On the first day of the 2023 legislative session, pro-cannabis advocates held a rally in favor of permanently decriminalizing possession of marijuana for personal use in the Commonwealth by way of a constitutional amendment.
Democrats in the statehouse, along with Gov. Andy Beshear, are hoping to push through some type of legislation for medical cannabis in the two-part, 30-day session that convened on Jan. 3, paused on Jan. 6, and reconvenes on Feb. 7.
Beshear worked with House Minority Floor Leader Derrick Graham (D-Frankfort) to file medical cannabis legislation.
Further, Northern Kentucky Rep. Rachel Roberts (D-Newport) filed a near duplicate of the bill she filed in 2022, which seeks to fully legalize recreational cannabis in Kentucky.
It’s a signature priority for Beshear, who faces reelection in 2023. So much so that he passed an executive order at the end of 2022 to decriminalize small amounts of medical cannabis purchased in another state, which took effect on Jan. 1.
However, the order doesn’t allow Northern Kentuckians to go across the river in Ohio to obtain medical marijuana because Ohio users must be residents.
Though he’s uncertain how cannabis legislation will fare in the Senate — the House has passed medical cannabis bills the past two years — House Speaker David Osborne (R-Prospect) said that the legislature pushed through a significant amount of legislation last year.
He expects to pump the brakes this session.
In 2022, working with Republican supermajorities in both chambers, the legislature passed laws on abortion, income tax, charter schools, transgender athletes, and unemployment benefits.
Osborne thinks the best path forward is slowing down and taking a more measured approach.
“I don’t think you’re gonna see an incredibly aggressive agenda,” Osborne said.
Cannabis isn’t the only potential legislation that legislators might consider in 2023.
On the last day of part one of the session, the Senate held a second reading of House Bill 1 — the income tax reduction bill. It passed the House on Jan. 5 along a party-line vote of 79 Republicans and 19 Democrats.
The new legislation would lower the income tax from 4.5 to 4% on Jan. 1, 2024, further reducing it where it sits now. Income tax shrank from 5 to 4.5% on Jan. 1, 2023.
“We are another step closer to putting more money back into the pockets of working Kentuckians,” said bill sponsor Brandon Reed (R-Hodgenville).
In a nearly two-hour House debate on Jan. 5, Democrats questioned why the state’s surpluses are so high at the moment, and lamented that the bill would help rich Kentuckians, as opposed to assisting average income earners.
Republicans said income tax reductions could help residents save for retirement or pay down debt.
“But nobody but the richest Kentuckians are going to get enough money to do any of that,” said Rep. Josie Raymond (D-Louisville).
Democrats also argue that the state has record surpluses because the federal stimulus money during the COVID-19 pandemic led to a faster-than-expected recovery from the pandemic recession and high inflation.
“The revenue surpluses we see today will be a thing of the past,” said Jason Bailey, the executive director of the Kentucky Center for Economic Policy. “At some point, things will return to the historic norm in which Kentucky has very tight budgets and modest revenue growth.”
Senate President Robert Stivers (R-Manchester) said he expects the Senate to take up the bill when the legislature returns from the four-week break.
“The triggers have been hit, it will take place, so we will have gone to four and a half … by next year, we will be down to 4%,” he said.
House Bill 606, the bill that would have legalized sports betting in Kentucky, died in the Senate on the last day of the 2022 session.
Former Rep. Adam Koenig (R-Erlanger), the bill’s sponsor, attempted to maneuver to get enough votes for the bill, but it ultimately failed.
A month later, Koenig lost his Republican primary to the new 69th District Rep. Steve Doan (R-Erlanger).
After the primary loss, Koenig said there would have to be a new torch bearer for the legislation. It’s unclear who that will be, but Senate Majority Leader Damon Thayer (R-Georgetown) said he hopes to take another crack at it this year.
Sen. Thayer pushed for it to pass the Senate, but it never made it out of committee. With new faces in the Senate, the legislation could pass this time around, according to Thayer.
“I think it’s a natural extension of our history, tradition, and heritage of betting on horses,” Thayer said at the Covington Business Council Legislative Preview in October.
