After pension overhaul, Kentucky lawmakers eye tax changes

March 30, 2018

FRANKFORT, Ky. (AP) — In just seven hours Thursday, Kentucky lawmakers introduced and passed a 291-page overhaul of the state’s pension system without revealing one word of the proposal to the public.

Monday, they could do it again — only this time with taxes.

The Kentucky House and Senate have passed competing versions of a two-year operating budget for state government. Lawmakers continued to meet privately Friday to find a compromise. Many had assumed tax reform would not happen this year after House budget chairman Steven Rudy announced he had “failed” to get a proposal put together in time. But Rudy clarified that in an interview on public television this week.

“What I said was I failed to do tax reform in the normal committee procedure,” Rudy said. “We are getting very close to a plan that could move Kentucky forward for the first time and make us completely overhaul our tax code.”

Lawmakers must pass a spending plan by Monday if they want to preserve their right to override any potential vetoes from Republican Gov. Matt Bevin. A spokesman for the Senate Republican Caucus said budget negotiators do not plan to formally meet again until Monday. That means the committee would have to have an agreement before then, so legislative staff would have time to print it, setting up the possibility of lawmakers again introducing and passing a bill on the same day.

“If we are a democracy, we should use and abide by the rules established by legislators themselves. That means bills shouldn’t have a bait and switch,” Kentucky Education Association President Stephanie Winkler said about the prospect of a tax proposal appearing Monday.

But Rudy noted the process is like what Congress did late last year when they pushed through federal tax changes and “they didn’t go through the normal processes, either.”

Lawmakers have not said where new money would come from, and they did not discuss it publicly during the two days of budget negotiations that were broadcast on public television. Lawmakers continued to meet Friday but declined to speak with reporters about their progress.

The House version of the two-year spending plan included a 50-cent per pack increase on cigarettes and what would be a first-in-the-nation tax on prescription opioids. House leaders said the taxes would generate an extra $377 million over the next two years. But the state Senate rejected those taxes, saying it does not prefer a piecemeal approach to tax changes.

The extra revenue in the House proposal allowed them to fund public education at record levels, something acting House Speaker David Osborne said would be key for getting enough votes to pass.

“Clearly some of the education issues will be very difficult to fund without additional funding,” he said.

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