Budget, tax code measures are moving forward | News

FRANKFORT — Kentucky lawmakers on Tuesday revealed a state spending plan calling for big pay rises for state employees and proposed a measure to phase out personal income taxes as ‘they were running out of time to wrap up work on priority bills.

The proposed two-year state budget would inject money into renovating state parks and increase spending for K-12 schools. House and Senate leaders negotiated the revised spending plan, setting the stage for final votes by Wednesday to send the measure to Gov. Andy Beshear.

“This is definitely the best budget I’ve voted for since I’ve been in the Legislative Assembly,” Republican House Speaker David Osborne said.

In a related action, the Senate passed its version of a sweeping proposal that could fundamentally change Kentucky’s tax code over time. Legislative leaders left about $1 billion unspent in the budget to cover tax code changes. The result was tax legislation to phase out personal income taxes while extending the state sales tax to more services.

The Senate version revised the conditions that must be met to trigger phased cuts in the state’s personal income tax rate, which is now 5%. The tax rate could drop half a percentage point at a time if the formula’s targets were met. The first rate cut could come as early as Jan. 1, 2023, Senate Appropriations and Revenue Committee Chairman Chris McDaniel said.

“We strongly believe in lowering the income tax rate in this state,” McDaniel said. “But it has to be done responsibly. And it’s a very progressive way to accomplish that safely.

The tax bill was approved by the Senate soon after it left committee. He returns to the House for further action before being sent to the Democratic governor. Lawmakers are expected to be in session until Wednesday before taking an extended recess to give Beshear time to decide whether to sign off on or veto the measures sent to his office. Lawmakers will meet again for wrap-up work in mid-April and could vote by way of overriding any vetoes on bills sent to the governor this week. Republicans have qualified majorities in both legislative chambers.

Meanwhile, the two-year state budget proposal — the state’s preeminent policy document — emerged after legislative leaders ironed out differences between the House and Senate versions.

Under this plan, state employees would receive a salary increase of at least 8% in the first year of the biennium. State police troopers and social workers are reportedly among state employees awaiting even bigger raises. The measure sets aside enough money for a 12% salary increase in the second year, although specific increases for the state workforce are based on a study by the Personnel Cabinet.

Budget negotiators agreed to increase per-student funding under SEEK, the state’s main funding formula for K-12 schools. The amount would increase to $4,100 in the first fiscal year and $4,200 in the second. The current amount is $4,000.

The measure asks the state to cover the cost of full-day kindergarten.

The plan would also allocate $150 million in year two of the budget cycle for a statewide overhaul of the state park system.

“One of our greatest and best assets is the natural beauty of this state,” said Senate Speaker Robert Stivers. “And we have made serious investments to bring people back to this state from a tourism perspective and enjoy our state. And I think that will go a long way to sustaining and growing our economy. »

The spending measure would allocate $200 million to renovate the state’s fairgrounds in Louisville.


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