Instead of turning pandemic aid into a tax cut for the rich, lawmakers should invest in Kentucky

HB 1 income tax cut is bad for the state’s health

January 25, 2023 5:30 am

Delilah Jenkins, 6, rests outside her camper last November at Camp Graves where she and her family were living in transitional housing after losing everything in the December 2021 tornado. Affordable housing is among Kentucky’s many needs. (Julia Rendleman for the Kentucky Lantern)

When is a tax cut NOT a tax cut? When a permanent reduction in state revenue is based on a temporary surplus in the state budget. The result is an unsustainable situation — a tax cut that ends up raising taxes elsewhere and harms our ability to fund the vital programs that keep Kentuckians healthy and thriving.

Right now state budgets across the country are full as a result of emergency pandemic programs and stimulus packages like the American Rescue Plan Act (ARPA). But these measures are temporary, with most expiring in 2023. Instead of using this money to build a commonwealth where everyone can live a healthy life and contribute to the health of their communities, some lawmakers have decided to squander the opportunity.

House Bill 8, passed last year, bases permanent income tax cuts on this temporary money. The first tax cut went into effect on Jan. 1 and legislators are already poised to pass another one. These moves take money away from the people who need it, just to give it away to the wealthiest among us. The result is already driving up prices on everyday services because of the new sales taxes.

Now, House Bill 1 puts into motion phase two of this plan to turn federal relief dollars into big tax cuts for the wealthy.

These cuts don’t just drive up the cost of basic necessities, they risk creating shortfalls in the state budget that will threaten Kentucky’s ability to keep up essential public services. They could threaten funding for expanded Medicaid for more than half a million hardworking Kentuckians and low-income families who don’t earn enough to afford health insurance. Cuts in Medicaid reduce funding for rural hospitals, many of which are already struggling to keep their doors open and find quality staff.

These cuts come at a time when Kentucky is already facing crises across multiple fronts — a nursing shortage, a mental health-care shortage, a teacher shortage, a childcare shortage, an affordable housing shortage. Meanwhile, thousands of our most vulnerable children and adults with disabilities remain on years-long waiting lists for the Home and Community-based Services they need to live and thrive in their communities.

Kentucky has been under-investing in essential services for too long and it’s starting to catch up with us.

These past few years Kentucky has seen tremendous resiliency, but also tremendous need. The pandemic has pushed our health-care system to its limits. Western Kentucky is rebuilding from tornados while Eastern Kentucky is rebuilding from flooding. Many families went without power over the Christmas holiday, not because of felled power lines but because public utility infrastructure couldn’t keep up with demand. We don’t know where the next disaster will come, but we know it will come. We need to make sure we’re prepared.

A better Kentucky is possible. Instead of another tax break for the top, it’s time for Kentucky to invest in itself. We can make sure our commonwealth has resources ready and available for everyone. We have the resources to keep our children fed, housed and cared for. We have the resources to keep our rural hospitals open and accessible. We have the resources to cover low-wage workers and families through Medicaid, which has proven to be one of Kentucky’s best investments in itself, its economy and its workforce.

Yet we won’t have the resources to do any of that if we squander this surplus.

Continued cuts will dig a financial hole many of Kentucky’s school, hospitals, and other essential services may never escape. It’s a move that benefits most those who need it least, and the end result is a “tax cut” that many hardworking Kentuckians will end up paying for, in 2023 and beyond.

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Emily Beauregard
Emily Beauregard

Emily Beauregard became the executive director for Kentucky Voices for Health after years of active health coalition membership. Prior to joining Kentucky Voices for Health, Beauregard served as director of planning and communications at the Kentucky Primary Care Association, where she worked on practice improvement, community development, policy advocacy, and communications with members and policy-makers. She previously served for five years at the Family Health Centers in Louisville as the health planner and refugee health coordinator. Beauregard holds a master’s degree in Public Health from the University of Illinois at Chicago.