FRANKFORT, Ky. — Kentucky is on course to achieve another record budget surplus in 2023, Gov. Andy Beshear said Thursday, calling it a sign of economic strength as the country struggles with inflation.
The state's General Fund is projected to receive more than $15 billion in revenue during the current fiscal year, up nearly 3% from the prior year. That would result in a revenue surplus exceeding $1.3 billion — the largest in Kentucky history — by the end of the fiscal year next June 30, Beshear said.
The General Fund pays for most state services, including education, health care and public safety.
“Our economy continues to hum in Kentucky,” Beshear said at his weekly news conference.
The Democratic governor pointed to the fiscal projections to push for his education priorities, including higher pay for school employees and state-funded preschool for 4-year-olds. He has urged the GOP-led Legislature to reopen the budget next year to pump more money into public schools.
Statewide test scores released last month showed many students struggled across a span of core subjects — a lingering effect from the COVID-19 pandemic. The governor says the state also needs to overcome a teacher shortage numbering about 11,000 vacancies in public schools.
“We can more than afford this," Beshear said Thursday in promoting his education plan. "We cannot afford to do nothing while there are 11,000 vacancies in our teacher shortage.”
Republican Senate Majority Floor Leader Damon Thayer has said lawmakers this year provided “record public school funding with flexibility for districts to spend to meet their local needs.”
“We do a biennial budget and have no plans to open up the budget in the middle of the cycle,” Thayer said last week in response to Beshear's plan. “Funding decisions won’t be made again until 2024.”
The budget lawmakers passed funded full-day kindergarten and poured money into teacher pensions and infrastructure. They increased the state’s main funding formula for K-12 schools, but the amount was hundreds of millions less than Beshear proposed.
Lawmakers left it up to school districts to decide whether to use additional state funding to provide higher pay to teachers and other school staff. Most districts awarded pay raises, Republicans say.
Beshear has called for a 5% pay raise for every school employee in Kentucky, on top of any pay increases already awarded by local school boards. He recommended more funding for textbooks and professional development, and renewed his push for a loan forgiveness program for teachers.
Meanwhile, the governor is expected to make his management of the state’s economy a cornerstone of his campaign for a second term next year. He typically starts his weekly news conferences by touting new economic development projects statewide. Beshear also readily acknowledges the “challenging present” caused by rising consumer prices.
Kentucky has had record or near-record budget surpluses during much of Beshear's term. The governor said this summer that there’s “enough credit to go around” for the massive surpluses. Republican House Speaker David Osborne has said the huge surpluses are the result of the Legislature's “sound fiscal policies and responsible tax reforms.”
Kentucky has posted record highs for job creation and investments and its lowest-ever unemployment rates during Beshear's tenure. The state’s two largest-ever economic development announcements — related to battery production for electric vehicles — have come during his term.
“The possibility that we can reach that stage where every child can pursue whatever dream they have, and to have the possibility of doing it all right here in Kentucky, is something special that I think we should all be working toward,” Beshear said Thursday.
A number of Republicans already are competing for their party’s nomination next spring to challenge the governor. Republicans are trying to link Beshear to Democratic President Joe Biden’s handling of the economy, which has been plagued by high inflation and interest rates.
Recent polling showed the governor receiving high job-performance ratings from Kentuckians, but Beshear faces a tough reelection fight in a state trending heavily toward Republicans.
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