By RONNIE ELLIS
FRANKFORT — Kentucky’s budget shortfall is so big and the answers so few that a group came to the capitol Wednesday to help by conducting a bake sale.
Well kind of.
Kentuckians for the Commonwealth sold cookies and baked goods Wednesday morning in the Capitol Annex to publicize their support for House Bill 13, sponsored by Rep. Jim Wayne, D-Louisville, which would reform the tax code with the goals of generating $300 million more each year while shifting some of the tax burden to higher income earners.
In all, the group raised $178.22, more than a bit short of the $1.5 billion, two-year shortfall predicted by Gov. Steve Beshear, who Tuesday evening proposed passing expanded gambling to fill the hole. KFTC President K.A. Owens said Wayne has a better idea.
“The only real solution,” Owens said, “is legislative leadership.”
Wayne is demonstrating such leadership, Owens said. HB 13 is the only solution that has been vetted by national tax policy groups while the “other options out there do not hold up to scrutiny.”
Wayne said his bill would replace a “patchwork” tax code developed over the past 70 years, a quilt he said which “Is not keeping us warm and is pretty tattered. We need a new quilt.”
He said Kentucky’s bottom wage earners pay 9 cents of tax on each dollar earned while those making over $300,000 a year — the top 5 percent of income earners — pay only 6 cents in state taxes on each dollar they earn. He said his bill will increase taxes on the wealth by 0.4 percent while adding an earned income tax credit for the working poor and applying the sales tax to several luxury services such as limousine service, private laundry and lawn services, chartered air flights and armored trucks. It would also eliminate a sales tax exemption for pollution control equipment installed by industry — something they are now required by law to do.
Wayne is working with a group of House lawmakers at the direction of Speaker Greg Stumbo, D-Prestonsburg, to reconcile differences between his bill and one sponsored by Rep. Bill Farmer, R-Lexington, which would eliminate the income tax and replace it with the sales tax on nearly all services. Wayne said the group is making progress toward an agreement but some portions of his bill are not negotiable for him — the earned income tax credit and expanding the sales tax to at least some additional services.
Beshear is opposed to what he calls any “broad-based tax increase,” favoring allowing video lottery terminals at horse tracks. Owens said KFTC opposes because “we do not believe gambling will solve Kentucky’s revenue problems. Kentucky is not bringing in enough revenue because our tax system if fundamentally flawed and that is hurting our families and crumbling our communities.”
Dana Beasley Brown, a mother of an infant son and expecting her second child, is the wife of a Bowling Green youth pastor. She found Beshear’s call for solving the revenue shortfall by passing expanded gambling an insufficient response to the needs of poor people in Kentucky.
“We didn’t hear solutions last night in the governor’s budget address — we heard excuses and imaginary solutions,” she said. She said she and her husband live on an income equal to 120 percent of the federal poverty level.
“We’re working hard and feeling the pinch,” Brown said. “But we’re actually paying about 11 percent of our income in taxes.”
Sheila Schuster, executive director of the Advocacy Action Network, an umbrella group of organizations serving Medicaid clients and the disabled, said it’s time for the state to pass Wayne’s bill, create a fairer tax system and generate sufficient revenues to take care of the state’s most vulnerable citizens.
“Our current system causes us to fight over the crumbs,” Schuster said. “We need to pass House Bill 13 so we don’t have to fight over crumbs.”
Afterward, KFTC members took the $178.22 to Beshear’s office to contribute toward the budget — leaving it with a receptionist in the outer office.
Only $1,499,999,821.78 to go.
RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.
