Week two of the 2010 Kentucky General Assembly saw its first bill signed into law. Legislators moved quickly to approve HB 176 in order to meet the application deadline for federal Race to the Top education grants. On Thursday, Gov. Beshear signed the measure into law.

 

Taxes and budget

 

The budget continues to dominate Frankfort. This week, it led Gov. Beshear to announce a number of new cost-saving measures for state government and pay reductions for top staff. It also seems to be leading to a push for a significant expansion of the sales tax to services.

This week, State Treasurer Todd Hollenbach and UK’s Martin School hosted a tax symposium to discuss the state’s tax code. Several legislators were in attendance including Senate President David Williams, who noted a serious mood to look at Kentucky’s tax code and House A&R Chairman Rick Rand, who announced a working group formed by Speaker Stumbo to work on a tax reform proposal based in part on the two tax bills below.

(Wayne) would raise individual income tax rates for persons making more than $75,000 per year, add an earned income tax credit for low income individuals, decouple the estate tax from the federal law and impose a sales tax on several selective services.

 (Farmer) would expand the sales tax to all services, lower the rate from 6 percent to 5.5 percent and eliminate all income taxes including the corporate, LLET and individual income taxes.

Thursday, Speaker Stumbo indicated he favors reducing Kentucky’s sales tax to 5 percent and eliminating the corporate income tax. His proposal would make up this revenue by eliminating tax exemptions and ensuring “residents and businesses are paying their fair share.” It is unclear how many businesses would see additional tax burdens under this plan.  Stumbo is expected to release details of his plan soon.

Conventional wisdom would suggest that significant tax changes will be unlikely in an election year; however, with significant budget shortfalls, there appears to be a more serious effort to look at taxes than expected. The Chamber continues to believe policymakers should focus on spending reform first.  The Chamber has provided lawmakers with a series of money-saving recommendations in its most recent publication, .

 

Education and Workforce Development

 

Transfer of Credits – (Rollins) requires the Council on Postsecondary Education to develop statewide transfer procedures for college credits and align lower division coursework across postsecondary education institutions. This Chamber-supported bill is awaiting action by the full House.

 

Options for Intervention — (Rollins) would provide more options to the education department and local school councils to intervene in low performing schools. The bill will help the state’s application for Race to the Top funds and was signed by the governor this week. Time constraints – the application is due Tuesday – prohibited an amendment that would have added a charter schools provision which could have enhanced the state’s application for federal funds.

  

Early Graduation — (Winters) would promote early graduation for high school students who fulfill rigorous academic requirements. The bill allows for students to continue on to either a technical and community college or a four-year university with financial aid from the state. This Chamber-supported legislation awaits action by the Senate Education Committee.

 

Teacher Incentive Pay —(Winters) provides for incentive pay for teachers of chemistry, physics or math, an accelerated certification program for certified teachers to obtain additional certification in those areas and loan forgiveness for teachers participating in the program. This Chamber-supported bill awaits action in the Senate Education Committee.

 

Government Modernization

 

Pensions — (Higdon) prevents members of the General Assembly who retire and begin receiving benefits from consolidating their retirement accounts under various retirement systems.  SB 51 passed the Senate and now makes its way to the House.  (Cherry) requires two of the three members of the Kentucky Retirement Systems board of trustees to have at least ten years of investment experience.  This Chamber-supported bill has been referred to the House State Government Committee.

 

Corrections — (Yonts) seeks to limit the usage of the persistent offender felony law if the defendant’s potential sentence has already been enhanced due to subsequent offenses.  The legislation was referred to the House Judiciary Committee.  (Burch) permits the Cabinet for Health and Family Services to contract with an agency to operate residential drug treatment centers for substance abuse offenders and permits the homes to be considered as an alternative to incarceration. 

Unemployment Insurance — (Floyd) requires an employee who received unemployment benefits and was subsequently convicted of embezzling funds to repay the total amount of benefits received to the unemployment insurance trust fund.  HB 242 is awaiting action in the House Labor and Industry Committee.  Click to review the final report of the Governor’s Task Force on Unemployment Insurance.

Health and Wellness

 

Physical Activity for Kids – (Wuchner) requires schools to integrate into the school day 30 minutes per day or 150 minutes per week of vigorous physical activity in order to reduce childhood obesity. This legislation awaits action in the House Education Committee

 

Wellness Program Protections — (Damron) is Chamber-initiated legislation to allow employers to charge a different premium on health care plans for smokers and exempt wellness plans with smoking cessation programs from discrimination statutes. This bill awaits action in the House Banking and Insurance Committee.

 

Competitiveness

 

AMA Guides — (Yonts) amends current law requiring the use of the latest edition of AMA Guides (6th) for determining permanent impairment ratings in workers’ compensation cases and mandates the use of the 5th edition.  The Kentucky Chamber appreciates Rep. Yonts’ continued efforts to work with the Chamber and other business associations to reach agreement on the legislation.  HB 38 is currently awaiting action in the House Labor and Industry Committee. 

 

Comparable Worth — (Riner) creates an arbitrary standard to prohibit wage discrimination against persons of the opposite sex for doing jobs of “comparable worth.”  The Kentucky Chamber has expressed its concerns to the sponsor that this legislation would encourage litigation and increase costs for employers. 

 

Energy

 

ˆ(Leeper) seeks to remove the moratorium on constructing nuclear power plant facilities in Kentucky.  The Chamber-supported bill passed out of the Senate Natural Resources and Energy Committee earlier this week and now moves to the Senate floor for a vote.

 In addition to the aforementioned legislation, the Chamber is closely monitoring a number of bills on behalf of its members.  If you have questions or concerns about any legislation pending before the General Assembly, please contact the  Legislative Web site is iPhone friendly

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