A bill that would dedicate tax receipts collected from out-of-state vendors — pending congressional action — toward Kentucky’s unfunded pension liabilities cleared a House panel Thursday.
The House State Government Committee unanimously passed House Bill 137, which would first require Congress to enact legislation requiring out-of-state vendors to collect and pay sales tax for purchases destined for Kentucky.
Rep. Brent Yonts, HB 137’s sponsor, said Amazon is the only company to voluntarily pay sales tax of around $20 million annually.
The U.S. Senate passed legislation on out-of-state sales tax, but the U.S. House has not acted on the measure. Sales tax on in-state purchases from remote vendors would yield about $205 million, based on 2012 figures, Yonts said.
HB 137 would create a state-administered retirement systems unfunded liability trust, which would be funded through the remote sales and use tax, Yonts said. The trust fund would receive sales tax receipts from out-of-state sellers, and each retirement system in the state’s control — Kentucky Retirement Systems, Judicial Form Retirement System and Kentucky Teachers’ Retirement System — would be eligible for some of the money.
“It (HB 137) parks this money in a pot until the General Assembly decides how to use it,” Yonts said. “It has no impact on the general fund.”
The bill also provides some relief to out-of-state retailers that must collect and report sales tax by returning some of the collected funds to them, Yonts said. That would undo a small provision in House Bill 440, which dedicates a revenue stream to tax coffers.
The House State Government Committee also passed two resolutions sponsored by Reps. James Kay, D-Versailles, and Derrick Graham, D-Frankfort, dealing with KRS. House Resolution 29 supports action to fully pay actuarially required contributions to KRS as required. HR 30 calls for a dedicated revenue stream to make ARC payments for the Kentucky Employees Retirement System and State Police Retirement System, specifically.