- Associated Press - Tuesday, June 6, 2017

FRANKFORT, Ky. (AP) - Kentucky’s Republican governor doubled down Tuesday on his promise to overhaul the state’s tax code, committing to calling a special session of the state legislature sometime after mid-August.

Gov. Matt Bevin sent a letter to all of the state’s 138 legislators telling them he does not plan to call them back to the state Capitol until after Aug. 15 “out of respect to our families and summer schedules.”

This is Bevin’s second year in office, but his first with Republican super majorities in both the state House and Senate. During his annual State of the Commonwealth address in February, Bevin called for an overhaul of the state’s tax code to generate more revenue for the state as it continues to struggle with a multi-billion debt across its public pension systems.

At the time, Bevin said any changes would not be “neutral,” suggesting a tax increase for some people in the mostly rural, poor state. That phrase has spooked many of the state’s Republican leaders, who have not shown a willingness to raise taxes so soon after taking power.

But in his letter, Bevin told lawmakers he wanted to “make it crystal clear that, despite the rumblings of the Frankfort rumor mill, our administration has made no final decisions with respect to any changes to the tax code or pension structures.”

“Anybody that suggests otherwise is either completely misinformed or is deliberately misinforming you and your constituents,” Bevin wrote.

Bevin urged all lawmakers to share their ideas with his budget staff by July 15. Specifically, Bevin said he wants to know which tax exemptions should be repealed. Kentucky routinely exempts more money in taxes than it collects each year.

“I believe we can make Kentucky’s tax code simpler and more competitive with surrounding states like Indiana and Tennessee by lowering or eliminating certain taxes, while at that same time generating sufficient revenue through economic growth and closing special-interest tax loopholes,” Bevin wrote.

State economists predict Kentucky will end the fiscal year on June 30 with a $113 million shortfall. To prepare for that, Bevin has asked his cabinet secretaries to trim 1 percent from their budgets and warned them they likely will face similar cuts next year.

Kentucky has one of the worst-funded public pension systems in the country. Last month, some independent consultants say taxpayers will need to spend an extra $700 million each year to keep the pension systems solvent. That’s in addition to the $2 billion taxpayers are scheduled to spend on pensions in the fiscal year that begins July 1.

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