PrintDec. 5--In an interview earlier this week, Gov. Steve Beshear managed to not only slam the door on comprehensive tax reform for Kentucky in the near future, but perpetuate the perception that reform is just a code word for tax hike.
Beshear told reporter Ronnie Ellis with CNHI News Service that "the middle of this recession is not the time to have broad-based tax increases on our people."
That's a double whammy that means the governor is either ignorant about what true tax reform means, or is intent on cultivating misconceptions to advance his goal of putting slot machines at race tracks.
Whatever the reason, the end result is the same -- there will apparently be no support from the first floor of the Capitol during the 2010 legislative session for comprehensive tax reform.
This revised stance on tax reform has Beshear going back on a commitment made during the debate this year over increases in the tobacco and alcohol taxes. Several legislators withheld their votes in favor of that tax package until Beshear and House Democratic leaders made a pledge to take up the tax reform debate in 2010. Beshear has dismissed the pledge with the claim that times have gotten tougher.
But beyond the governor going back on his word, it makes no sense to close off options when the state is facing one of its largest budget shortfalls in history. Lawmakers will return to Frankfort in January faced with a $1 billion revenue shortfall and the work of designing a two-year budget for the state.
Kentucky's outdated tax system has left the state's revenue sources dried up, which makes this the right time to act on tax reform. Lawmakers need to craft a new tax system more aligned with Kentucky's largely service-based economy that will help the state avoid the drastic revenue shortfalls in the future.
Yes, tax reform will include tax increases in some areas, but others will see decreases. Reform should be an across-the-board adjustment of how Kentucky derives revenue from its citizens and those that do business here, not summary increases in tax rates to rake in new revenue.
Leaders in the House and Senate appeared to be more supportive of taking a hard look at Kentucky's tax code and making the changes needed. Now the governor says 2010 is not the time.
Beshear appears to be hoping that shooting down tax reform will elevate his pitch for slot machines at horse tracks. By offering Kentucky a more sustainable package of revenue sources, tax reform would have endangered Beshear's expanded gambling pitch as a much-needed remedy for the financial woes of Kentucky and the horse industry.
Kentucky needs a leader that recognizes tax reform for what it is, and is willing to consider all options to right the state's finances. Instead, Beshear has concluded that "right now, during the recession, I don't think is the time to raise anybody's taxes."
Thankfully, what legislation the General Assembly considers doesn't depend upon a blessing from the governor's office. House and Senate leaders should continue with plans to take up tax reform when the 2010 session opens in January despite Beshear turning his back on the issue.
If the governor chooses to sit out the debates that need to occur to overhaul Kentucky's tax system, it's his choice. Failure to lead during this time when Kentucky truly needs it may have him sitting out at the end of his term, too.
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