Kentucky Lt. Gov. Jerry Abramson says he is looking to the General Assembly for movement on his recommendations for statewide tax reforms, and that he is not yet prepared to announce a decision on a potential 2015 bid for governor.
Abramson assumed the chairmanship of a commission on statewide tax reform shortly after taking office in 2011. In 2012, the commission performed an extensive review of Kentucky’s tax codes. That study became one of 12 the Commonwealth has conducted since 1982.
But when Gov. Beshear assumed office, he outlined five areas that tax codes lacked: fairness, competitiveness, simplicity, elasticity and adequacy.
Abramson said a study like his was relevant due to the slowed national economy. The Commonwealth reacted over the last five years, conducting more than 13 rounds of cuts that resulted in $1.6 billion in budget breathing room. Despite that, a consultant associated with the commission said recently that Kentucky could experience up to a $1 billion budget shortfall by 2020.
“What he’s saying is, if we do nothing, by 2020, we’ll have another billion dollars we’ll have to cut,” Abramson said.
The commission finished its study with the New Year and has compiled an extensive report that is now in the governor’s hands. It includes 54 recommendations that would add almost $660 million annually to state revenue.
About $485 million would come from raising taxes on retirement benefits. Kentucky’s current code puts the pension income threshold at $41,110. Abramson said he and commissioners met countless retirees across the state during their investigation who said the current threshold gives many “representation without taxation.” Retirement benefits along with federal Social Security money can give a retired family of two almost a $100,000 a year in income, and Abramson said by lowering the threshold, retirees can more equally pay for the important state services they use.
“Most other states have a threshold have a threshold of somewhere around $15,000 to $18,000 tax-free, and after that, you pay taxes,” he said. “We have a situation that was over $40,000. So, if you make $40,000, your wife makes $40,000 and you have Social Security benefits, you don’t pay a nickel, and yet your kids and grandkids who are in the public schools are in a situation where there have been cuts; you’re driving on the roads where we have less state police than ever before to help you. Yes, that was a recommendation that was made.”
Most of the recommendations require General Assembly approval, and Abramson said he was disappointed by the little legislative traction the House gave the recommendations. He said he hopes for more negotiations between state leaders after statewide redistricting is finished by mid-August with possible votes to come in the 2014 budget session. Consideration of tax reform only makes sense then, he said, because the General Assembly will be considering a massive biennial budget.
“Once the redistricting is done, we feel very confident that the governor will spend more extensive time with the leadership of the House and the Senate and begin to look at these items that they’re willing to agree to and begin to move on.”
Abramson said, the commission’s plan was always to pursue legislative action on reform, but he said he won’t let the results of the undoubted legislative battles impact a possible run for governor in 2015. Abramson has joined a list of other Kentucky Democrats who have shown interest in the open race including Commonwealth Attorney Jack Conway and former state auditor Crit Luallen.
He said he may make an announcement shortly before or after the Annual Fancy Farm Picnic on Aug. 3.
“I’m going through this yes, no, up down," he said. “If you’re going to spend a year and a half hour to raise $15 million and once you win the question becomes can you really be a transformational public servant and make a significant difference in the future of Kentucky? That’s what I’m thinking through.”
Polling, he said, shows he could win against other expected candidates.