Advocates: KY has billions in rainy-day funds that could benefit communities
Monday, December 18, 2023
In less than a month, lawmakers will convene for the 2024 Kentucky General Assembly.
Advocates said they want fewer dollars stockpiled in the state’s rainy day fund and more money going to resources to help address the housing crisis, teacher and bus driver shortage and economic hardship brought about by inflation.
According to the Kentucky Center for Economic Policy, the state has nearly $4 billion in its “rainy day” or Budget Reserve Trust Fund, and it’s expected lawmakers will continue padding its savings.
Jason Bailey, executive director of the Kentucky Center for Economic Policy, said the cash stockpile could be used to justify tax cuts down the road, which would disproportionately benefit the wealthiest Kentuckians, while the state’s problems grow.
“We have child care centers that are on the brink,” Bailey pointed out. “We have needs in our state that are unfulfilled, and the money’s there for the first time in a long time to begin to reinvest it.”
Supporters of bulking up the state’s rainy day fund argue the money is needed to buffer the state from future economic downturns and provides extra cash for natural disaster aid. The rainy day fund is expected to top $5 billion by next summer, an amount Bailey argued exceeds what is necessary to protect against hard times.
Courtney Rhoades Mullins, black lung organizer for the Appalachian Citizen Law Center, said residents in eastern Kentucky are still out of their homes, living in tents or FEMA campers a year-and-a-half after 2022’s devastating floods. She stressed money to build new homes continues to be a need.
“People are still having to adapt,” Rhoades Mullins explained. “People are still trying to navigate in this world after this devastating flood that not only took several people’s lives but has displaced so many.”
Kentucky recently changed its income tax rate from a graduated rate up to 6% to a flat 4% rate. According to some economists, the Commonwealth’s General Fund, typically fueled by income taxes, will likely fail to keep pace with inflation over the next few years.