Beshear, move on tax reform: Budget reinforces need for more revenue

In his state of the commonwealth address last month, Gov. Steve Beshear spoke with urgency about the need for tax reform, calling the existing state system "archaic."

This is nothing new, he said, noting that "we've been talking about tax reform for decades and through a dozen studies. Even though it's an election year, he said, "it's time to take action."

The irony — stronger words that could apply — is that the time is never good.

In odd-numbered years, legislators meet in shorter sessions and so say they don't have time to address a complex matter like tax reform. In even-numbered years, as the governor observed, elections loom and politicians are loathe to approach the dreaded t-word.

As a result, the fiscal noose that's been choking Kentucky revenues is now so tight that making the best of this bad situation still leaves vital state services gasping for life.

Few things could make that case as well as the budget proposal the governor presented Tuesday night.

Kentucky must re-invest, as Beshear proposes, in children by restoring public school funding and child-care assistance for low income families. The state is obligated to the $100 million promised last year to the ailing state pension fund. Public school teachers and state workers who have stayed on the job for four years without raises deserve them.

But the cost of these choices is further cuts for higher education, the Kentucky State Police and a host of other agencies that have already suffered double-digit cuts in recent years.

Beshear softened the blow by recommending over $1 billion in borrowing to fund projects at every state university and eleswhere around the state. Future Kentuckians will be laden with more debt but current members of the General Assembly will have projects to tout back home.

This has to change.

Despite a modest economic recovery and remarkable governmental belt-tightening since the recession, there is simply not enough money to go around.

Kentucky's economy may recover further but our outdated, loophole-ridden tax system won't capture enough of the upswing to pay for the government services we need.

Beshear must move quickly to get his tax modernization proposal, based on the work of his own blue-ribbon committee on tax reform last year, before this session so legislators can get to work on a system that captures revenues from our growing, service-based economy, closes loopholes to promote fairness and raises more money for our state's pressing needs.

A final note: Many political observers believe that, after two decades of talk, a proposal to place a constitutional amendment on the ballot this fall to allow casino gambling has a real shot this session.

Even if that happens and voters give gambling a thumbs up, no one should be lulled into believing that gambling revenue will magically fill the state's coffers, eliminating the need for the politically difficult task of rewriting the tax code.

Gambling is, well, gambling. It will never eliminate the need for a fair, modern tax code to reliably fund our state's pressing needs.