Competitive Edge

Budget Address this Week

January 2010

When a major bill makes its way to either chamber's floor for a vote in the session's early days, it's a sure sign the bill has uncommonly deep support in that chamber. House Bill 176 became the first piece of legislation to reach the governor's desk this year, as the Senate and House cooperated and fast-tracked the bill. Time was of the essence: A Jan. 19 deadline loomed for state education officials to apply for federal Race to the Top funds, up to $200 million or more that can be used toward improving state middle and high schools. HB 176 also qualifies Kentucky for $45 million in other federal funds to turn around low-performing schools. This money is sorely needed, as will be demonstrated when the Governor deliver's his budget address on Tuesday when the General Assembly returns from the Martin Luther King holiday. The administration has said very little about their budget proposal other than it will contain significant cuts to major programs in order to deal with a projected $1.4 billion deficit over the biennium in the General Fund. Governor Beshear has said he will try to protect the main source of funds for elementary and secondary education, the SEEK formula, and try to limit cuts to key human services. Any cuts in state programs, will be in addition to multiple rounds of cuts in the base funding for most programs that have been made the last year and a half. While some believe government can stand a little more belt-tightening, we think these cuts will begin to be more noticeable to the average Kentuckian. These cuts seem almost a certainty without some new source of state revenue or tax increases. Speaker Stumbo announced this week that he would like to see the General Assembly explore a more consumption based tax system, meaning more reliance on a sales tax. He is advocating looking at the current sales tax exemptions and the possibility of taxing services which are currently excluded from the sales tax. He has also mentioned a possible repeal of the corporate income tax. President Williams has indicated he would favor a more consumption based system as well, but will be very cautious to avoid raising taxes. Governor Beshear has said tax reform of any kind usually translates into tax increases and he doesn't favor any "look" at changing the tax system in the middle of a recession. During the 2010 session AGC of Kentucky will track nearly 1,000 bills and resolutions which may impact our members interests and we will continue to provide the best legislative representation for the commercial construction industry in the Commonwealth. To view the bills we are tracking see below.

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