In his State of the Commonwealth address, Gov. Andy Beshear said that sports betting is something he wants to get over the line this session. He appointed the House Minority Leader Derrick Graham (D-Frankfort) to file legislation.
“We’re also filing legislation to legalize sports betting,” Beshear said. “I think Kentuckians overwhelmingly want it, and that should be enough — people are who we represent.”
Republicans also signal they’ll take over where Koenig left off. In a press conference on the first day of the session, House Speaker David Osborne (R-Prospect) said the legislation would be filed in the second part of the 30-day session.
“I believe there are a couple of them (House Reps.) working on it,” Osborne said, though he wouldn’t clarify who they are at this time.
Electric vehicle taxes
Sen. Chris McDaniel (R-Ryland Heights) is the chair of the Senate Appropriations and Revenue Committee, which helps dictate tax policy and sets the budget every other year.
This session, he said he is interested in electric vehicle legislation, but admitted it’s a long-term issue. He said he expects it’s something the state will have to deal with in the next 10 to 15 years.
“We put a groundwork in place this last session, which in essence was a placeholder,” McDaniel previously said.
He told LINK nky in January that he’s meeting with constituent groups and he fully anticipates action will be taken to adjust last year’s initial electric vehicle tax structure.
The groundwork comes from an electric vehicle power tax and vehicle fee.
As part of House Bill 8 — a bill that will lower the state’s income tax — businesses that operate an electric vehicle charging station will be charged three cents per kilowatt hour starting in 2023.
There is wiggle room for the legislature to adjust this rate.
In addition to last year’s changes in the tax structure, a $120 electric vehicle owners fee — or $60 for motorcycles or hybrid vehicles, took effect on Jan. 1,2023. This fee is on top of normal registration fees.
Fifty percent of these fees will go to the state’s road fund and the other half to the General Fund.
While there will be room for electric vehicle power taxes, there still isn’t a tax credit like in other places in the country. Senate Bill 370 was introduced last session but never made it to a committee vote.
The bill would have provided electric vehicle infrastructure tax credits for 30% of qualified expenditures paid for business. It doesn’t address tax credits for individual users.
The tax credit would have maxed out at $1,000 for an at-home charging station or $30,000 for a direct current fast charging station — in other words, one capable of quickly charging an electric vehicle so it can charge multiple cars.
The gas tax is the primary funding mechanism for roads in the Commonwealth. As electric vehicles grow in popularity, the state will need to look at replacing the lost revenue from the decrease in the gas tax, McDaniel said at the Covington Business Council Luncheon.
Electric vehicles will become more common. There are currently 47 federal incentives to purchase electric cars, which include grants, tax breaks, loans and leases, rebates, credits, exemptions, and other programs in the country, according to reporting from LINK nky reporter Grace Tierney.
Kentucky started pursuing electric vehicle infrastructure as part of the projected growth of electric vehicle use.
In July, the legislature heard testimony on how state officials are working to institute Kentucky’s Electric Vehicle Infrastructure Deployment Plan.
The Kentucky plan is part of the National Electric Vehicle Infrastructure, or NEVI, Formula Funding Program. Funding comes from the 2021 Infrastructure Investments and Jobs Act, and Kentucky is getting $10.3 million this year, with a total of $69.5 million through 2026. There will also be $17.4 million in non-federal funds.
“The goal of the NEVI funding is to develop a reliable, affordable, and equitable national EV charging network,” said John Moore, assistant state highway engineer for project development and cabinet lead at the Kentucky Transportation Cabinet over the summer. “The initial focus is to deploy fast chargers along the interstates to support long-distance travel.”
In order to access the funding, Kentucky has to have a federally approved plan. The KYTC is working with the Energy and Environment Cabinet (EEC), the Public Service Commission (PSC), and the Federal Highway Administration (FHWA) to develop Kentucky’s Electric Vehicle (EV) Infrastructure Deployment Plan.
As part of the plan, Kentucky must develop specific corridors along its highway system. Interstates 65, 75, and 71 already have EV infrastructure in place. Routes 68, 9, and 23 are ready for this infrastructure. The plan will help to develop EV infrastructure on Interstate 64, 69, and 165.