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Local reaction mixed to Bevin's budget and tax plan vetoes

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Local reaction mixed to Bevin's budget and tax plan vetoes

By James Mayse
The Messenger-Inquirer

Local legislators had different reactions Monday to Gov. Matt Bevin's veto of both the entire state budget and the tax bill passed by legislators this year, with some legislators saying they hoped a compromise could be reached between Bevin and House and Senate leaders before the session ends Saturday.

But some felt the issue would come down to whether the House and Senate want to override the governor's vetoes, with Rep. Jim Gooch, a Providence Republican, saying the House will have the votes for an override.

"We need this budget," Gooch said, calling it "the best education budget we've had for a long time."

"I think we can override a veto," Gooch said. "I'm going to vote to do that."

In a Monday morning press conference, Bevin said the two-year state budget "has hundreds of millions of dollars in spending that we really can't afford to spend." The budget sent to Bevin's desk "spends every single cent we would have in an emergency," Bevin said.

"If we were to have a 1937 type flood again, we don't have the capacity to pay for it," Bevin said.

The tax plan includes taxing various services, such as car repairs, dry cleaning and pet care, and would also set the tax rates for individuals and corporations at 5 percent. The bill also included a tax increase on cigarettes of 50 cents per pack. The Courier-Journal reported the Legislative Research Commission projected the tax bill would raise $478 million over two years, but reported state budget director John Chilton said revenue from the bill would be least $50 million under that projection.

"If we need to do tax reform, it needs to be more comprehensive," Bevin said.

Rep. Matt Castlen, a Maceo Republican, said he had some concerns with the tax plan, such as the tax for services would include businesses selling to other businesses, which he said could result in those increases being passed on to consumers. The tax bill and budget are connected, so legislators will have to determine how to proceed, Castlen said.

"We still have two days left" in the session," Castlen said. "... It was a lot of give and take to get where we are, so I guess we have to negotiate some more."

Legislators need to "hear what (Bevin's concerns) are and come up with common ground," Castlen said.

In a joint statement Monday morning, House Speaker Pro Tem David Osborne, a Prospect Republican and Senate President Robert Stivers, a Manchester Republican, said: "We believe Gov. Bevin is misguided in his interpretation of the budget and the revenue bills, as we are comfortable with the LRC staff revenue projections ... We believe Gov. Bevin would be best served to meet with legislators to understand their thoughts and rationale before making a final decision on vetoing" the bills. However, Bevin vetoed both the budget and the tax plan Monday afternoon.

Sen. Joe Bowen, an Owensboro Republican, said "there were components of the revenue bill I didn't like as well," although he did vote for the bill.

"I supported the revenue bill because I saw the budget, revenue bill and pension reform (bill) as a three-legged stool all tied together," Bowen said.

The tax bill moves tax reform in the right direction, Bowen said. "I do think it's important we move to a consumption-based tax ... but I though we should do it in a more comprehensive way," Bowen said. "I'm glad we are moving. We need to move to a consumption-based tax instead of a tax on productivity.

The budget "for the most part was responsible," Bowen said. "Now, the question is do we override those vetoes, and I'd say that's a coin toss," he said. The tax bill was passed on the insistence of education groups, who wanted revenue increases done as part of pension reform, Bowen said.

If legislators do not override Bevin's veto on the budget, there would have to be a special session before the end of the fiscal year in June. If there were no budget in place, "from my understanding ... the government stops, except for essential services," with Bevin deciding what those services were, Gooch said.

The budget "is the first budget that totally funds the pension" contribution, Gooch said. "It's the first budget that made a commitment on the pension problem."

Rep. DJ Johnson, an Owensboro Republican, said House and Senate leadership will meet, and said the hope is a solution can be found so a veto override won't be necessary.

"I would prefer we not (override) them," Johnson said. "... I think we passed a budget and revenue plan that, one, paid the bills" while the tax plan begins the process of "modernizing our tax code," Johnson said.

Surrounding states like Indiana and Tennessee have seen "explosive growth by modernizing their tax code," Johnson said. Before the end of the session, legislators will also have to deal with House Bill 362, which would phase in increased payments cities and counties would have to make into the pension system, Johnson said. Bevin vetoed House Bill 362 on April 5.

Rep. Robby Mills, a Henderson Republican, and Rep. Melinda Gibbons Prunty, a Belton Republican, could not be reached for comment. Rep. Suzanne Miles, an Owensboro Republican, said "no comment" in a text message.

The budget bill contained an increase in per-student formula used to fund public schools, raising the rate to $4,000 per student. The budget also included school transportation dollars and money to cover school employee health insurance, items which were not funded in Bevin's recommended budget.

Nick Brake, superintendent of Owensboro Public Schools, said Bevin's intent to veto the budget "is bad news if the legislature doesn't override the veto on Friday or Saturday.

Of the revenue bill, Brake said, "I think the service tax is an unfair way to increase revenue," and said he would support an "across the board" increase in the state's sales tax instead. Matt Robbins, superintendent of Daviess County Public Schools, said he hopes legislators will override the vetoes on the budget and tax bills.

"I'm very hopeful legislators, who originally passed the budget, haven't changed their opinions," Robbins said. Bevin's recommended budget did not support "the most basic things in public education," Robbins said.

Bevin's budget "was draconian .. to the point of causing numerous districts to go bankrupt" over the two years of the budget, Robbins said.

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