Let's Fix Kentucky's Revenue System

It's long past time for legislators to take seriously Kentucky's significant and harmful structural revenue deficit. That's the message state Rep. Jim Wayne and KFTC members emphasized during a press conference this morning at the State Capitol.

Rep. Wayne outlined legislation he is introducing today with the support of KFTC and many other groups that include teachers, public employees, community advocates, students, parents, human services workers, public safety and environmental protection advocates, and many others from all walks of life who are directly impacted by budget decisions made by the General Assembly.

Various speakers reminded the nearly dozen media representatives in the room that this year's revenue crisis is just the latest piled on top of revenue shortfalls in every state budget in this decade.  Daniel Shaw (pictured, right) a Western Kentucky University student spoke for himself and read a statement from University of Louisville student Amar Shah  describing the added strains that regular double-digit hikes in college tuition have meant for students and their families.

"As universities cut costs to keep inching along, the quality of our education is deteriorating." — Amar Shah

Rep. Wayne acknowledged the students who are facing difficulties "because of the fiscal irresponsibility of the General Assembly and Frankfort leadership."

The primary points made at today's press conference were:

• Deeper budget cuts, a cigarette tax increase and expanded gambling are not the only possible solutions to the state's current revenue crisis.


• It is not just the economic recession that is to blame for our revenue woes.


• This structural revenue deficiency was predicted in 2001 and has been ignored by legislators.


• Now is the opportune time for more comprehensive tax reform.


• Such reform needs to restore a measure of fairness to Kentucky's tax system.

Kentucky's structural revenue problem was predicted in some detail in a 2001 study known as the Fox Report. It forecast a $2.3 billion revenue shortfall by 2010 unless lawmakers acted to increase state revenue. They have not.  The result is a current fiscal year $456 million revenue shortfall "on an already severely cut budget," said Rep. Wayne.

"It's going to be worse in the next fiscal year unless we do some systematic, structural changes to our revenue system."

Rep. Wayne is the chief sponsor of legislation (House Bill 223) that has four components:

1. make the income tax more progressive by slightly increasing the rate for income that exceeds $75,000 a year  (learn more)
   


2. extend the sales tax to a variety of services used primarily by people who are well-off (Kentucky taxes mainly the sale of products, not services)  (learn more)
   


3. restore the estate tax (phased out by Congressional action)  (learn more)
   


4. create a state Earned Income Tax Credit to begin to address the unfairness in the system  (learn more).
   

These measures are expected to raise $310 million in new revenue.

Here is a video of Rep. Wayne's comments at the press conference.

• WDRB-TV Fox 41


• Kentucky News Connection
  


• Owensboro Messenger-Inquirer
  


• Lexington Herald-Leader