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Kentucky House GOP eyes sales tax increase, lower income tax in upcoming session

The next legislative session begins Tuesday with the state budget as the main priority. Lawmakers are looking to take on more than just the budget bills this session

FRANKFORT, Ky. — Kentucky 2022 legislative session begins Tuesday.

The state’s budget is the main agenda item.

By law, Kentucky passes biennial budget bills, which means they pass budgets every two years.

That didn’t happen in 2020 because lawmakers adjourned early after passing a single-year budget due to the pandemic.

So this year’s budget will be the commonwealth’s first two-year budget since 2018.

Budget bills aren’t the only items on lawmakers agendas.

Kentucky House Speaker David Osborne, R-Prospect, said he wants to pass tax reform this session.

If passed, Osborne said it would include an income tax cut and a sales tax hike.

“I do think that we could easily end up where Indiana is, which is a lower income tax with a more expanded sales tax,” Osborne said.

Osborne said while he doesn’t normally like to consider budget bills and tax reform in the same legislative session, now is the time since Kentucky is coming out of a record $1.1 billion surplus year.

Osborne said he thinks the change could make us more competitive with other states.

State workers will also likely see a pay bump by the time session wraps up this spring.

“We, at the state level, are having a hard time competing with private level keeping state employees,” Senate President Robert Stivers, R-Manchester, said.

“I hear people say all the time that they want to see government run like a business,” Senate Democratic Leader Morgan McGarvey, D-Louisville, said. “I don’t know many businesses that have stripped their retirement benefits from their employees and failed to give them a raise for 13 years and expect to keep them staying for work there.”

Lawmakers on both sides of the aisle also seem to agree some of the federal pandemic relief money should be given as bonuses to essential workers.

“Certain classifications of people like nurses and EMTs — people who were directly dealing with individuals who were sick and that had knowingly had COVID — that's where we wanted to narrow our focus,” Stivers said.

Democrats have been holding town hall meetings to consider hero pay for employees in other sectors, like corrections officers and dispatchers, and intend to release their final recommendations following those meetings soon soon.

“It is my hope if a decision is made that we are going to reward people monetarily, that it could be done early in the session so people don’t have to wait on that,” House Democratic Leader Joni Jenkins, D-Shively, said.

Lawmakers focus this first week of session, however, isn’t on taxes or the state budget.

Instead, they’re working to pass redistricting plans.

Every 10 years, the U.S. Constitution requires states redraw their congressional and legislative districts using census data to reflect population changes.

GOP lawmakers, who are in control in both chambers, intend to work Saturday to pass the final versions of their maps and send them to the governor.

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