KY Policy Blog

Arguments to Cut Income Tax Miss Context and Ignore Tax’s Benefits

By Jason Bailey
October 17, 2012

Those arguing for a shift toward sales taxes and away from income taxes in Kentucky overstate the influence of income taxes on where people live. And they overlook the benefits of income taxes, including how they improve tax fairness and drive long-term revenue growth.

One argument, which comes up in the consultants’ report to the governor’s tax reform commission, concerns location decisions along Kentucky’s border regions. Since close to half of the Kentucky population lives close to a state border, there are more opportunities for individuals to choose which state read more

What Would Kentucky Gain from More Business Tax Cuts?

By Jason Bailey
October 10, 2012

For a state like Kentucky—with high levels of poverty, low wages and too few jobs—a perpetual issue is how government can do more to promote prosperity. For years, the state has focused heavily on reducing business taxes and providing special tax incentives with the hope of attracting industry.

In truth, business tax cuts are not a formula for long-term economic development. Yet a focus on that strategy continues in the recently-released consultants’ report to Governor Beshear’s Blue Ribbon Tax Reform Commission.

The report argues that Kentucky needs to improve its read more

Budget Cuts Lead to Job Losses

By Jason Bailey
June 8, 2012

News of layoffs at the University of Kentucky follows stories of pending job loss at the Fayette County health department. Both announcements can be linked to the 11 rounds of cuts the legislature has made to the state budget, which have reduced funding for many state functions by 15-30 percent or more.

Job growth in the economy remains slow, and budget cuts at all levels are making matters worse. Those cuts are resulting in the direct elimination of jobs—both through layoffs and by agencies and organizations not hiring for open read more

Senior Tax Breaks Don’t Attract Migrants

By Jason Bailey
June 1, 2012

Those arguing for state income tax cuts often claim that such cuts will result in the relocation of large numbers of people from other states, but the economic evidence simply doesn’t support those claims. As a recent survey of the research showed, people don’t migrate much in general, and those that move do so largely for family reasons or because they are attracted by quality of life, housing costs, job opportunities or weather—not taxes.

One variant on this claim is that tax cuts for seniors will make a state a read more

Kentucky’s Adult Education Challenge

By Jason Bailey
April 30, 2012

Education cannot solve all of our economic problems, as the many college-educated young people now unemployed and underemployed can attest. But low levels of educational attainment are an important reason for Kentucky’s economic challenges. A more skilled and educated citizenry is critical to building a Kentucky economy and society that can flourish.

While policy discussions of education often focus on children and traditional-age college students, Kentucky adults ages 25-54 face severe gaps in college attainment that impede state progress and family well-being. Those adults will be participating in the workforce read more

Budget Agreement Affirms Deep Cuts to Core Investments

By Ashley Spalding
April 5, 2012

The 2012-2014 budget bill that passed both the House and Senate late last week is—like the budgets previously proposed this year by the Governor, House and Senate—based primarily on cuts. These cuts will further strain the state’s essential programs and services and prevent critical investments in Kentucky’s future.

The budget bill generally upholds the cuts to 2012 funding levels made in the Governor’s budget, which include:

Across state government: 8.4% Universities and community college system: 6.4% Kentucky Educational Television, libraries and archives, career and technical education: 4.2% Public safety including read more

Report Highlights Kentucky’s Need for More Progressive Income Tax

By Jason Bailey
April 4, 2012

A report released today by the Center on Budget and Policy Priorities (CBPP) shows that income taxes for Kentucky families slightly above the poverty line are among the highest in the nation for that income group.

The report says that in 2011 a two-parent family of four in Kentucky with income of only $28,773 (25 percent above the poverty line) paid $1,021 in state income taxes, an amount higher than any other state.

This dubious distinction is because the legislature has been unwilling to comprehensively reform its income tax to read more

Budget Would Further Reduce College Affordability

By Jason Bailey
January 25, 2012

Three stacks of books and large dollar stack.The barriers to affordable higher education–especially for low-income Kentuckians–will continue to grow under a budget that cuts funding to postsecondary institutions and limits need-based financial aid.

Budget Would Further Reduce College Affordability

The Governor’s budget includes cuts of 6.4 percent to higher education institutions. On top of previous cuts and because of rising enrollment, per student General Fund dollars for higher education institutions would be an estimated 22 percent lower next year than in 2008 under the plan (see figure below). More cuts would inevitably lead to tuition hikes on read more

Inadequate Tax System Has Big Role in Austere Budget

By Jason Bailey
January 24, 2012

While the still-weak economy and the end of federal recovery-related assistance are important factors in the tight budget now being considered in Frankfort, long-term structural problems with Kentucky’s tax system also play a big role.

Economists say that a state’s tax revenue should grow in line with its economy in order to keep up with approximate growth in costs. Kentucky’s General Fund revenue has been declining as a share of the economy for a long time, and that trend is expected to continue over the next two years (see the read more

State Releases More Pessimistic Revenue Forecast

By Jason Bailey
October 14, 2011

The official body that approves state revenue estimates released a preliminary forecast today that projects nearly $500 million less in General Fund revenue for the upcoming two-year budget than the draft forecast back in August. Troubling questions about the economic outlook are resulting in less optimistic estimates.

The new estimate suggests growth in the General Fund of only 1.8 percent in 2013 and 2.4 percent in 2014. That translates to revenue growth of $164 million in 2013 and $224 million in 2014.1

In addition to possibly weak revenues, costs will read more