KY Policy Blog

Year-End Revenue Results Underscore Need for Right Actions on Tax Reform

By Anna Baumann
July 11, 2017

Kentucky ended the 2017 fiscal year with $138.5 million less in General Fund revenue than economists predicted would be collected. The shortfall puts slightly more pressure on investments in our schools, universities and community colleges, health and human services and other building blocks of Kentucky communities. And its details reinforce the need to generate more revenue in ways that will work.

Total General Fund receipts in FY 2017 totaled $10.5 billion. Receipts did grow compared to FY 2016 by $138.9 million (1.3 percent), but the forecast predicted twice as much read more

New Study Provides More Evidence Harsher Penalties Are Not Solution to State’s Drug Problems

By Ashley Spalding
July 11, 2017

At the same time our state is increasing criminal penalties for heroin, a new analysis further bolsters existing research showing such an approach is not an effective way to address Kentucky’s drug problems.

House Bill 333, which the Kentucky legislature passed earlier this year, increases penalties for low-level heroin and fentanyl trafficking — rolling back the drug sentencing reforms in 2011’s House Bill 463. The new law makes trafficking in heroin in less than 2 grams a Class C felony, with a 5 to 10 year sentence and no eligibility read more

Senate Health Care Repeal Bill a Drastic Step Backward for Kentucky’s Health

By Dustin Pugel
June 23, 2017

The Senate released the discussion draft of their bill yesterday to repeal the Affordable Care Act (ACA). If passed, the Senate proposal would be a terrible setback for the 1.4 million Kentuckians covered by Medicaid as well as all Kentuckians who benefit from the patient protections and assistance buying coverage contained in the ACA.

Nationally, the Congressional Budget Office (CBO) estimates that it would end coverage for 22 million Americans and drive up health care costs for nearly everyone else.

Effectively Ends Medicaid Expansion

Over 473,000 low-income Kentuckians have gained read more

Kentucky Public Pensions Are Not Expensive — If You Fund Them

By Jason Bailey
June 21, 2017

A special session this fall will likely include proposals to cut public pension benefits, and new employees are especially vulnerable because their plans can be changed easily under law. However, such cuts do nothing to reduce the existing unfunded pension liability — which is owed to retirees and current employees — and won’t save money over the long-term either. That’s because Kentucky’s pensions are already inexpensive to the state as long as they are properly funded on time.

Actuaries refer to the regular cost of a pension plan as the read more

Kentucky’s State Budget Unable to Compensate for Massive Cuts in Trump Budget

By Ashley Spalding
June 15, 2017

President Trump’s budget proposal dramatically shifts costs to states they will be unable to afford, as shown in reports released this week by the Center on Budget and Policy Priorities. At the national level the cuts mean states and localities would immediately need to come up with the equivalent of more than five percent of state General Fund budgets to maintain the programs the federal government is shedding. Because the proposed cuts grow over time, what states need to assume responsibility for will grow to the equivalent of 37 percent read more

Troubling Hints About Direction for Tax Reform

By Anna Baumann
June 8, 2017

We don’t know yet the specifics of a tax reform plan the governor wants the General Assembly to consider in a 2017 special session. But this week, in a letter sent to legislators indicating the session will be held sometime after Aug. 15, the governor said Kentucky can become “more competitive with surrounding states like Indiana and Tennessee by lowering or eliminating certain taxes.” Given the makeup of those two states’ tax systems, this language suggests a potentially harmful direction that involves lowering taxes for the wealthy and corporations and read more

Kansas’ Experiment Yields Valuable Lessons for Kentucky

By admin
June 7, 2017

By Heidi Holliday

You’re welcome, America. Our state, Kansas, just wrapped up a 5-year long experiment in governance from which the other 49 states can now glean some important lessons. The Kansas Legislature has voted to roll back much of the 2012 package of tax cuts that sent the state into a downward spiral of financial instability and weakened the Kansas’ public schools, universities, Medicaid program and virtually everything else that the state funds.

With the state facing yet another budget shortfall of $900 million, government leaders decided that enough read more

Pension Benefits Inject $3.4 Billion into the Economies of Kentucky Counties

By Jason Bailey
June 6, 2017

As the governor and General Assembly consider additional cuts to pension benefits for employees, it’s important to understand the role such benefits play in local economies. In 2016, public retirees of the Kentucky Employees’ Retirement System, State Police Retirement System, County Employees Retirement System and Kentucky Teachers’ Retirement System received pensions totaling $3.4 billion.  That’s the economic equivalent of an entire industry — for comparison, the accommodations and food services industry in Kentucky generated $4.5 billion in earnings in 2015 while the construction industry generated $7 billion, according to the read more

The Health Care Repeal Bill Would Double What Kentucky Must Pay for Medicaid Expansion

By Dustin Pugel
June 6, 2017

The American Health Care Act (AHCA) ends extra federal funding for states that expanded Medicaid eligibility, meaning Kentucky would have to increase its Medicaid expansion funding 111 percent to make up the difference. This $404.9 million increase in state spending would almost certainly lead to Kentucky ending coverage for the 472,000 Kentuckians insured through the expansion.

How Is Medicaid Paid for In Kentucky?

Medicaid is a shared state-federal program, and federal government pays states differently for their traditional Medicaid population depending on how well-off people are in each state. For read more

Angel Investor Tax Credit Program is an Overly-Generous Subsidy for Wealthy Investors

By Pam Thomas
May 23, 2017

Kentucky’s angel investor tax credit program is touted as a way to encourage investment in start-up companies. But because it is overly generous to investors, fails to target start-ups exclusively and lacks adequate evaluation mechanisms, there are reasons to question its cost-effectiveness.

Angel investor tax credit programs are offered in more than 20 states. They are promoted as a way to encourage investors to support start-up and early stage ventures for which it is sometimes difficult to access the capital needed to begin or expand operations — especially in risky read more