The Kentucky General Assembly will create a new two-year budget in 2026 in the face of declining state revenues and substantial new costs passed down from Congress. Large recent state income tax cuts and a slowing national economy are already causing a $305 million budget shortfall this year. And HR 1, the federal megabill passed this summer, shifts major costs for Medicaid and SNAP food assistance to states. This challenging context threatens much-needed investment in Kentucky’s already-underfunded schools, hospitals, infrastructure, and human services.
At the same time, the state’s wealthiest people are doing better than ever. Their incomes and investment portfolios are soaring while they’re being showered with enormous federal and state tax cuts. In 2026, Kentucky’s richest 5% will receive $3.4 billion from tax cuts enacted over the last decade. That’s revenue no longer available to meet people’s needs. Kentucky workers, meanwhile, are facing stagnant and inadequate wages and a growing cost of living crisis that will get worse if state budget cuts are enacted.
There is a commonsense way to respond to this budding crisis. Kentucky could pass a windfall tax on the wealthy that redirects revenue lost through tax cuts favoring those at the top. A windfall tax is a practical and fair way for the General Assembly to protect critical public needs and create a path to a more prosperous Kentucky for all.
Read the rest at Ky Policy.
Comments
