General Assembly passes budget and revenue bill
Estimated crowds of protesting teachers, state workers, supporters, families and many more that numbered as high in one estimate as 18,000, were loudly heard through the halls and rotunda of the Capitol Building in Frankfort as the Senate and the House of Representatives were conducting business. It was thought to be the largest crowd since 15,000 to 20,000 education supporters marched on the Capitol on March 17, 1988. That crowd was upset at Gov. Wallace Wilkinson and demanded more money for Kentucky schools. Sounds like a familiar tune.
Either via schools being on spring break or local districts succumbing to pressure of high teacher absentism with a lack of substitutes, every public school in the state was closed on Monday, April 2.
That pressure to properly fund public schools hung over the senators and legislators as they quickly considered a budget, comprehensive tax reform and revenue bill as well as several other items on the agenda. It was the last day for a bill to be passed and give the General Assembly the opportunity to override any Governor veto.
In an article in the Courier-Journal, Tom Loftus writes, "Gov. Matt Bevin made clear in a statement Monday he does not like the tax reform and budget bills that the General Assembly flopped on his desk. Bevin's statement said he is 'very concerned' that the budget and tax bills do not meet 'basic standards of fiscal responsibility.' He suggested the budget creates 'unfunded mandates' that could cause 'budget shortfalls in the future.' But the statement did not say whether or not he would veto them. Instead, the governor ended his statement by saying there "is ample time left in this legislative session" to thoughtfully fix the tax and budget bills.'
Bevin does have the power of line-item veto and can pick and choose what he will pull out and veto.
A veto that many expect to be coming and Governor Bevin in a social media post seemed to allude. As of 4:00 p.m. on Wed., April 4, that veto has not yet occurred. The Ky Constitution gives the Governor 10 days, not including Sundays, for him to veto a bill. That means he could veto the budget bill as late as 11:59 p.m. on Fri., April 13.
Lawmakers recessed Monday night and are scheduled to reconvene for the session's final two days on April 13 and 14. They may act on a few remaining bills on April 13 and will consider any vetoes on the final day. The session can last 50 days and April 13 and 14 are the last two days.
Some of the highlights of the budget is that it fully funds the Family Resource Youth Service Centers for the remainder of this school year (they were facing a cut for the remainder of the 2017-18 school year and for the next two years which is the length of the budget. SEEK funding was raised to the $4,000 per pupil level which is the highest in the commonwealth's history.
Transportation funds were funded after the governor had proposed deep cuts in them. Potentially, this could be a line-item veto and would be up to the General Assembly to override it on that last date.
One bill that was passed and was vital to every school district and local government was the phase-in bill. According to Strong, the pension costs for Pendleton County schools would have been $200,000 NEXT YEAR. Now that cost can be phased in over the next five years at a much more reasonable rate. Pendleton County Judge Executive David Fields has repeatedly said that if the pension expense is not phased-in, it would mean jobs lost for the county government.
As far as the revenue bill, how you view it depends on which side of the aisle you sit and which narrative you lean. The actuality is that the proof will be in the pudding as it takes affect and we see real life numbers of the growth of the Kentucky economy and the tax revenue it increases.
The revenue bill did drop the state income tax rate to 5 percent for all parties while raising taxes on cigarettes, 50-cents a pack and e-cigarettes.
It also instituted new taxes on services. Kentucky officials have talked about a sales tax on services for decades.
For the politicians and special interests trying to make this a partisian issue, according to an article written in the Lexington Herald-Leader by Jack Brammer, "In 2017, a blue ribbon commission set up by then-Gov. Steve Beshear (Democrat) proposed broadening the sales tax to “limited” services, including auto repair, certain recreational activities like golf courses and fitness centers and certain commercial and personal services like landscaping and cleaning companies. Beshear said he tried to avoid taxing “mobile” services such as legal and accounting that easily move their work across the state’s borders."
So, for those taking their car to the mechanic, clothes to the dry cleaner or the dog/cat to the vet, there will be a new service tax. Some but not all of the other services that sales tax would apply are: landscaping, lawn care, janitorial services, pet care services, fitness and recreational sports centers, golf courses and country clubs, bowling centers, indoor skn tanning services, diet and weight-reducing services and limousine.
The Republican leadership have indicated they would like to get rid of the state income tax and increase taxes on the consumption of services and goods. The theory is that the more you consume services and goods, read those with higher incomes, the more taxes you will pay. Many states have moved away from income taxes, including Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Residents of New Hampshire and Tennessee are also spared from handing over an extra chunk of their paycheck on April 15.
The Northern Kentucky Chamber of Commerce released a statement thanking the General Assembly for finding a reasonable solution to the Commonwealth's pension crisis, addressing the phase-in provision and moderinazing the tax system. They applauded the cigarette tax for generating much needed revenue for a period of time but improving the health of the Commonwealth.
The Ky. Center for Economic Policy was not so rosy with their view of the plan. "This tax plan doubles down on the deeply flawed Trump-GOP tax law enacted last year. Average Kentuckians are being asked to pay for a giveaway for wealthy taxpayers all under the guise of tax reform."
Make sure to get your copy of The Falmouth Outlook on each Tuesday either via print at your local convenience store or subsctiption either through the mail or e-subscription for all of the information concerning the finals days of the General Assembly. Also, mark www.falmouthoutlook.com as one of your brower favorite pages as we disseminate information from around the state on this issue and many others.
The bill in its entirety can be found here. http://www.lrc.ky.gov/recorddocuments/…/18RS/HB200/FCCR1.pdf