Governor vetoes bill that would reduce state income tax

Vetoed legislation that would drop the state income tax by 1 percent

FRANKFORT, Ky. (KT) – Gov. Andy Beshear on Friday vetoed legislation that would drop the state income tax by 1 percent, and could even reduce it to zero eventually, if certain benchmarks on state revenue are reached.

He vetoed House Bill 8, sponsored by Rep. Jason Petrie, R-Elkton, which reduces the state income tax rate from 5% to 4%, on Jan. 1, 2023. Further reductions are possible based on so-called “triggers,” which are dependent on increases in state revenue.

To offset the reductions, sales tax would be added to dozens of products and services that are not currently taxed.  However, groceries and pharmaceuticals would continue to be tax exempt.

On Beshear’s veto message he stated, “It imposes new taxes that weaken public safety, harm vital industries, undermine economic development incentives, and threaten Kentucky's future economic security.”

He also complained about the process used to enact the 208 page bill.  “House Bill 8 was revealed to many members of the General Assembly mere hours before it was passed. As a result, the people of Kentucky and their elected representatives were deprived of the opportunity to review and weigh in on the bill. Passing such legislation without public scrutiny ensures that only lobbyists and special interest groups can have their voices heard.”

Beshear also noted a situation that occurred in Kansas.  “The then-Governor of Kansas promised that similar tax cuts passed in 2012 would be a ‘shot of adrenaline into the heart of Kansas' economy.’  The opposite was true, and five years later, Kansas had to roll back those tax cuts when its economy performed worse than the national average and the state could not provide essential public services.”

After the veto, the Republican Party of Kentucky issued a statement:

"With the highest inflation rate since 1982, Kentucky Republicans led the charge in cutting the income tax rate to deliver relief to Kentucky workers and families. Andy Beshear vetoed that relief," RPK spokesperson Sean Southard said.  "At a time when Kentuckians are facing historic inflation and the state coffers are brimming with money, Andy Beshear believes your money belongs to him. Kentucky Republicans believe your money belongs to you."

You can read the full bill and the veto message at https://apps.legislature.ky.gov/record/22rs/hb8.html.