KY Policy Blog

Massive New Federal Tax Cuts for the Wealthy Should Be a Resource for Kentucky’s Budget

By Jason Bailey
January 3, 2018

Kentucky is facing a major gap in its next two-year state budget that could mean unprecedented cuts to education and other services. But the General Assembly could look to the money coming from huge new federal tax cuts for the wealthy to help bridge that gap.

The richest 20 percent of Kentuckians are expected to receive $2.1 billion in federal tax cuts in 2019 because of the bill that passed Congress and was signed into law by President Donald Trump in December. Those high-income individuals will receive 69 percent of read more

Passage of the Dream Act Would Benefit Kentucky

By Anna Baumann
December 21, 2017

In September, the Trump Administration announced the end of DACA (Deferred Action for Childhood Arrivals), a program established by executive order that granted immigrant youth who were brought to the U.S. as children temporary relief from deportation and authorized them to work. By passing the Dream Act, Congress can restore and even strengthen the legal protections for these young Kentuckians who contribute to our commonwealth by going to school, working, paying taxes and more. In the absence of a Dream Act, Dreamers, their families and our communities will be harmed. read more

New Tax Expenditure Report Obscures Growing Costs

By Pam Thomas
December 21, 2017

The Office of State Budget Director (OSBD) released the Tax Expenditure Report for the 2018-2020 biennium late last month. The new report is misleading because it does not include in the grand total of all expenditures located in the executive summary a number of tax expenditures detailed in the body of the report, making total costs appear smaller than they actually are.

The purpose of the Tax Expenditure Report, which is required by language in the executive branch budget, is to identify revenues lost for the current and next two read more

Year-End Results Show Progress Made on Pensions in Last Budget

By Jason Bailey
December 19, 2017

New reports on Kentucky’s public pension systems show substantial funding progress thanks to sharply increased contributions to the plans in the 2016-2018 budget. The extent to which those funding levels are getting us on the right track should be understood before the legislature makes harmful cuts to benefits or demands dramatic additional increases in contributions in the next budget.

Pension Plans on a Stronger, More Sustainable Path

In the 2016-2018 budget, the General Assembly contributed about 94 percent of the actuarially required contribution (ARC) to the Teachers’ Retirement System (TRS), read more

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

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

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

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

Report Shows Kentucky’s Preschool and Kindergarten Programs Effective, Need Greater Investment

By Ashley Spalding
October 16, 2017

High quality early childhood education has long been understood to be an important investment with a significant return. While our state has done more in recent years to expand access to preschool and full-day kindergarten, a new report from the state Legislative Research Commission shows there is real need for additional investments.


The report describes how effective our state’s preschool program is at preparing children for kindergarten — especially those from low-income households or who have disabilities. However, while full-day preschool is shown to be most effective just 40 read more