Late last year we described Kentucky Governor Steve Beshear's misguided resistance to reforming the state's tax system. Instead of offering real leadership and addressing the serious flaws of the state's tax structure, Governor Beshear took a dramatic and short-sighted stance against any tax increases to assist in balancing the state's budget. It's unfortunate, but unsurprising that he continues to hold this position leading up to the Special Session starting May 24. (The legislature adjourned its regular session on April 15 without a budget).
Kentucky isn't a state where the tax system just needs a little tweaking. In a recent report, ITEP found that the state's revenue system "is simultaneously insufficient, as it fails to produce enough revenue to fund the public services on which Kentuckians rely, and inequitable, requiring low- and moderate-income residents to pay more in taxes relative to their incomes than wealthier individuals and families."
The two-year budget that is expected to pass in the special session contains no fundamental tax reform. Instead, it relies heavily on across-the-board spending cuts of 3.5 percent for the first year and 4.5 percent in the second year. Many are quick to add that the spending cuts aren't as deep for select areas of spending, including K-12 education, higher education, Medicaid and some areas of public safety, as if this makes a cuts-only budget more acceptable.
No doubt the choices facing Kentucky lawmakers are difficult and complex. But they have made their own jobs enormously more complicated and difficult by taking taxes completely off the table for the special session. The cutting has only begun.