Citing Bleak Economic Outlook, Beshear Pushes for More Tax Revenue for Education, Pensions

FRANKFORT — Gov. Steve Beshear is encouraging lawmakers to take bold stances in reforming the state’s tax code,  before past budget decisions and cuts cripple Kentucky.

Beshear made the pleas Wednesday night in his annual State of the Commonwealth address.

(Read the State of the Commonwealth address.)

The speech focused on the state’s lack of revenue—and how reforming the tax code would allow enough new money to solve the state’s pension problems, plus increase funding for education.

The idea, Beshear said, was for lawmakers to be forward-thinking in their decisions this year.

“Our focus needs to be not just on the present, but on five, 10, even 25 years from now,” he says.

In his address, the governor laid out a dismal revenue outlook for Kentucky, despite modest economic growth.

The governor stopped short of saying tax and pension reforms had to be accomplished the 2013 regular legislative session—which resumed this week— but said they must be addressed by the end of the year.

“What will be able to pass in this session in the way of tax reform or pension reform is not clear. And yes, the two go together,” Beshear says.

Beshear also made the case for such a statewide ban, pointing to many large and small communities across the state who implemented their own bans.

And he said now was the time to pass such a ban.

“Folks this isn’t a rights issue—people could still smoke. Just not in places where their smoke endangers the health of our workers and others,” Beshear said.

But the bill still faces hurdles in the state Senate, with some opposition from Republican leaders.

Speaking to reporters, state Senate President Robert Stivers, a Republican, said he disagrees with many of the proposals the governor advocated, including linking pension and tax reforms together and supporting a statewide smoking ban.

But Stivers also said he’s willing to hear the governor out to come up with solutions.

“Let’s have the conversation,” Stivers said. “We welcome the debate. But we want to go it in a method and manner that is collegial and respectful in nature and allowing people to participate and express their opinions.”

Stivers said  he’s not sure what issues he would be willing to compromise on, because the opposing parties haven’t sat down to discuss issues yet.

And while not all lawmakers agree with Beshear’s approach, House Speaker Greg Stumbo said the governor laid out a plan for the future.

“He didn’t paint a rosy picture, he didn’t pull a lot of punches, he pointed to a limited amount of successes that we had but he also pointed the stark budget dilemmas we’ve had to face because of the recession,” Stumbo said.

Stumbo, a Democrat, said he does think pension reform needs a dedicated funding sources, such as new tax revenue. He also agreed with the governor on implementing a statewide smoking ban.

Other lawmakers weren’t high on the speech. House Republican Floor Leader Jeff Hoover said he was disappointed the governor didn’t offer solutions to the state’s problems.

“I think every member of the General Assembly, Republican and Democrat is looking for leadership,” Hoover said. “They’re looking for his ideas, looking for what he wants to get done, to get something out there so we can begin that discussion and we didn’t get that tonight. We just heard ‘Here’s the problems, I look forward to working with you over the next year’ and that was it. He talked about the need for more revenue, what’s his proposal to get more revenue? We didn’t hear any of that.”

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