Local Features
12:09 pm
Fri January 29, 2010

More delays likely for Kentucky tax reform

Frankfort, KY – The phrase tax reform' is again finding its way into the lexicon of Kentucky's lawmakers. For years, many have called on the Commonwealth to update its tax system, yet, there's been little action, and further delays seem likely. KPR's Stu Johnson looks at the ever-persistent question of "When will it happen?"

Leaders from both Houses of the Kentucky legislature indicate an expansion of gambling is very doubtful this session. Likewise, very few lawmakers favor tax increases. So, with no new revenue available and the state facing a one-and-a-half billion dollar deficit, the legislature may be forced into deeper budget cuts and the layoff of state personnel. Given that prospect, some proponents of tax reform say its time has come. Still former governor and current state senator Julian Carroll says tax reform will be no easy task

"2010 makes the 49th year I've been in this capital building and I've never known us to attack tax reform as such."

Over the years, there have been some tax modifications, but Carroll says they didn't amount to real tax reform. Before that can happen, the Frankfort senator believes lawmakers should consult tax experts and tax payers.

Likewise, fellow senator Tom Buford believes concrete action must wait. Buford wants a clearer perspective on Kentucky's economic future...

"We know what we need to do we know what we have to do but I would rather do it after the economy recovers so that we don't make a knee jerk reaction and end up two or three years down the road with a billion dollars more than it takes to make government operate."

Among the top proponents of tax reform is Louisville Representative Jim Wayne. For years, Wayne has said new taxes on luxuries, such as limousines or golf courses, could raise revenue but not greatly impact the poor. Wayne has also argued for adjusting the income tax structure

"And with that new income how much could you reduce the income taxes on the middle income of this state and the working poor of this state so the idea is to make our system more fair by making people pay their taxes according to how much they're earning."

But, for now, business leaders say the Commonwealth should simply focus on spending cuts. Dave Akisson with the Kentucky Chamber of Commerce says too much is spent on jails, Medicaid, and on health insurance for public employees. The chamber director's not necessarily opposed to genuine tax reform, but, he doesn't want to find tax increases hidden behind those reforms..

"If it's to modernize and make it more fair and equitable and keep us more competitive with surrounding states we're for that if it's just to produce more money for state government we would rather see state government focus its attention on spending."

And so it gets back to the question of timing .when will the legislature take up tax reform? Given this session's lengthy to-do list, Jim Wayne admits more delay seems inevitable. For now, he simply hopes to make the case for reform .perhaps later this year

"That we would formulate a budget have that budget presented to the legislators and help them realize how dramatic the cuts are going to be and then based on that we can give them some sense of hope that we can come back in a special session and do tax reform the right way."

Senate president David Williams and House speaker Greg Stumbo agree tax reform this session is a tall task. But, Stumbo adds it's still possible..

"It's not impossible if the will of the bodies are there we can do it the question is what will be the will of the body."

Meanwhile, a long-standing legislative working group that's building a plan for tax reform suffered a setback this week. It lost Lexington representative Bill Farmer. Farmer wants to scrap Kentucky's income tax and replace it was a state sales tax. In resigning, the Republican said, the work group had put too much emphasis on tax increases.