Income tax cut bill passed through the Kentucky Senate, headed to governor’s desk
Kentucky Capitol (Getty Images)
The GOP-controlled Kentucky Senate passed legislation Wednesday afternoon along party lines that would further cut the state’s income tax to 4%, sending the bill to the desk of Democratic Gov. Andy Beshear who remains mum on whether he’ll veto the tax cut.
House Bill 1, highlighted by Republican lawmakers as a priority to pass well before this year’s legislative session began, faced strong pushback from various advocacy and research groups and Democrats who worried the loss of tax revenue could lead to a future budget shortfall and subsequent cuts to key government services.
Republicans in the legislature have remained firm in their support of the bill, saying on multiple occasions that there are needed safeguards on the bill that would halt further income tax cuts in the case of an economic downturn in the state.
Senate President Robert Stivers, while explaining his vote for the bill, said the overwhelming support for the legislation was a reflection of past elections that put Republicans in office and in control of the two legislative chambers.
“That truck driver, that farmer, they don’t want us to take back money away from them,” Stivers said.
The legislation reduces the state’s income tax from 4.5% to 4% percent at the start of 2024, a part of a series of pending income tax cuts of a half percent set in motion by landmark tax legislation passed last year.
That 2022 law also included specific financial triggers that would have to be met each fiscal year for the income tax rate to be lowered, such as the balance of the state’s rainy day fund must be at least 10% of the state’s General Fund receipts for the last fiscal year.
Financial experts reported last year that the state was flush with tax revenues, and the state’s rainy day fund has added on billions of dollars in funding in recent years, allowing for fiscal triggers to be met for the tax cut.
The five Democrats who voted against the bill railed against the tax cut as inequitable, benefiting wealthy residents more while average Kentuckians see more of a tax burden through newly implemented sales taxes.
Senate Democrats also echoed previous concerns from their colleagues in the House of Representatives that the recent boost in revenues should be used for investments across the state including to support survivors of natural disasters.
“We want to give more money to the rich and let the working class people suffer,” said Sen. Reginald Thomas, D-Lexington. “It makes no sense at all.”
Majority Floor Leader Damon Thayer dared Democratic Gov. Andy Beshear to veto the legislation, mentioning that he was tired of arguments from Democrats describing the legislation as a “reverse Robin Hood” situation.
“I dare him to veto this bill that lets the people of Kentucky know that their taxes are going to be cut for the third time since Republicans took over control of both of these chambers,” Thayer said.
Beshear has not explicitly said whether or not he plans to veto the bill, previously criticizing new sales taxes that the GOP-controlled legislature passed last year.
“I’m going to take a close look at anything that comes to our desk to balance out where our Kentucky families are at that time and both to look at short term and long term ramifications,” Beshear told the Lantern as he was leaving an event in the Rotunda.
Republicans hold such large majorities in both chambers that they could easily override Beshear’s veto, as they did with last year’s income tax cut.
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