In Annual Address, Bevin Calls For Tax Reform, More Revenue
Gov. Matt Bevin delivered his second State of the Commonwealth address Wednesday night. It marked the first time in state history a Republican governor of Kentucky addressed a joint session of a Republican-led legislature.
“It’s good to be here in Speaker Hoover’s House,” Bevin said at the beginning of his speech, referring to House Speaker Jeff Hoover, who now presides over the chamber after Republicans secured a majority of seats in the chamber for the first time since 1921.
Bevin touted recent legislation quickly passed last month by the Republican-dominated legislature, including a pair of anti-abortion bills, ‘right-to-work’ legislation and the repeal of higher wages for workers on state construction projects.
But he said lawmakers likely wouldn’t be able to pass legislation as rapidly moving forward.
“I encourage you, please be patient,” Bevin said. “Those of you that are out there watching that want this, that and the other thing done, they will come. If they don’t come this year, they will be coming soon.”
The Big News
But the main news of the night was that the governor plans to call a special session of the legislature sometime this year, in order to reform the state’s tax code and find solutions for Kentucky’s public pension crisis.
Bevin said his administration will review about 300 tax breaks.
“I’m talking about bringing every single sacred cow that people think can’t be touched on the tax front, bringing them all out of the barn,” he said. “And some of those sacred cows are going to be returned to the barn as sacred cows, and some of them are going to be turned into hamburger and I’m going to need your help to make it happen.”
Bevin said the state needs to move from a production-based tax economy to a consumption-based one. And, in a point that might not be popular with some fiscal conservatives, Bevin said the state needs to generate more revenue.
“There are people who support me and have supported me that won’t like this,” said Bevin. “This is not going to be a tax-neutral tax plan. It’s not, we can’t afford for it to be. That’s a straight up fact. We can’t pay off eight times what we bring in if we simply just reshuffle the deck.”
Combined, Kentucky has the worst-funded public pension systems in the nation with about $35 billion pension payments to current and future retirees that the state can’t afford.
After the speech, Speaker Hoover and Senate President Robert Stivers voiced tentative favor for the governor’s call for a special session and a tax overhaul that might not be revenue neutral.
“We will need some time once we think we have a consensus or at least a working document to meet with our members, to educate our members to educate our constituents and the governor will have to do the same thing, to educate the public and travel around Kentucky,” Hoover said.
“I think truly through a pro-growth tax policy we can do that,” Stivers said.
Minority Floor Leader Rocky Adkins said he wanted to see what the governor’s tax reform plan is before voicing an opinion on it.
“If we’re going to grow revenue, how are we going to do that and who it’s going to impact before we start talking about whether that’s a good thing or a bad thing; but it’s up to him to sell that as we move forward,” Adkins said.
Bevin criticized Kentucky’s status as one of seven states that don’t allow charter schools, saying that the state “has a monopoly on public education dollars.”
“With all due respect, we’re not doing as well as we could be,” Bevin said.
And Bevin doubled down on comments he made last year: that Kentucky would invest in education programs that the state can get “good return” on.
“Interpretive this and interdisciplinary that, this is not where the jobs of the 21st Century are; they’re just not,” Bevin said.
Last year, the governor said, “There will be more incentives to electrical engineers than French literature majors.”
Bevin also said he intends to create a “czar” to revamp Kentucky’s foster care and adoption programs. He also said he would crack down on welfare fraud and “deadbeat dads” who have child support debts.
“Real men pay for their children, real men take responsibility,” Bevin said.