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State Budget, Taxes, and Other 2022 General Assembly Topics

State Budget, Taxes, and Other 2022 General Assembly Topics

Renee Shaw and guests discuss the state budget, taxes, and other 2022 legislative issues. Guests: Sen. Chris McDaniel (R-Taylor Mill), chair of the Senate Appropriations and Revenue Committee; Sen. Reggie Thomas (D-Lexington), Senate Minority Caucus Chair; Rep. Buddy Wheatley (D-Covington); and Rep. Jason Petrie (R-Elkton), chair of the House Appropriations and Revenue Committee.
Season 28 Episode 48 Length 57:42 Premiere: 3/14/22

Lawmakers Debate Competing Versions of the State Budget Plus Reducing the State Income Tax

As lawmakers head into the final stretch of the 2022 General Assembly session, they are faced with resolving differences between House and Senate versions of the state budget and tax plans.

“The number one priority that we had was to begin to work on adjusting state workforce pay so that we can retain appropriate people inside of governmental service,” says Senate Appropriations and Revenue Committee Chair Chris McDaniel (R-Taylor Mill).

The Senate plan calls for a $4,500 pay raise for all state employees in the first year of the biennium. State police officers and social workers would receive additional increases. In the second year of the biennium, state workers would receive another bump based on a study to be done by the Personnel Cabinet of all state positions and regional cost of living differences.

Overall, the Senate approach to House Bill 1 spends less than the House version. Democrats argue with billions in surplus funds available in state coffers, lawmakers are missing a rare chance to make transformative investments.

“When you look at how much money we have to spend, we’re not pinching pennies this time,” says Senate Minority Caucus Chair Reggie Thomas. “We’ve got opportunity.”

The Lexington Democrat says the Senate proposal adds some $3.6 billion in new debt, yet shortchanges health care and education. For example, he criticizes the plan for not funding full-day kindergarten, which the House version of the budget does, or universal pre-kindergarten.

Another sticking point for Democrats is that neither the House nor Senate plans allocate specific funds for teacher pay raises. McDaniel and House Budget Chair Jason Petrie (R-Elkton) say their budgets provide other funding to school districts, plus public schools in the commonwealth received millions of dollars in federal pandemic assistance. They say that should free up funds at the local level so individual districts can decide what pay raises are appropriate for their teachers.

“To go over the top of that with a bulldozer mentality and say we’re going to mandate this despite what your pay-scale needs are at the local level and your history at the local level, I think, is irresponsible and not a function of state government,” says Petrie.

The Senate plan also provides less transportation funding for schools than the House version. McDaniel says schools can tap federal dollars to help with those costs, plus he says districts should have transportation funds left over from when schools were closed to in-person instruction because of COVID. Petrie says the House budget focuses its school transportation spending on the districts that need the most help. But he adds that he’d like to eventually move to fully funding transportation costs for schools.

Lawmaker Grant Pool

Another difference between the two plans is that the Senate removed a House appropriation of $10 million in annual funding for a grant pool to be divided among all 138 state lawmakers. Every senator would have $130,000 and each representative $50,000 to award grants in their districts for education activities or to governmental or quasi-governmental entities.

Petrie says this would enable lawmakers to fund worthy projects that are too small to get funded through the regular state budget process. He says all grants would be in the public record and would be administered by the Department for Local Government.

Rep. Buddy Wheatley (D-Covington) says he appreciates the intent of the proposal even though he opposes the idea.

“I really do appreciate innovative looks at ways that we can help Kentuckians,” says Wheatley. But he adds, “it’s just not quite baked enough.”

McDaniel offers no explanation as to why the Senate budget omitted the grant pool from its plan. But Thomas says he supports the pool as a good way for lawmakers to return tax dollars to their local communities and support worthy causes.

“If it’s done the right way, it could help a lot of people across the state,” says Thomas.

An Income Tax Cut and a Tax Rebate

Republican leaders are carefully guarding the state’s surplus funds to provide them the fiscal cushion needed to promote tax-related bills, including an income tax cut offered by the House and a tax rebate proposed by the Senate.

House Bill 8 would drop the individual income tax rate from 5 percent to 4 percent starting next year. The measure also calls for further reductions in the rate as the state meets certain revenue benchmarks.

“Over time it would take the personal income tax rate from its current flat rate of 5 percent to zero ultimately,” says Petrie.

To make up for the lost income tax revenue, the state would add sales taxes to a range of goods and services not currently taxed. Food, prescription medicines, and utilities would still be excluded.

