Beshear Touts Tax Overhaul, Expanded Gambling, Vows To Protect Education Spending

Jan 7, 2014

Tax reform, expanded gambling, and education were among the topics Gov. Beshear touched on during his annual State of the Commonwealth address.

Gov. Beshear renewed his push for revamping Kentucky's tax system and legalizing expanded gambling saying they're the only sources available to tap for significant new revenues to meet pressing needs after years of budget cuts.

In his speech to a joint session of the House and Senate, Beshear said he will present a tax modernization plan with specific recommendations to update the tax code.

"I realize that tax modernization is a sensitive topic, especially in an election year," the Democratic governor said. "But the people elected us to tackle difficult issues."

Beshear also made his case for the state to reinvest in education funding. He said that schools have "stretched every dollar they have as far as they can, and now they're out of options."

Schools face the prospect of laying off teachers, increasing class sizes and falling behind in technology if the state continues to cut or freeze education funding, he said.

"We are in danger of losing all of the positive momentum which has been built up," he said. "I am not going to allow that to happen. I am determined to find money to reinvest in education - even if I have to make harmful cuts in other areas to do so."

Beshear said the tax modernization package he presents will include a proposed constitutional amendment that would give Kentucky cities and counties the authority to impose a local sales tax.

Local government leaders and other supporters of the local-option sales tax say it's needed to raise money for local projects when state funding is unavailable.

Beshear outlined broad principles but few other details of his tax plan, but said Kentucky continues "to hamstring itself by using an outdated tax structure."

"A more competitive tax structure will, as the economy grows, also stabilize long-term revenue - not because of higher rates, but because it's aligned with today's economy," he said. "Broadening our tax base and improving our business climate will help stabilize our future budgets."

The other potential pool of sizable new revenue can spring forth from expanded gambling, Beshear said.

Tax reform and expanding gambling are perennial issues that made little or no headway with Kentucky lawmakers in the past.

Kentucky has received results from more than a dozen studies of its tax system since 1982, Beshear said, the latest being from a group headed by Lt. Gov. Jerry Abramson that proposed an array of changes, including lowering the top individual and corporate tax rates.

Beshear made expanded gambling a main theme of his first successful gubernatorial campaign in 2007, but he's been unable to get a measure legalizing casino gambling through the Legislature.

The governor said he'll push again for a proposal constitutional amendment that, if it gets through the Legislature, would allow Kentucky voters to decide whether they want to legalize casino gambling.

"They want to vote on this issue, and we should let them decide whether to continue allowing Kentucky tax money to flow across our borders or to keep it here at home," Beshear said.

Casinos have sprung up in some of Kentucky's neighboring states.

Beshear said the additional revenue is badly needed after about $1.6 billion in state spending cuts in the past six years as tax collections plunged as the recession took a toll on the state's economy. He said some of those cuts resulted in "decimating many programs and services that Kentuckians desperately need."

"We cannot continue making progress by paying teachers less than they deserve, by ignoring needs like textbooks and technology, by delaying research into innovative energy production, by pricing college out of reach, by leaving needed cancer screenings unfunded and by retreating from things like child care and mental health services," he said.

"We need more resources to make needed investments in our future."

The governor will present his budget proposal to lawmakers later this month, the starting point in their work to craft a new state budget for the two-year period beginning July 1.

Beshear also promised to present a major health initiative to lawmakers that includes the goal of cutting Kentucky's smoking rate by 10 percent by 2018.

Kentucky has the nation's highest smoking rates, he said, contributing to its prevalence of heart disease, respiratory illnesses and other chronic diseases.

"Tobacco use is the single-biggest factor negatively impacting our health," the governor said.

Beshear said he'll again support a statewide ban on smoking in some public places. Many Kentuckians live in places with such bans, he said, and it's time "to fill in the map and protect all our people."

Other goals in the proposal will be cutting obesity rates and reducing cancer deaths by increasing screening rates, he said.

Beshear also floated the idea of "no-phone zones" where motorists wouldn't be allowed to talk on phones while driving. He said the idea deserves consideration, given the vulnerability of schoolchildren and construction workers.

The governor also said it's time Kentucky aligns its booster seat regulations with federal recommendations that would cover more children.

He also endorsed legislation to extend domestic-violence protections to unmarried couples. He noted that Kentucky's current protective-order law doesn't apply to dating couples who do not live together.

Beshear also called for a more aggressive response by law enforcement to curb the statewide rise in heroin addiction and more treatment for addicts. Heroin overdose deaths rose from 22 in 2011 to 170 in the first nine months of 2013, he said.