Majority Republicans are following through on pledges to move quickly on the income tax drop — which would trim the rate from 4% to 3.5%. The House tossed a number of proposed amendments, from both sides of the aisle.
Rep. Steve Doan made the case for pressing ahead toward a total elimination of the income tax.
"When we look at the most economically successful conservative states around our nation, they all have one thing in common: a 0% income tax," he told colleagues.
Skeptics argued for caution. Lexington Rep. Adam Moore joined other Democrats in urging the legislature to opt for greater support for services rather than eating into a key revenue source.
"I know it would be irresponsible to reduce the income tax rate too far... not when our constituents so clearly desire fully-funded public schools, safe and well maintained roads and bridges, increased public safety, and expanded access to quality health care," he said.
Others expressed genuine conflict over whether the latest cut is warranted. Sen. Max Wise noted after the governor's State of the Commonwealth Address that it's a move Gov. Andy Beshear isn't opposing.
"The governor's already made a public comment that he would not veto that, so that right there shows common ground as we work towards helping our commonwealth," he said.
However, this may be the last year the incremental reductions in the tax get bipartisan buy-in.
Beshear and at least one Republican representative have cautioned further cuts could be a harder sell, especially if state revenue growth slows, as new reports already indicate.
Jason Bailey heads up the Kentucky Center For Economic Policy, which opposes the reduction. He told lawmakers the newest cut would take another $718 million out of state coffers annually.
"With another reduction, Kentucky will get closer to the depth of cuts Kansas had to reverse just five years later because they couldn't meet their basic obligations," Bailey said.
While the governor has said the state's economic growth has equipped it to handle another income tax cut, those gains were fueled in part by federal pandemic relief dollars — another variable that may have played itself out by the time the General Assembly mulls future cuts.
With the House moving relatively swiftly on the cut — known as House Bill 1 — the Senate is expected to receive the bill Thursday and prep it for passage in that chamber.
"Tomorrow, depending upon how the weather is, we still are planning to meet at 9 a.m. Immediately, upon adjournment tomorrow, the Senate A&R will... formally take on House Bill 1," Wise said.
The General Assembly will take a three-week break for the remainder of the month after it adjourns Friday. The tax cut bill is likely to be passed by the Senate in early February, according to chamber leaders.
