NKY Forum: Legislators talk budget and abolishing income tax

Mark Payne
Mark Payne is the government and politics reporter for LINK nky. Email him at [email protected]

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With the General Assembly taking a break on Monday to celebrate President’s Day, four Northern Kentucky legislators participated in the “A Word with Our Legislators” forum. 

Hosted by the NKY Forum, which is a joint project of Northern Kentucky University’s Scripps Howard Center for Civic Engagement and the Boone, Kenton, and Campbell Counties libraries, the forum engaged with Sen. Chris McDaniel (R-Taylor Mill), Sen. Wil Schroder (R-Wilder), Rep. Ed Massey (R-Hebron), and Rep. Buddy Wheatley (D-Covington). 

Moderated by Kentucky political journalist Al Cross of the University of Kentucky Institute for Rural Journalism and Community Issues, the panel explored redistricting, the Brent Spence Bridge project, taxes, and the budget. 

Currently, the General Assembly is in session for 60 days, which happens when the legislature needs to pass a two-year budget. Due to the pandemic, the Senate and House only passed one-year budgets the past two years. 

“The biggest issue in any legislative session is the budget,” Cross said. “The budget is the basic policy document for the Commonwealth in Kentucky.” 

Cross noted that the legislature asserted itself in a way never seen before when the House released its budget ahead of the Governor’s budget. This is the first time in history that this has occurred. Sen. McDaniel chairs the Senate’s Appropriations and Revenue Committee and is heavily involved in both the budget and tax reform. 

“I know there’s a lot of interest in tax reform,” McDaniel said. “…tax reform will always be an issue in the Commonwealth, and it’s hard to take even what people view as modest steps.” 

People want to see an increase in consumption taxes, such as the sales tax, and a decrease in production taxes, such as income taxes, McDaniel noted. Republicans have talked about lowering or abolishing income taxes, which is similar to other states such as Florida and Texas. 

 This goes against Gov. Beshear’s recent support of a sales tax decrease. During his press conference, Beshear warned of “comprehensive tax reform” that raises taxes on average Kentuckians while giving tax cuts to corporations and wealthy Kentuckians. 

“Our families don’t need this type of ‘reform.’ They need relief,” Beshear said. “So, if we are going to alter our tax structure, let’s do it to address the current inflation and in a way that will help our families. Let’s do it in a way that will make things cost less for all Kentuckians.”

Wheatley disagreed with McDaniel regarding changes in the tax code that would increase the consumption tax, as disadvantaged individuals will see their taxes go up. 

“When I think about tax reform, the first thing I think about is we have revenue in the state that comes from our tax code,” Wheatley said. “If we make any changes to the tax, is somebody going to be paying more, is somebody going to be paying less? Are some companies going to be paying more, some less?”

In states such as Florida and Texas, they have abolished the income tax, and Republican legislators in both chambers have mentioned this is something that might be on the table this session. Massey and McDaniel noted that while they might support it, they don’t want to make any rash decisions. 

“I would like to go that direction,” Massey said when asked about abolishing the income tax. “We’ve talked about it a little bit.” 

This year has been unique due to the amount of federal money coming into the state from both the CARES Act and the American Rescue Plan Act. When U.S. Senator Mitch McConnell (R-Louisville) spoke to the Kentucky Republican Caucus, he told them to use the money wisely, Massey said. 

“We’re trying to use it wisely,” Massey said, noting they are trying to make workforce investments that will get Kentuckians back to work. “If we can get people back to work – I think the statistic is something like 52 or 53 percent of adult-aged individuals are working in Kentucky – we need to get them back to work. The work is what drives the economy, and if we have a good economy, I think we can make more movement with our tax reform.” 

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