.3 billion, up 11 percent from the prior year.