In Depth: Tax Code Changes Again Unlikely to Pass in Frankfort

by Tony McVeigh on March 2, 2011

A Kentucky lawmaker determined to update the state’s antiquated tax code has made his annual pitch for reform. But the bill is generating little excitement as time runs out on the 2011 session.

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For 12 years now, Representative Jim Wayne has been sponsoring a comprehensive tax reform package that occasionally gets a House budget committee hearing, but that’s all. It’s never had a committee vote, much less consideration by the full House or Senate.

But the Louisville Democrat refuses to give up. He’s back again with the bill, which ups the cigarette tax by 50-cents per pack, extends sales taxes to services primarily used by the wealthy, reduces income tax rates on low-income families and raises them on people earning over $65,000 per year.

Wayne says the adjustments are necessary because the state’s current tax code doesn’t work. And since 2000, the state has spent $3.5 billion more from the General Fund than it collected.

“We don’t have enough monies to run the government,” said Wayne. “The programs that the people want – including education, social services, public protection – we can’t fund them properly.”

Wayne, once called the “Conscience of the General Assembly’ by former budget chairman Harry Moberly, knows his bill is a tough sell, because lawmakers tend to look for the exits when somebody mentions tax hikes.

“True leadership calls us to stand up and say let’s look at the facts,” said Wayne. “Let’s see what we need to do to be responsible legislators and responsible leaders in this state, to protect our people, to invest in our people and protect those programs that are so essential, including education.”

Wayne is not alone. Among those testifying in favor of his tax reform bill was Sharon Oxendine of the Kentucky Education Association. She thanked lawmakers for not cutting basic school funding in recent years, but says schools are hurting and the state must find new sources of revenue.

“The cost for staff and for faculty always are continuing to go up,” said Oxendine. “And when you don’t increase the SEEK funding, the state support to those schools and the commitment that we’ve made to help those schools, that commitment is not there.”

And Father Pat Delahanty of the Catholic Conference of Kentucky says it’s time for shared sacrifice.

“Contributions to the common good should reflect one’s ability to pay,” said Delahanty. “And from those to whom much has been given, scripture teaches us, much should be expected.”

But Rep. Fred Nesler of Mayfield wishes Rep. Wayne would pick on someone besides smokers. He says farmers in his rural part of the state depend on their tobacco crop and it’s unfair to keep turning to cigarette taxes to raise new revenue for the state.

“It would never happen,” said Nesler, “but if our country and our state voted cigarette smoking absolutely illegal, and you did not get any revenue for coffers regarding the cigarette tax, we would be scrambling for sure, for tax dollars.”

Rep. Wayne isn’t the only one pushing for tax code changes this session. A bill backed by Senate Republicans, calling for creation of a tax reform commission to study the issue and make recommendations for next year, cleared the Senate in January, but continues to languish in the House. House Appropriations and Revenue Committee Chairman Rick Rand says it’s not because the House is afraid to tackle the tough issue.

“But we have to deal within the political realities as to what we can do with tax reform and what will pass the General Assembly,” said Rand. “And, you know, that’s where we’re at.”

With only a handful of days remaining in the current legislative session, the possibility of tax reform legislation emerging this year appears unlikely. But one thing’s for sure. As long as Rep. Jim Wayne serves in the General Assembly, lawmakers won’t be allowed to ignore the issue.

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