BETWEEN THE AISLES: Is passing tax reform in Kentucky a tall order?

Gov. Steve Beshear wants a consensus before vote

By Kevin Wheatley, Published:

Nearly three weeks have passed since Gov. Steve Beshear unveiled his $210 million tax reform package, and leaders in the House and Senate are about as close to an agreement now as they were then.

Beshear said Thursday he has met with leaders in both chambers “on a pretty regular basis” since announcing his wide-ranging proposal, which has been met with some criticism among legislators.

But they’re not quite at the negotiating table. Beshear has said he wants leaders in both chambers to come to a consensus on tax reform before voting.

“Obviously we’re in the beginning stages of it, and right now it’s an educational process in terms of the different parts of the proposal,” Beshear said. “But we’re having some good conversations.”

Passing a comprehensive tax reform plan more than halfway through the 60-day session seems to be a tall order, though. House Speaker Greg Stumbo said the issue “doesn’t appear to have any legs at this point” and may be too complex to address this session.

Stumbo, D-Prestonsburg, reiterated one of his concerns with Beshear’s proposal: collecting a sales tax on services such as landscaping, custodial labor and auto repair. Expanding the state’s 6 percent sales tax to those areas could yield some $244 million in new tax receipts, according to estimates from Beshear’s office.

“I don’t think it’s fair to just place a tax on certain services because they don’t have the voice here,” Stumbo said. “I mean, the people who repair automobiles aren’t organized; they’re not up here lobbying. Why is it fair to tax them for their service and not tax others who have lobbyists here — lawyers, doctors, people like that?”

Senate President Robert Stivers, R-Manchester, said lawmakers have respected Beshear’s request to examine the dynamics of individual pieces of the tax reform plan. 

“We’re still gathering information about certain ideas and certain individuals in his administration are being made available to us and discussions are ongoing,” he said.

Beshear has assumed the role of mediator on his tax plan, but leaders in both chambers will need to settle their differences on the proposal eventually if there’s any hope of progress this session.

“This is a proposal he (Beshear) has brought forth and initiated and I was hoping he was having some discussions with the speaker, and I just raise that question,” Stivers said of a conversation with Beshear Thursday.

Beshear said he wants lawmakers to fully grasp his tax plan before moving forward.

“Then we’ll be moving into trying to find that common ground to see if we can’t come to some good conclusion on it,” he said.

Up in smoke

Beshear wove two of his legislative priorities — a statewide smoking ban and increasing taxes on tobacco products — into a campaign to improve Kentucky’s health rankings in a number of categories, including smoking, by 2019.

If those issues fail to pass this session, Beshear said he expects the push will continue next year. He sees “growing popularity all the time” in anti-smoking initiatives, he said.

“Many of these issues are difficult to address, and it takes a period of time and education before you finally get there,” he said. “But I’ve seen a lot of strong movement in both of those areas. As a matter of fact, we’ve raised the cigarette tax once since I’ve been governor and I’m hopeful that we can do it again before I go out as governor.”

The prospects of a statewide smoking ban are up in the air. The only bill gaining any traction thus far is Democratic Rep. Susan Westrom’s House Bill 173, which has been ready for a vote on the House floor since Feb. 13.

Back from the grave?

It’s been about two weeks since House Speaker Pro Tem Larry Clark declared that expanded gaming wasn’t dead yet, but simply at the funeral home.

If that’s the case, some have been working behind the scenes to make sure the issue isn’t rushed to the morgue anytime soon.

A closed-door Senate GOP caucus vote held earlier this month that essentially killed the chances of a constitutional amendment starting in the chamber was “a setback,” said Beshear, who has pushed for expanding gambling since taking office.

Beshear said he has been in “constant communication” with stakeholders and lawmakers in an attempt to move legislation forward.

“It’s still too early to know exactly what may happen on that issue,” he said.

There’s a chance for expanded gaming this session, Stumbo said, but it will take action from the Senate first. Senate Majority Floor Leader Damon Thayer, R-Georgetown, said after the caucus vote that there’s “no chance” the Senate will act first on a constitutional amendment on gambling.

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