2022 could be the best time to reform Kentucky’s tax code, legislative leaders tell the business community at Chamber conference

Senate President Robert Stivers and House Speaker David Osborne discussed the key issues facing the General Assembly in 2022 with Kentucky Chamber President and CEO Ashli Watts at the Kentucky Chamber’s 2022 Legislative Preview Conference.

The legislative leaders started by discussing the western Kentucky storms and the role the legislature will play in recovery for those areas. Both Stivers and Osborne agreed so much of what will be needed by the communities, individuals and businesses is yet to be seen, and while there will be an incredible amount of federal resources, there will still be areas that need assistance. The legislature’s role will be looking to see how they can help the state get back to normal and expediate recovery, according to Stivers and Osborne.

A common theme of the day was the next two-year budget and the potential for tax reform. ”The legislature will be as aggressive as possible to get things moving on the budget,” Osborne said. He continued to speak on how difficult, it is to have a clear picture on revenues, as there is still federal stimulus helping with the economy. Stivers noted both chambers have worked hard to implement a 10-day viewing period to improve the process on the state’s most important policy document.

As for tax reform, both Stivers and Osborne feel there is great momentum  in Kentucky headed into 2022.

Osborne noted his Republican caucus in the House has 75 members, and this is one of the biggest things the entire group has expressed they want to accomplish. He said while he often feels the absolute worst time in the world to do tax reform is in session as the crafting of the budget, but he feels “this may be the best time in history for us to tackle this.” He noted the state is expecting a budget surplus and to be able to look at tax reform through that lens is exciting. ”While it will still be incredibly difficult to get all legislators on the same page, I still see us moving in that direction (on tax reform) pretty quickly.”

Stivers said the concept of tax reform and making a better economic environment, as other states have done, is a critical area of focus in the state. ”Some of the huge economic successes we’ve seen in this state have been a result of the reforms to the tax code we made in 2018.” Stivers said. The Senate President added he feels it may be a good time to do things like lowering the personal and corporate income taxes and potentially even lump the gas tax in with that to potentially make the action revenue-neutral.

Kentucky’s critical workforce shortage is also something that must be addressed and considered in tax reform, the leaders said. Speaker Osborne said an important reason to do tax reform is to look at attracting and retaining an attractive workforce, because it is the main factor businesse are considering when deciding where to locate. The Speaker said overall workforce is particularly bad in Kentucky, as we have among the lowest workforce participation rate in the nation, suggesting the state also look at assistance reform as a way to address this issue.

Stivers pointed to access to childcare as a huge issue they want to address when it comes to the workforce shortage, but said he doesn’t want it to be all government run. “We want to hear from businesses as to what can be done and how everyone can work together to find the right solutions,” Stivers said.

When asked what the General Assembly will and won’t do in 2022, Stivers and Osborne said they will not miss the opportunity to take a stab at comprehensive tax reform and they will pass a smart state budget.

Stay tuned to The Bottom Line for more updates from the 2022 Legislative Preview Conference.