• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Kentucky Center for Economic Policy

Kentucky Center for Economic Policy

   

  • About Us
  • Press Room
  • Events
  • Job Opportunities
  • Donate

Research That Works for Kentucky

  • Topics
    • Budget & Tax
    • Criminal Justice
    • Economic Security
    • Education
    • Health Care
    • Jobs & The Economy
  • Types
    • News
    • Op-Ed
    • Research

   

  • About Us
  • Press Room
  • Events
  • Job Opportunities
  • Donate

Copyright © 2021 KyPolicy Privacy Policy Terms & Conditions Sitemap

Analysis

Kentucky’s Revenue Not Keeping Up with Economy

Micah Johnson | August 16, 2016

As Kentucky’s economy continues to grow, the state’s revenue intake reflects that growth less and less. Just over the last year from fiscal year 2015 to 2016, state personal income (a good measure of economic growth) grew by 4.7 percent in the Commonwealth, but the state’s General Fund grew by only 3.7 percent.

The disparity is reflective of a 25-year trend in which revenue hasn’t been keeping up with the economy. That means instead of being able to reliably maintain our investments in excellent schools, affordable higher education, job training and healthy citizens and communities, we have less of what it takes to create a better future.

More On Budget & Tax: Governor’s Budget Increases Funding for Relief and Reinvestment

micah blog

Source: KCEP analysis of Office of the State Budget Director, Bureau of Economic Analysis data

Just how much less? The General Fund as a share of the state’s economy was 5.8 percent in 2016. If revenue had simply kept up with growth in the economy since 1991 – the year following the passage of the Kentucky Education Reform Act (KERA) when revenue was 7.3 percent of personal income – the Commonwealth would have raised in fiscal year 2016 alone an additional $2.6 billion. Even a small portion of those resources could have prevented across-the-board budget cuts in 2016, as well as a “lost decade” of investments in our state.

Ideally, a tax code fosters robust investments in education, infrastructure, workforce development and other areas, creating a “virtuous cycle,” in which smart allocation of resources today produces an even greater amount of growth and resources tomorrow. In reality in Kentucky, tax breaks for powerful interests siphon off billions of dollars each year, subsidizing the highest incomes in the state; and as a result of our “upside down” tax structure (which asks the least of those who are gaining the most in today’s increasingly unequal economy) we have less to invest in that virtuous cycle.

Cleaning up some of the billions in tax breaks the state gives out each year would help restore the link between our economy and General Fund and afford stronger investments in thriving communities.

FacebookTweetLinkedInEmail

Primary Sidebar

Get KyPolicy news updates in your inbox

Sign Up

Sidebar

Perspectives

Kentucky Must Remove the Roadblocks to Unemployment Insurance — Our Most Important Economic Stabilizer

Many Kentuckians Face Hunger and Hardship This Thanksgiving. They Need Relief.

Kentucky Lives and Livelihoods Are on the Line with Supreme Court Challenge to ACA

Letter to Governor Beshear: Priorities for Use of Remaining Coronavirus Relief Fund Monies

Congress Can’t Go Home Without Passing a Strong Aid Package

Other Budget & Tax Items

Gov Budget analysis

Analysis

Governor’s Budget Increases Funding for Relief and Reinvestment

Money Harvest slot machine thumbnail 1

Analysis

Any Action on Proliferating Slot Machines Must Raise Artificially Low Tax Rate

budget preview cover image

Analysis

Defeating the Pandemic and Building a Robust Recovery: A Preview of the Budget of the Commonwealth

Ky. Policy

Footer

Research that works for Kentucky

433 Chestnut Street, Berea, KY 40403

Phone: 859-756-4605

General information and inquiries: info@kypolicy.org

   

Help us make the facts free and accessible to everyone. That’s how Kentucky will thrive.

Donate

  • Topics
    • Budget & Tax
    • Criminal Justice
    • Economic Security
    • Education
    • Health Care
    • Jobs & The Economy
  • Work
    • News
    • Op-Ed
    • Research
  • About Us
  • Press Room
  • Contact

Get KyPolicy news updates in your inbox

Sign Up

Copyright © 2021 KyPolicy Privacy Policy Terms & Conditions Sitemap

made by P&P
Share this ArticleLike this article? Email it to a friend!

Email sent!
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you consent to the use of cookies.OkPrivacy policy