Kentucky lawmakers have been excessively stockpiling money in the Budget Reserve Trust Fund, which is commonly called the rainy day fund. There is roughly $3.7 billion in the fund now and the total is projected to rise to nearly $5 billion by next summer, or more than double what’s needed to protect against future economic downturns. That number will then keep growing rapidly unless the legislature better prioritizes more of Kentuckians’ immediate needs.

Over the past few years the federal government has provided necessary pandemic aid — over $45 billion came to Kentucky — that stimulated strong economic growth. High inflation also increased state revenues by driving up income tax and sales tax receipts. This happened all around the country and led to dozens of states setting records for revenue.

With receipts coming in so strongly, lawmakers have an opportunity to do great things for the people of Kentucky. But why have they chosen instead to hoard the money? The explanation lies in House Bill 8, passed in 2022, which established a framework for eliminating Kentucky’s income tax, our single largest source of state revenue.

The bill requires the state to build up the rainy day fund and hold down spending in order to reduce and eventually eliminate the income tax, the benefits from which would go overwhelmingly to the wealthy. Now the funds set aside have become excessive, and  lawmakers face a choice next session. They can continue to hoard resources to fund more tax cuts that enrich the wealthy, or they can do more to take care of our communities.