Daily Independent (Ashland, KY)

December 9, 2012

Time for action

Governor must be leading advocate for tax reform

The Independent

ASHLAND — Even in the best of times, the recommendations of the Blue Ribbon Tax Commission appointed by Gov. Steve Beshear would be controversial and difficult to gain the approval of the Kentucky legislature, but the chances of approval of meaningful tax reform by the 2013 General Assembly will go from difficult to impossible unless Governor Beshear uses all the political muscle he can muster to convince reluctant legislators to support the reform package.

While the 2013 General Assembly is limited to only 30 days, it likely is the best hope for a lame-duck governor to improve on a legislative record that during his first five years in office has been dismal. But if Beshear can convince legislators to approve changes in the state’s tax code, he will immediately move from being remembered as a caretaker governor who had the state treading water for two terms to being hailed as the governor who brought meaningful changes to the state.

In short, the fate of tax reform and pension reform has the chance to determine Steve Beshear’s legacy in much the same way as higher education reform determined the legacy of former Gov. Paul Patton and the 1990 Kentucky Education Reform Act became the signature issue of  the term of the late Gov. Wallace Wilkinson.

At least initially, Beshear has shown a reluctance to put his muscle behind tax reform. The governor acknowledged tax reform “will be tough in this political climate” and said he wasn’t sure it could be passed in the 2013 General Assembly. The 2013 session is a “short” session in a non-budget year and any tax measures passed in those odd year sessions must get a super majority of 60 percent to pass.

The governor has said he will sit down with legislative leaders once he gets the commission’s recommendations and see which items have enough support to pass. Even if there is agreement, he said, tax reform might require a special session.

If a special session does become necessary, that session should be in 2013. That’s because there are no statewide elections next year. That means legislators can do what they think is best for the state without worrying about immediately paying the price at the polls. It also means legislators can begin work on tax reform on day one of the 2013 session, while in even-numbered year, little or nothing gets done in the General Assembly until after the deadline for filing for office. The budget also dominates the even-year legislative sessions, while the budget is not on the agenda for the 2013 General Assembly.

Even Lt. Gov. Jerry Abramson, who chaired the Blue Ribbon Tax Commission, expressed doubts about whether legislators would approve the commission’s recommendations.

“I think there are some items on here that have little or no chance” of approval,” Abramson said.

Abramson  probably is right. Some of the recommendations have a much greater chance of being approved than others, but as the leader of the tax commission, Abramson should be the most vocal supporter of its recommendations. Saying that some of the recommendations have “little or no chance” of approval undermines all of the recommendations of  the commission.

This is hardly the first time the legislature has received tax reform recommendations from a blue ribbon committee or task force of experts. However, the hundreds of hours of work put in by those studying in the tax code have been a waste of time because nothing ever came of their recommendations. There must be a special area of the Capitol in Frankfort reserved for all the tax studies that have been done and quickly forgotten.

Will the latest tax study join the other studies and quickly be gathering dust on some shelf? It will unless the governor and legislative leaders who give lip service to the need for tax reform decide it is time to stop talking and take action.

Abramson did say there is an added reason for approving tax reform now instead of later. Legislators have committed to allocating adequate funds in the 2014-16 budget to not increase the state’s unfunded pension liability, but to do that, the state will need money it currently does not have.

That’s why the two top issues of the 12013 General Assembly — tax reform and pension — are so closely related, Abramson said. You can’t have one without the other.

Is seeking meaningful tax reform in 2013 just a pipe dream? It is unless Governor Beshear and legislative leaders begin exhibiting real leadership.

We are not saying all  the commendations of the tax commission are good ones that should be approved. They aren’t. But they offer an excellent starting point on the path to changing Kentucky’s antiquated and inadequate tax code.