Leaders with the Kentucky Center for Economic Policy are calling on state leaders to tackle tax reform to address the commonwealth’s economic woes.
Governor Steve Beshear plans to close the state’s $742 million spending gap by cutting many state agencies by up to 8.4 percent and using a number of other measures, including taking $100 million of the $122 million in the state’s Rainy Day Fund.
Kentucky Center for Economic Policy Director Jason Bailey says that’s a necessary step to prevent deeper cuts.
“Well, Rainy Day Funds are there for days when it rains, that’s the purpose of them and it’s absolutely raining right now. It is a smart policy decision for the governor to use the Rainy Day Funds to plug this budget,” he says.
Beshear says tax reform and expanded gaming are needed to augment the state’s sluggish revenue streams. The governor made a passionate plea to state lawmakers during his budget address Tuesday to pass a gambling amendment so voters can decide that issue in the fall.
Since running for governor in 2007, Beshear has pushed for expanded gaming as a way to help raise revenue in the state. Initially, the governor sought to have the legislature pass the measure outright, but he has since pivoted to advocating for a constitutional amendment.
Despite a landslide victory in November over state Senate President David Williams, R-Burkesville, there little indication the gaming debate has cooled and there is still question if the gaming bill will have enough votes to pass out of the Republican-controlled state Senate.
But Bailey says gaming is only a short-term fix and lawmakers need to think about the state’s economic future instead.
“As a revenue source, casino gambling is not likely to be a long-term solution,” he says. We’re going to need tax reform because reforms to our income and sales tax are going to grow in line with the economy and allow us not to just get out of this current challenge but in the long-term make the investments that we need to make. With or without expanded casino gambling, we’re going to need to address tax reform.”
The non-profit group reviewed the governor’s budget and concluded it only “heightens the need to follow through on recent conversations about generating additional revenue through tax reform.”