The Kentucky Center for Economic Policy says the 1 percent cut to the income tax would reduce state receipts by $1.1 billion a year. Further reductions would benefit the wealthy far more than lower- and middle-class families, the group argues.

Republicans call that a “classic class warfare” argument. Petrie says lower income taxes are critical to growing the state’s population, while McDaniel says lower rates are crucial to economic development.

“It is the thing that helps states grow, helps wages grow, and provides opportunities for people,” says McDaniel.

Wheatley says the issue is a matter of fairness, not class warfare. He says a graduated income tax is fairer than the current flat tax. He also fears how the plan will impact the state budget, since he says the proposed sales tax changes won’t compensate for lost income tax receipts.

“We’re going to look at some really draconian cuts in the future if we don’t correct this or stop it now,” says Wheatley

Thomas says the plan hurts working families, and will preclude vital investments in the state’s future.

“We could use that money to fund full-day kindergarten. We don’t,” says Thomas. “We could use that money to fund universal pre-K. We don’t.”

At the same time, Senate Republicans have proposed a plan to give Kentuckians a tax rebate. Senate Bill 194 would send $500 to individual taxpayers, and up to $1,000 to households. That is expected to cost the state $1.15 billion.

McDaniel says the state can afford the rebate since there will be more than $2 billion in unanticipated revenues this fiscal year and since the Budget Reserve Trust Fund is at record levels. He says Kentuckians need the rebate to help offset the costs of inflation.

“That’s the people’s money,” says McDaniel. “It needs to be spent wisely and frankly one of the best places is for them to spend it themselves.”

Thomas criticized the plan on the Senate floor, saying it would do nothing to help the poorest Kentuckians who don’t make enough money to pay income taxes and would therefore be ineligible to receive the rebate.

The Senate approved SB 194 on a vote of 28 to 7 with most Democrats opposing it. The tax cut bill passed the House 67 to 23. Neither chamber has taken action yet on the other chamber’s bills, but McDaniel says he thinks the state can do both the tax cut and the tax rebate.

A Pay Increase for Legislators

The House has also passed legislative and judicial branch budget bills. The legislative plan includes a 6 percent pay raise for Legislative Research Commission staff as well as lawmakers.

Democrats offered an amendment to make the boost for legislators a separate measure, but that proposal was defeated. Petrie says it’s been since 2008 since senators and representatives got a salary increase. McDaniel says the Senate hasn’t discussed the issue yet, but he says if lawmakers get a bump it shouldn’t exceed what all other state employees receive.

Thomas says it makes no sense to improve lawmaker pay but not give the state’s teachers a raise.

“To say we’re going to give ourselves a raise and not give teachers a raise, that just frankly troubles me,” says Thomas. “I think qualified teachers are probably a little bit more important.”

