Covering Kentucky

Jul 11, 2014 5:59 AM

Kentucky Ends 2014 With $90 Million Shortfall

FRANKFORT (AP) - Kentuckians are buying more stuff, they just aren't paying as much in taxes.

That's why the state ended the 2014 fiscal year on June 30 with a $90 million shortfall in its general fund.

Sales taxes - the extra 6 percent consumers pay on their purchases - were up $109 million, the largest increase of any state funding source.

But the state's largest revenue source - individual income taxes - grew less than 1 percent compared to last year - about $63 million less than officials had planned. Even during the depths of the recession the past three years, Kentucky's income tax collections grew by 8.3 percent, 2.8 percent and 6 percent, respectively.

"The sales tax was our hero," State Budget Director Jane Driskell said. "The largest culprit was the individual income tax."

The reason, Driskell said, is what budget wonks refer to as the "April Surprise." In 2012, when the nation was barreling toward the fiscal cliff - the combination of automatic tax increases and spending cuts that had economists worried - most of the country's wealthiest individuals sold a lot of their assets to avoid a federal tax increase.

(Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

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