FRANKFORT — Gov. Steve Beshear has named 23 people, including former University of Kentucky President Lee T. Todd Jr. and Stu Silberman, executive director of the Prichard Committee for Academic Excellence and former Fayette County school superintendent, to a commission that will draft a proposal to overhaul Kentucky's tax code.
The commission must have its recommendations finished by Nov. 15, giving lawmakers time to review them before the 2013 General Assembly begins in January.
Beshear, speaking at a Capitol news conference Thursday, said commission members are from diverse geographic areas and backgrounds — they include bankers, educators, union members, small-business leaders and mental health advocates. Lt. Gov. Jerry Abramson previously was named chairman of the commission.
The state has slashed more than $1 billion in spending during the past four years, and Beshear's proposed budget for the next two fiscal years would cut an additional $286 million. Some of those cuts have been in core services, such as education. The state is losing traction in key areas because of lack of investment, Beshear said Thursday.
"The revisions should allow for tax revenues that are adequate to address the needs of the state's citizens and businesses," he said.
The state's tax system must encourage economic growth, be fair and grow with the economy, he said.
Studies have shown that Kentucky's tax receipts have not grown at the same pace as the economy. A study released Monday by the University of Kentucky repeated what many studies have shown during the past decade — Kentucky's tax code should be broadened so it can be more stable.
The vast majority of Kentucky's sales taxes are generated from goods. But people are spending more money on services and the service industry, which is largely untaxed in Kentucky.
Beshear said tax reform would not be possible during this legislative session because it will take time to build consensus, and all 100 members of the House and half of the 38-member Senate are up for re-election this year.
"This is not a question of courage," he said. "This is a question of timing. I firmly believe that Kentucky's leaders, in the governor's office and in the legislature, have the political courage and will to tackle this complex issue."
Beshear said that all options are on the table and that the commission was not being charged to come up with a specific plan to lower or increase taxes.
The state has done a series of studies on tax reform during the past 20 years, leading some to say it's time for the legislature to act.
"I would say to them to fasten their seat belts," Beshear said of naysayers. "Get ready for not just another study but for some proposals that I think can refashion Kentucky's future."
The commission will hire a consultant to look at various options, including other states' tax structures. The consultant's report is scheduled to be completed in late summer.
The chairmen of the House and Senate budget committees — Rep. Rick Rand, D-Bedford, and Sen. Robert Leeper, I-Paducah — will serve as ex-officio members of the committee. Rep. Jim Wayne, D-Louisville, and Rep. Bill Farmer, R-Lexington, who have long pushed for a tax overhaul, also will be non-voting members.
Farmer said Thursday that he hoped the commission's final report would result in real, substantial changes to the state's tax code.
"I don't want this to be another study that sits on a shelf and gathers dust," he said.