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Season 28 Episodes

Discussing New Developments in the COVID-19 Pandemic

S28 E84 Length 56:33 Premiere Date 6/20/22

Reducing Opioid Addiction Rates in Kentucky

S28 E83 Length 56:36 Premiere Date 6/13/22

Mass Shootings and Gun Laws

S28 E82 Length 56:33 Premiere Date 6/6/22

Discussing the Rise in Gas Prices and Inflation

S28 E81 Length 56:34 Premiere Date 5/23/22

Previewing Kentucky's 2022 Primary Election

S28 E80 Length 56:33 Premiere Date 5/16/22

Third Congressional District Democratic Primary

S28 E79 Length 56:33 Premiere Date 5/9/22

Candidates in the 2022 Primary Election: Part Two

S28 E78 Length 58:33 Premiere Date 5/2/22

Candidates in the 2022 Primary Election: Part One

S28 E77 Length 58:40 Premiere Date 4/25/22

Lawmakers Review the 2022 General Assembly

S28 E76 Length 56:33 Premiere Date 4/18/22

Recap of the 2022 Legislative Session

S28 E75 Length 56:35 Premiere Date 4/11/22

Public Assistance and Jobless Benefits

S28 E50 Length 56:33 Premiere Date 3/28/22

Abortion Legislation in the 2022 General Assembly

S28 E49 Length 56:34 Premiere Date 3/21/22

State Budget, Taxes, and Other 2022 General Assembly Topics

S28 E48 Length 57:42 Premiere Date 3/14/22

Critical Race Theory and Approaches to Teaching History

S28 E47 Length 56:33 Premiere Date 2/28/22

2022 Legislative Session at the Midpoint

S28 E46 Length 56:33 Premiere Date 2/21/22

Name, Image and Likeness Compensation

S28 E45 Length 56:33 Premiere Date 2/14/22

Child Abuse and Neglect

S28 E43 Length 56:33 Premiere Date 2/7/22

Debating School Choice in Kentucky

S28 E42 Length 56:35 Premiere Date 2/1/22

Debating Provisions in the Proposed State Budget

S28 E41 Length 56:34 Premiere Date 1/24/22

Redistricting, State Budget, and Other Legislative Issues

S28 E40 Length 56:33 Premiere Date 1/10/22

Discussing Legislative Goals for the 2022 General Assembly

S28 E39 Length 56:33 Premiere Date 1/3/22

City and County Issues

S28 E38 Length 56:34 Premiere Date 12/13/21

Previewing the 2022 Kentucky General Assembly

S28 E37 Length 56:35 Premiere Date 12/6/21

Compensating College Athletes: Name, Image and Likeness

S28 E36 Length 56:33 Premiere Date 11/22/21

Trends in State and National Politics

S28 E35 Length 56:34 Premiere Date 11/15/21

Abortion Rights and Restrictions

S28 E34 Length 56:33 Premiere Date 11/8/21

Kentucky's Social Services System

S28 E33 Length 56:33 Premiere Date 11/1/21

School Choice in the Commonwealth

S28 E32 Length 56:33 Premiere Date 10/25/21

Historical Horse Racing: A Growing Pastime in Kentucky

S28 E31 Length 56:33 Premiere Date 10/11/21

New Developments and the Unknowns of COVID-19

S28 E30 Length 56:33 Premiere Date 10/4/21

COVID and the Classroom

S28 E29 Length 56:33 Premiere Date 9/27/21

Remembering 9/11, 20 Years Later

S28 E28 Length 56:33 Premiere Date 9/13/21

Kentucky's Response to COVID-19

S28 E27 Length 56:35 Premiere Date 8/30/21

Discussing the Surge of COVID-19 Cases in Kentucky

S28 E26 Length 56:34 Premiere Date 8/23/21

Fancy Farm Preview and State Politics

S28 E25 Length 56:33 Premiere Date 8/2/21

Back-To-School Issues in Kentucky

S28 E24 Length 56:33 Premiere Date 7/26/21

Childcare Challenges

S28 E23 Length 56:33 Premiere Date 7/19/21

The Urban-Rural Divide in Kentucky

S28 E22 Length 56:34 Premiere Date 7/12/21

Work Shifts: Kentucky's Labor Shortage and Hiring Challenges

S28 E21 Length 56:33 Premiere Date 6/28/21

Public Infrastructure: What Kentucky Needs

S28 E19 Length 56:34 Premiere Date 6/21/21

Debating Critical Race Theory

S28 E18 Length 56:34 Premiere Date 6/14/21

Kentucky's Rebound From COVID-19

S28 E17 Length 56:33 Premiere Date 6/7/21

Jobs and the Economy

S28 E16 Length 56:33 Premiere Date 5/17/21

The Future of Policing in America

S28 E15 Length 56:34 Premiere Date 5/10/21

President Biden's First 100 Days

S28 E14 Length 56:33 Premiere Date 5/3/21

Mass Shootings and Gun Laws

S28 E13 Length 56:33 Premiere Date 4/26/21

Voting Rights and Election Laws

S28 E12 Length 56:33 Premiere Date 4/20/21

The 2021 General Assembly: Debating Major Legislation

S28 E11 Length 56:34 Premiere Date 4/12/21

Wrapping Up the 2021 General Assembly

S28 E10 Length 56:34 Premiere Date 3/29/21

School Choice in Kentucky

S28 E9 Length 56:33 Premiere Date 3/22/21

No-Knock Warrants

S28 E8 Length 56:33 Premiere Date 3/15/21

Proposed Legislation to Modify Kentucky Teachers' Pensions

S28 E6 Length 56:34 Premiere Date 2/22/21

Debating Historical Horse Racing Legislation

S28 E5 Length 56:33 Premiere Date 2/8/21

New Lawmakers in the 2021 Kentucky General Assembly

S28 E4 Length 56:34 Premiere Date 2/1/21

A Nation Divided

S28 E3 Length 56:33 Premiere Date 1/18/21

Recapping the Start of the 2021 General Assembly

S28 E2 Length 56:34 Premiere Date 1/11/21

Previewing the 2021 General Assembly

S28 E1 Length 56:33 Premiere Date 1/4/21

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Kentucky Tonight, hosted by Renee Shaw, is a public affairs discussion program broadcasted live on Monday nights at 8/7c on KET and KET.org/live.

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