Politics & Government

Bevin hints at tax increases in State of the Commonwealth address

Hoover and Stivers respond to Bevin's call for tax overhaul

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Gov. Matt Bevin implored Kentucky lawmakers to show boldness and bravery in his State of the Commonwealth address Wednesday as they consider tax reform and fixing the ailing state pension systems later this year.

In a non-scripted speech that lasted 56 minutes, Bevin said Kentucky can’t afford a revenue-neutral tax overhaul, a model that has long been at the heart of Republican tax plans, indicating that tax increases will be needed when lawmakers meet to reform the tax code in a special legislative session that Bevin pledged to call in 2017.

“Think big, be bold,” Bevin said in regards to restructuring the tax system. “This is what you were elected to do, this is what the people want of us.”

Bevin also promised to cut the state’s inventory and estate tax, but said he expects other taxes to increase in order to ensure the state can pay its growing pension obligations, which Bevin called a crisis.

“That’s not a pension system,” Bevin said of the Kentucky Retirement Systems. “That’s a checking account and it’s about to go bankrupt.”

Bevin said lawmakers must examine every aspect of the tax code and that there will be “sacred cows” that are turned into hamburger.

Senate President Robert Stivers, R-Manchester, and House Speaker Jeff Hoover, R-Jamestown, were cautious in their reaction to Bevin’s pronouncement, saying that tax increases aren’t the only way to generate more revenue for the state.

“How do you define, exactly, more revenue? Is it a particular increase in taxes or is it expanding the base by doing different things?” Hoover said.

Speaking to a joint session of the General Assembly for the second time since he took office in December 2015, Bevin touted the accomplishments of his first year in office while renewing a pledge to make Kentucky the “center of excellence in engineering and manufacturing.”

“You asked for change to come and change has come,” Bevin said. “Change has come in a significant way in this particular body and it will continue to come.”

He promised to appoint a “czar” to overhaul the state’s foster care and adoption programs, saying they will become a model for the rest of the nation.

“If you are going to be a foster child anywhere in this country, you are going to want to be a foster child in Kentucky,” Bevin said.

Bevin also listed people he doesn’t want to live in Kentucky, saying the justice system must crack down on people who “abuse the system,” drug dealers, people who don’t respect law enforcement and “deadbeat Dads.”

In particular, he said he will focus on increasing the amount of money counties collect from what he called “deadbeat dads,” pointing out that Lee County only collects 29 percent of their child support money while Morgan County, which collects the highest percentage, collects 78 percent.

On education, Bevin touted the fact that some funding for state universities will soon be dependent on their ability to meet educational goals. He also pledged to continue shifting state funding to college majors that can give a “return on investment.”

“Interpretive this and interdisciplinary that, this is not where the jobs of the 21st century are,” Bevin said. “They’re just not.”

Bevin also said he wanted high schools to teach fiscal management, fiscal discipline and civics before promising that charter schools will be allowed in the state.

“Charter schools are coming to Kentucky,” Bevin said. “They are going to come to Kentucky and they will be good for Kentucky.”

Bevin highlighted several laws that were passed in the first week of this year’s legislative session, in particular praising the passage of the so-called “right to work” law and restrictions on abortion.

Going forward, he encouraged Kentuckians to have patience as lawmakers delve into a host of complex topics.

“As we move into 2017, I encourage you all to be patient,” Bevin said. “There are things we would like to see get done and they will get done.”

Bevin also took a swipe at the media, accusing traditional news outlets of ignoring things like murder rates, failing schools and discrimination suits because they were “breathlessly looking at things that are idiotic.”

Bevin began his speech by reading from several letters and emails he received from Kentuckians over the course of the year.

He thanked firefighters and custodians, teachers and a Democrat. But when he got to a note from the mother of a veteran who committed suicide, Bevin paused. He regained his composure and then made a pledge to her.

“I challenge those of you in this legislative body, take this to heart,” Bevin said. “These are the young men and women who have laid everything out for us and there is no greater love than that.”

Daniel Desrochers: 502-875-3793, @drdesrochers, @BGPolitics

Jack Brammer: (502) 227-1198, @BGPolitics

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