It can be a couple things on the governor.
To check the function of the governor:
Set the dash lever to a mid position.
Disconnect the carb link from the governor arm.
You will now be in manual control of the engine speed, so it helps to have an assistant to operate the ignition and starter.
Hold the disconnected carb link rearward to the idle position.
Gently hold the governor arm forward.
Have the assistant start the engine. Be careful, your hands are very near the belt!
Gradually bring the engine RPM up.
Observe the disconnected governor arm. It should begin to move toward the rear if the governor is working. It helps to have a tach, but by the time the engine is around 2500 RPM, the arm will be as far back as it is going to move.
If this does not happen, there is an internal problem with the governor.
If it does move, carefully note the farthest position it moves to.
Adjust the length of the carb rod so when the arm was at it's rear most position, the throttle is held against the idle stop.
Reconnect the linkage, start the engine and slowly bring the RPM up. It should max out at around 2000RPM. If the top speed needs to be adjusted, loosen the U bolt, rotate the arm until the speed is correct with the dash lever in full speed position.