LOUISVILLE Tax reform is “off the table” for a likely October special session to tackle how to shore up Kentucky’s badly underfunded public pension system.
Republican Speaker of the House, Jeff Hoover, R-Jamestown, said Thursday that Gov. Matt Bevin has agreed to hold off on tax reform until lawmakers can first deal with the pension systems which are estimated to face unfunded liabilities of between $37 billion and $60 billion.
Once lawmakers and the governor have developed a plan to deal with pensions, Hoover said, they can then turn attention to tax reform. He said that could occur in a subsequent special session this year; during the regular session which convenes in January during which lawmakers must pass a new two-year budget; or after that regular session.
Hoover said no date has been set for the initial special session but he said it’s likely to occur in October.
Hoover, Bevin, Senate President Robert Stivers, R-Manchester, and U.S. Sen. Mitch McConnell met privately later Thursday morning, following the annual Kentucky Farm Bureau Country Ham Breakfast. None took questions before the meeting.
Bevin originally indicated he wanted to take up both pension and tax reform in the same session, but as lawmakers — most of whom will be on next year’s ballot — pleaded to segregate the two tasks, he’s lately sounded more open to doing so.
House Minority Leader, Rocky Adkins, D-Sandy Hook, said Thursday he’s seen no proposal to address either issue nor has he been told of any date for a special session.
Calling the pension problems “a serious issue,” Adkins said Democrats want to see a plan before agreeing to support something. He said Democrats will resist any efforts to reduce benefits for current retirees or employees.
Bevin has taken to social media of late to assure retirees and employees that he and Republican lawmakers — who enjoy overwhelming majorities in both chambers of the General Assembly — are committed to protecting public employee pensions.
But some key lawmakers have said they see little way to address the problem without adjusting at least some benefits.
Hoover has rescheduled a previously postponed meeting of all House members for next Tuesday to hear the report of an outside firm’s analysis of the pension system problems. He said both Republicans and Democrats will be encouraged to attend, but he said the meeting will be closed to the public.
As for when lawmakers may ultimately address tax reform, Hoover couldn’t say. He conceded it would be “a heavy lift” to deal with tax reform in a biennial budget session.
If tax reform is passed after the regular session, its benefits would have to be pushed off for two years or lawmakers would have to re-address the budget they’d just passed, Hoover agreed.
While most won’t say so, perhaps the biggest reason lawmakers want to delay tax reform is to get past the late January filing deadline for the November 2018 elections before they vote on something an opponent might characterize as a tax increase.
Much of the discussion of tax reform has centered on existing tax exemptions for various businesses and interest groups. By some estimates, Kentucky foregoes as much as $13 billion in lost revenue from such “tax expenditures” while operating on $10.5 billion in annual tax revenues.
Ronnie Ellis writes for CNHI News Service and is based in Frankfort. Reach him at firstname.lastname@example.org. Follow him on Twitter @cnhifrankfort.