LEGISLATIVE UPDATE: February 13, 2009

 

by State Representative Addia Wuchner

Debate Over Tax Increases Headline Legislative Action This Week

House members spent much of this past week discussing the daunting task of how to address the $456 million budget shortfall that is adversely affecting our state and studying the merits of a proposed revenue bill.

For more than two months, legislative leaders from both chambers have been meeting to find a solution to our state's dire financial situation and crafted this plan as a compromise that they feel lays the groundwork to help us regain our financial footing. On Wednesday, a fter an hour of intense and emotional floor debate, House Bill 144, the compromised revenue package, was approved by a vote of 66-34.

The two main components of this plan would double the tax on tobacco products and increase the cigarette tax by 30-cents a pack in addition to the new federal 61-cent increase. Also, a six percent sales tax would be applied to the purchase of all alcoholic products, which are currently taxed 11 percent at the wholesale level. It has been projected these increases would yield approximately $52 million in revenue for the remainder of this fiscal year.

Passing with a vote of 77-23, House Bill 143, a companion bill to House Bill 144, would re-allocate appropriated money, including $219 million from the state's rainy day fund, $33 million from various government accounts to the state's general fund and require the Governor to cut $137 million from the executive branch budget and $10 million from the judicial and legislative branch udgets. A concerning provision of the legislation would allow the Governor to take $50 million from the Public Employees Health Insurance Trust Fund, leaving on a razor thin margin of approximately $8 million in the fund.

As this bill came to a floor vote, our thoughts turned to the people of Northern Kentucky who entrusted us to serve as your voice. Many of you have contacted us over the past month, sharing your personal circumstances, urging us to oppose a tax increase of any kind and make every effort to reduce wasteful spending.

Given the state's current economic environment, there are no easy decisions. We acknowledge that House Bill 144 protected vital services that each of us support like education, juvenile justice and Medicaid. Yet, during this time of critical shortfalls, we found it problematic that funding for parks were also being protected from any budgetary reduction while other vital services were threatened. Furthermore, we feel the increased tax on alcoholic beverages is an unfair tax burden placed on Northern Kentuckians that will equate to 30 Kentucky counties attempting to sustain 90 counties in the Commonwealth.

As a group, we proposed several alternatives to raising taxes. One alternative would have imposed a two year moratorium on prevailing wage for all K-12 and post-secondary school construction projects, saving 15-22 percent in construction costs. Additionally, we called for the immediate creation of a Legislative Efficiency Accountability Task Force to identify areas of efficiency and reduction of expenditures which could result in cost savings for government agencies and programs throughout the state

We firmly believe in transparency of government spending and we pledge our continued effort to achieve this goal. Be assured of our commitment to push for immediate and long term solutions.