Politics

Gov. Matt Bevin says he will veto the entire two-year state budget and revenue bills passed by the legislature last week, saying that the tax plan isn’t comprehensive enough and the budget spends too much money.

The budget passed by the legislature included about $600 million more in spending than the spending plan proposed by Bevin back in January.

Most of the spending increases went towards K-12 schools and higher education, which education advocates say still received cuts but were funded at higher levels than in Bevin’s budget.

During a press conference on Monday, Bevin said that the legislation comes up short.

“It’s why we have to get tax policy done that is sound. That is comprehensive. So we can actually pay for all the things we need and want to spend money on,” Bevin said.

The tax bill passed by the legislature last week raises some taxes and lowers others — it would expand the sales tax to 17 new services, eliminate some income tax exemptions and creates a flat five percent tax on corporate and individual incomes.

The tax bill — which nets about $487 million in new revenue — amounts to a tax cut for wealthier people and businesses, but a tax hike for middle-income and poorer people.

An estimate by the Washington-based Institute for Taxation and Economic Policy estimates that the tax plan would give the wealthiest one percent of Kentuckians an average tax cut of more than $7,000 per year while those making less than $21,000 per year would pay about $93 more per year.

The median per capita income in Kentucky is about $25,000 per year.

Senate President Robert Stivers and acting-House Speaker David Osborne, both Republicans, reacted to Bevin’s planned vetoes in a prepared statement Monday.

“We believe Governor Bevin is misguided in his interpretation of the budget and the revenue bills, as we are comfortable with LRC staff revenue projections,” the statement read. “To our knowledge, the Governor has had no discussions with any legislators on the details of this budget and what he might consider to be a shortfall. We believe Governor Bevin would be best served to meet with legislators to understand their thoughts and rationale before making a final decision on vetoing the revenue and/or budget bills.”

Bevin applauded lawmakers for trying to pass a tax reform package, but said it wasn’t comprehensive as it needs to be.

“These are all things that I’ve been advocating for in some respects, but as it relates to these services, I think perhaps a little different level of thought,” Bevin said.

“There’s a whole lot of services that are capable of being taxed. Some of those that were chosen, I don’t know that I follow the logic behind.”

Among the 17 new services that would be tagged with the six percent sales tax are automotive repairs, pet grooming and boarding, janitorial services, gym memberships and dry cleaning.

Once Bevin officially vetoes the bills, lawmakers might try to override his vetoes when they return for the final two days of the legislative session on Friday and Saturday.

The state constitution requires lawmakers to pass a balanced budget. If they don’t override Bevin’s vetoes, they would either have to pass a new budget in either the final two days of session or a special legislative session, which would have to be called by Bevin.

Bevin also applauded the legislature for passing a bill that changes pension benefits for current and future state employees, but said it didn’t go far enough

“I applaud those men and women who are courageous enough in the face of a whole lot of people encouraging them to do nothing at all, that they at least did something. And something is better than nothing,” Bevin said.

This story has been updated. 

Ryland Barton is the Capitol bureau chief for Kentucky Public Radio.