KY Policy Blog

Plan to Front-Load Pension Payments Would Create Crisis in Next Budget

By Jason Bailey
December 1, 2017

The pension framework under consideration would require Kentucky to make excessive increased payments for pension liabilities in the next state budget — even beyond the huge new contributions the state just made in the current budget. If included in a revised pension bill, this overreaction to past underfunding would set up unprecedented budget cuts a few short months from now — especially if there is no new revenue on the table to make those payments possible.

The additional contributions come largely from shifting to what is called the level dollar read more

Senate Tax Plan Harms Low- and Middle-Income Kentuckians to Pay for Giveaways to Those at the Top

By Anna Baumann
November 21, 2017

Like the top-heavy tax cut plan passed in the House last week, the plan now in front of the Senate would shift taxes away from millionaires and corporations and over to low- and middle income Kentuckians while setting the stage for deep cuts to the budgetary programs and services that help Kentucky’s communities thrive.

Senate Plan Slashes Taxes at the Top, Increases Taxes for Low and Middle-Income Kentuckians

Senators will return to Capitol Hill next week after the Thanksgiving recess for a potential vote on their revised plan. According to read more

How Federal Tax Proposals Threaten Investments in Kentucky’s Congressional Districts

By Dustin Pugel
November 13, 2017

The vast majority of Kentuckians would be worse off under recent federal tax cut proposals. Far from benefiting the average Kentuckian, the plans would put fiscal pressure on already strained public programs and leave behind nearly 40 percent of children in working families from the Child Tax Credit expansion. Its tax cuts are focused on the very wealthiest, with the top 1 percent in Kentucky bringing in 40 percent of the value of the tax cuts by 2027, even while taxes would go up for more than 1 in 5 read more

Analysis Shows Pension Bill Adds Huge New Costs for Teachers’ Plan

By Jason Bailey
November 10, 2017

A new analysis of the proposed pension bill by the actuary for the Teachers’ Retirement System (TRS) shows huge new costs to the state from the legislation, including higher costs to pay down the existing unfunded liabilities. In total, the bill adds $4.4 billion in state costs for TRS over the next 20 years, including $645 million in costs in 2020.

There are several reasons for the added costs. First is the switch to the “level dollar” method of paying down pension liabilities, which massively shifts contributions to earlier in read more

5 Things to Watch for in the House Federal Tax Plan

By Anna Baumann
November 1, 2017

Tomorrow the U.S. House is expected to release a draft bill that, by all accounts, would enact large tax cuts tilted heavily toward the wealthiest Americans and largest, most profitable businesses. Based on what is already known, here’s a round-up of the research showing how it would leave most Kentuckians worse off:

Plan Will Increase the Deficit

The House plan would increase the deficit by $1.5 trillion over 10 years, possibly even more if it uses gimmicks such as dynamic scoring and phase-ins to hide the true cost. This is read more

Congressional Plan to Cut Taxes Now and Programs Later Would Harm Kentuckians

By Ashley Spalding
October 26, 2017

Now that the Senate and House have both passed budget plans that include a fast-track process for tax cuts, Congress is poised to launch the first step of a likely two-step tax and budget agenda. Step one is enacting tax cuts heavily skewed toward wealthy households and profitable corporations. Step two is paying for them later through program cuts that will deeply harm low- and middle-income Kentuckians.

Instead of trying to pass a single bill with both tax cuts and offsetting program cuts, the two-step strategy is an effort to read more

Additional Contribution for Retiree Health Benefits Is an Unnecessary Wage Cut

By Jason Bailey
October 24, 2017

The state’s proposed framework for pension legislation would require public employees to pay three percent more of their salaries toward retiree health benefits, the effect of which is the same as a three percent cut in wages. However, Kentucky’s retiree health plans are much better funded than most similar plans around the country, and the resources available for the plans are growing rapidly without the need for extra contributions from public employees who are already undercompensated.

The new contribution will cut wages by approximately $158 million annually for state workers read more

Supplemental Security Income is the “Assistance of Last Resort” for Kentucky’s Most Vulnerable

By Dustin Pugel
October 24, 2017

Supplemental Security Income (SSI), similar to Social Security Disability Insurance, provides a vital lifeline to blind, disabled and aged Kentuckians. Being a means-tested program, however, SSI is specifically designed for those with extremely little means. Far from some claims it is an ever-expanding program designed to create dependency, it is targeted to offer a small but critical benefit only to those who have nowhere else to turn, and encourages work among those who can. Because of the dangerously fragile position these beneficiaries are in, the Social Security Administration refers to read more

Film Industry Tax Credits are Growing Rapidly and Pose a Significant Threat to State Revenues

By Pam Thomas
October 23, 2017

In a recent important article, the Lexington Herald-Leader examined the proliferation of Kentucky’s film industry tax credits. The state’s law allowing the credits was amended in 2015 to reduce the minimum investment required, and to provide enhanced credits for productions that meet those requirements. At that time, we wrote about the dangers of expanding the program as legislators proposed.

The Herald-Leader article noted the state has awarded $90 million in tax credits from the time the program launched through June 30, 2017.  Of that total, just under $2 million happened read more

Pension Framework Makes Harsh Benefit Cuts, Adds Costs Without New Revenue

By Jason Bailey
October 18, 2017

The governor and legislative leaders released a framework today that makes substantial cuts to pension benefits for current workers, new employees and even retired teachers. It includes a shift to a 401k-type defined contribution (DC) system for future employees that is no cheaper than the current pension plan but will reduce retirement security and make it harder to attract and retain a skilled workforce. In addition, the framework calls for big new contributions to the plans without any new tax revenue to make that possible.

Major aspects of the proposal read more