The Richmond Register

State News

January 31, 2014

Beshear putting tax reform ideas on table

FRANKFORT — Gov. Steve Beshear will discuss his ideas for tax reform with some key lawmakers Monday in hopes of seeing it pass the 2014 session that is nearly one-third complete.

Beshear appointed a Blue Ribbon Tax Commission, chaired by Lt. Gov. Jerry Abramson, which last year offered a lengthy list of recommendations that Abramson said would provide a fairer, simpler tax code that could raise more money for the state budget.

During his budget address two weeks ago before a joint session of the General Assembly, Beshear proposed a tight budget based on current revenue sources. The budget proposal makes deep cuts in some programs in order to boost funding for elementary and secondary education.

At the conclusion of the speech, Beshear said a better alternative would be to increase state revenues through tax reform or expanded gambling and promised to offer proposals on each.

On Friday, House Speaker Greg Stumbo, D-Prestonsburg, said he expects Beshear to meet with legislative leaders some time Monday “about his tax reform proposal,” but Stumbo said he hadn’t seen any details.

Senate President Robert Stivers, R-Manchester, said he also wants to see the details of Beshear’s proposals, adding he thinks it best those details are shared with lawmakers before being made public so lawmakers can discuss it “without it being played out in the press.”

When asked Friday about next week’s meeting, Beshear’s spokeswoman, Kerri Richardson, said she couldn’t provide any details.

Senate Minority Leader R.J. Palmer, D-Winchester, confirmed he’d been asked to meet with the governor Monday.

“But I don’t know what’s in it,” Palmer said. Asked about the prospects for passing tax reform in the 2014 session that is roughly one-third of the way to its maximum 60-day time period, Palmer said such prospects “are probably challenging.”

The commission’s recommendations included lowering some corporate taxes while creating a new individual tax bracket and extending the sales tax to some services. Another recommendation would limit the amount of deductions on retirement income.

Rep. Jim Wayne, D-Louisville, served on the commission and has long advocated for tax reform. He wasn’t invited to Monday’s meeting. But he’d liked to have seen the governor try to build public support for the idea before the current legislative session.

“I’m discouraged the groundwork hasn’t been laid since the commission made its report over a year ago,” Wayne said. Doing that would provide lawmakers with information about how tax reform and presumably some extra money for the state budget can benefit lawmakers’ individual districts, he said.

Stumbo seemed reluctant to sign on to some of the commission recommendations about lowering corporate taxes.

“I don’t know why you want to give more tax breaks or incentives to companies that are doing well?” Stumbo said. “And it appeared to me that some members who are on that commission have jockeyed for those provisions to help their own businesses.”

In fact, Stumbo said, he’d like a review of existing tax breaks and incentives for business.

“We’ve really incentivized our tax code to the point to where we’re giving away more money than we’re taking in,” Stumbo said. Tax breaks or exemptions have been estimated to leave about $17 billion untapped. Kentucky’s General Fund budget is just under $10 billion a year.

“Some of these things are 20 or 30 years old,” Stumbo said. “They need to be looked at and reviewed again.” And in the future, he’d like to see such incentives include a sunset date.

Republicans in both the Democrat-controlled House and Republican-controlled Senate have said they are interested in tax reform if it helps create jobs or a more friendly business climate but are suspicious of proposals to raise more money.

It’s also an election year with half of the 38 state Senate seats and all 100 House seats on the ballot. Combined with the two parties’ different views of what form tax reform should take, it may be a tough sale for Beshear.

“Tax reform always means someone pays more and someone pays less,” Stumbo said. “The people who pay less don’t call and thank you but the people who pay more sure do call you and raise hell.”

He said the most likely outcome ― given what he’s hearing from fellow lawmakers ― is that neither proposal passes the 2014 session.

But Stumbo said lawmakers have promised Beshear they’ll keep an open mind about both tax reform and expanded gambling.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

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