FRANKFORT — Republican House Speaker David Osborne says his GOP supermajority in the House plans to pass a bill this week that would continue to cut state income taxes, a big priority for the GOP leadership. telegram long before this year’s legislative session.
Osborne on day one of the legislative session said House Bill 1, the vehicle for further income tax cuts introduced Tuesday, would likely pass the House on Thursday. The law will lower the state income tax rate from 4.5% to 4%, confirming that various “triggers” for adequate revenue from the previous fiscal year have been met.
“Well, of course it’s coming out of the state coffers – about $600 million dollars this year,” said Osborne. “We happen to believe it is good policy to allow taxpayers to keep more of their hard-earned money.”
Osborne said taking the income tax rate to 4% would cost the state coffers $1.2 billion by 2024.
Senate President Robert Stivers, R-Manchester, told reporters Tuesday that the income tax cut is one of the House bills the Senate is likely to pick up this weekend before the legislature recess until February. Stivers said the Senate would consider final passage of the income tax bill when lawmakers return to Frankfort in February.
“The trigger has been hit,” he said. “It will last so we will go to four and a half. Next year we will drop to 4%.”
Before the legislature convenes, a coalition of advocacy and research groups keep pushing lawmakers to oppose an income tax cut, citing the loss of General Fund dollars that could support services such as education and childcare. Previous cuts as a result of last year’s House Bill 8 would cost the state general fund a loss of $247.6 million in fiscal 2023 and $487.6 million in fiscal 2024, the group said.
Natalie Cunningham, outreach director of the Kentucky Center for Economic Policy, a progressive think tank, told reporters that HB8, which sets the stage for cutting income taxes again this year, “is dangerous to use temporary surpluses to make permanent tax cuts Kentucky cannot deliver.” Pundi -State coffers still benefit from federal pandemic relief even though the money will expire soon, he said.
“HB8 is using our temporary surplus as an excuse for big permanent tax cuts that will squander our current surplus over time and rip a huge hole in future funding for schools, hospitals and other essential needs,” said Cunningham.
When asked if he thought changing the minds of Republicans in favor of the proposed income tax cut was possible, Cunningham said that despite support for passing it, “there is always the hope and the possibility for someone to see the other side and understand that our country is worth investing in and people -Our people are worth investing in.”
Erin Doherty Copeland, Kentuckian fellow for the Commonwealth Economic Justice Council and a psychotherapist, says that with fewer income taxes coming in, programs in areas like public education, Medicaid and the criminal justice system could generate fewer dollars in the future. Paying higher sales taxes to cover losses can be a burden for those on lower incomes, he said.
“The system has reached a breaking point,” Copeland said. “The Kentuck people have struggled enough and lawmakers want to take money that is meant to benefit all Kentucks. Those funds must be reinvested into our community so that our community can be healthier, stronger, smarter and safer.”