Kentucky tax bill, budget pass; will Gov. Bevin sign?

Published: Apr. 2, 2018 at 9:41 PM EDT|Updated: Apr. 3, 2018 at 9:31 AM EDT
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The budget passed the Senate 25 to 12. (Source: KET)
The budget passed the Senate 25 to 12. (Source: KET)
The tax proposal passed the Senate 20 to 18. (Source: KET)
The tax proposal passed the Senate 20 to 18. (Source: KET)
The tax bill passed House 51 to 44. (Source: KET)
The tax bill passed House 51 to 44. (Source: KET)
The budget passed House 59 to 36. (Source: KET)
The budget passed House 59 to 36. (Source: KET)

FRANKFORT, KY (WAVE) - Kentucky lawmakers are feeling the heat as the session winds down, and time for passing a budget dwindles.

That, coupled with the thousands of protesting teachers who swarmed the capitol Monday calling for a repeal of Senate Bill 151, had all eyes on Frankfort.

Republicans introduced a tax reform bill and a budget Monday morning, passing both in the Senate before 2:30 p.m. In the House of Representatives, both bills were voted on and passed by 8:30 p.m. the same day.

"We have not been asked one question about our input," Democratic House floor leader Rocky Adkins said. "We've not been communicated with on what we'd like to see go in both the tax bill 366 or into the budget bill."

Gov. Matt Bevin has voiced his concern about the budget, saying it is not "fiscally responsible."

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Acting Republican House Speaker David Osborne said by passing the bill Monday night, the General Assembly will have time to vote to overturn a veto by the governor.

"It restores many of the cuts to education that were contemplated in the governor's budget," Osborne said. "And I think that ultimately the budget will do a great service to the people of the Commonwealth."

Senators first approved the budget, voting 25 to 12. The vote was mostly split along party lines, but two Republicans -- Sen. Embry and Sen. Smith -- voted against the measure. No Democrats supported it.

The tax bill barely passed, with a vote of 20 to 18. Seven Republicans voted against the bill, joining Democrats in opposition.

First up in the House, lawmakers debated the tax reform proposal. Representatives voted around 6:45 p.m., passing the bill 51 to 44. Nine Republicans voted against the tax plan.

>> RELATED: Bevin issues statement on state budget

There was steadier Republican support of the budget in both chambers. It passed the House with a broader margin of 59 to 36, more in keeping with party lines. Only one Republican, Rep. Kim King, voted against the bill.

Both bills now head to Bevin's desk for signing, though as previously mentioned, it's not certain he will sign them into law.

Democrats are not pleased with the hurried nature of the proceedings. They claim they were excluded from the process and did not have time to read the bills.

It's similar to the tactics used Thursday to push through Senate Bill 151 -- a pension reform bill -- in one day.

If signed into law, the tax reform bill would make numerous changes in Kentucky's tax code. First, it would extend sales tax to apply to some services, including car repair, cleaning services, pet care, landscaping, dry cleaning, fitness memberships, golf courses and country clubs, tanning salons, limo services and more.

It also increases the tax on cigarettes by 50 cents per pack, to $1.10.

This is expected to generate an extra $480 million during the two-year operating budget.

In the budget bill, that money goes to the pension system and public education, and seeks to restore several funding cuts proposed by Bevin, including the Western Kentucky University Mesonet, and Kentucky State Police.

"We tried to fashion that budget in a way that took care of public education going $19 above what the current SEEK allotment is," Senate President Robert Stivers (R-District 25) said. "It was $3,981 (per child), and we took it up to $4,000. For every dollar, that's hundreds of millions of dollars that went into the system. So we made a substantial increase in that appropriation."

The tax reform bill also would change individual income tax from a variable 2-to-6 percent to a flat 5 percent. Most people who make enough money to pay taxes pay 5.8 or 6 percent, meaning most will see a tax break. However, some analysts suggest those making just above the poverty line could see a tax increase.

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Kentuckians making 133 percent of the federal poverty line would be exempt from paying taxes. The bill conforms the state tax code to the U.S. tax code.

The proposal also would change corporate income tax from a variable 4-to-6 percent to a flat 5 percent.

Republicans who are getting blasted by Democrats about their process said the process has not changed, just the people sitting at the table. The General Assembly swung into full Republican control during the 2016 election.

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