Imes, Howell: the State budget takes a step towards modernizing the tax code | Local News

FRANKFURT – Elected state lawmakers in Calloway County say the 2022-24 state budget currently awaiting Governor Andy Beshear’s signature takes significant steps to modernize the state’s tax code.

“On both sides of the aisle, people who have been (in Frankfort) a long time are saying this is the best budget they’ve ever seen,” said Rep. Mary Beth Imes (R-Murray). “…I think we’ve taken the first step in modernizing Kentucky’s tax code, and I think a lot of voters have been asking for it.”

“We will phase out personal income tax,” Imes continued. “(The changes to the code) will gradually reduce the state’s personal income tax over a period of years until it is eliminated. The first drop is measured against the performance of the fiscal year 2021 and lower the rate to 4.5% on January 1, 2023. According to the best statistics I have, approximately $500 million will go into taxpayers’ pockets to be invested and spent in their local communities.”

Imes and Sen. Jason Howell (R-Murray) explained that the income tax cuts and eventual elimination are not on a set timeline, but will be triggered by certain budget factors over the next few years.

“There are trigger points in there for incomes that balance out and trigger another income tax cut,” Howell said. “So that takes us down the first (steps). I can’t imagine we won’t be coming back to change it, but it puts us in a position where we can make sure it’s a real revenue-neutral tax reform and it doesn’t create deficits like what Kansas tried to do. do a few years ago.

Howell said the General Assembly has significantly increased the state’s “rainy day fund” to use as a cushion for tax reform as the personal income tax transition occurs over the next few years.

“We’ll be in place to hopefully take us further towards a consumption-based tax and away from a state income tax,” Howell said. “Living here next to Tennessee, we see the benefits every day. This makes it very difficult to compete as a state with this income tax structure instead of a consumption based tax structure. I was really happy to see us take the first step towards real tax reform.

Howell said he believes the budget is to blame for how it uses the surplus created by federal COVID-19 relief money the state received from the Coronavirus Aid, Relief and Economic Security (CARES) Act. ) and the American Rescue Plan Act (ARPA).

“There are two things that are difficult in the budget process: not having enough money or having too much,” Howell said. “But I was really glad to see us take the most fiscally responsible angle on it. We’ve paid off our supplemental pension commitments; we’re on track to pay Kentucky Teachers $422 million each year. Retirement System (KTRS) for pension funding, and we put an additional $1.25 billion into it, and then another $887 million for the SEEK (Support Education Excellence in Kentucky) formula.

“So we invested nearly $2 billion more in KTRS, which is the most underfunded of them all (superannuation). I think that will help us put this back on a solid financial footing. It’s like with your home loan; if you make an extra payment or two up front, it really shortens the term of the mortgage. It doesn’t exactly work that way, but conceptually it does.

Howell said the budget designates $75 million of ARPA funds for the Tourism Recovery Fund. He added, however, that the tourism industry in this region has not been as badly affected by the pandemic as others because it is so focused on the outdoors. He said an additional $150 million will go toward major state park renovations, which he says will help lakes area parks.

Imes said she was proud to report that the budget includes increases for Kentucky State Police and state government employees and does not include any tax increases. Howell said increases will average 8% in the first year and 12% in the second. However, the staff cabinet will oversee this process, so some will get more and some less depending on how they are assessed, he said.

In addition to general increases for state employees, Howell said the budget includes an additional $2,400 for social workers. This is in addition to Beshear’s executive order which gave social workers a 10% raise in December.

“The people doing these jobs are supporting our weakest and most vulnerable children, and it’s hard work,” Howell said. “It’s also very difficult work on an emotional level. In addition to funding to make their compensation more competitive, (out of respect for) what they do for us, we have implemented a sabbatical year. They have an option every four years where there are certain things they can do outside of (their regular arena) while receiving their regular salary.

“Money doesn’t cure all ills, but the burnout rate for these men and women who do this job is really high. This is one of the things that some studies have found will hopefully reduce that burnout. It is not enough to have enough social workers. It’s like any other business; you also need experienced people, and it’s very difficult. Sometimes we focus on salary, but it’s more than salary. They are human beings who sometimes face inhuman situations, and the mental health component of their work is really important and I think society and government have failed to deal with it properly. We very much hope this helps some of them who need to get away a bit to be able to do their job effectively.

The General Assembly is currently not in session during the governor’s veto period, but will reconvene next Wednesday and Thursday, April 13-14. In the final two days, lawmakers can choose to override governors’ vetoes and then adjourn the session at the end of April 14.

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