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This week, Governor Beshear announced the Commonwealth would have a budget shortfall of $91 million; he also released a plan to provide funding to cover the shortfall. As the Kentucky Senate President said, “The governor’s plan is appropriate.” However, as President Stivers also noted the real focus should be on the fact that the shortfall in revenues is caused by a stalled economy. Tax reform must be a top priority in order to help Kentucky’s businesses compete in a global economy, and we must continue to look for ways to break the stranglehold the Obama Administration has put on our industries. If not, we will continue to see revenue decrease and budget shortfalls will continue.
Kentucky’s existing tax structure and the effect it has been having on one of Kentucky’s premier industries, the houseboat industry, was raised during my Interim Joint Committee Meeting held at Lake Cumberland State Resort Park, in Russell County. Economic Development and Tourism combined with Labor and Industry to hold a joint meeting with a spotlight on the incredible benefits houseboat manufacturing and related industries and tourism bring to Kentucky. Although Kentucky has been dubbed the “Houseboat Capitol of the World,” the industry is struggling to keep and attract houseboat owners. One issue raised is that individual counties do not realize that they are driving business from the state – as houseboat owners leave to find friendlier ports when they are assessed with personal taxes by individual counties.
The industry shared testimony that the average houseboat owners are not wealthy – most are average, middle-class people who use the houseboat as a weekend retreat. When costs of docking or keeping their houseboats increase, they often sell or move their houseboat to an adjacent state with friendlier laws. Each houseboat docked in Kentucky brings a $25,000.00 benefit directly to the state, by slip rentals, expanded dock employment opportunities, and the related industries such as grocery stores and fueling services, just to name a few.
Also, the Subcommittee on Energy met Friday in Frankfort. I joined the other members in hearing from Cabinet for Health and Human Services regarding the Low Energy Assistance Program Block Grant Application, a program that helped over 78,000 families in Kentucky meet emergency energy needs. Kentucky has always benefitted from low energy costs as compared to the rest of the nation. However, federal rules recently released are expected to increase energy costs for Kentuckians, and whether the loss of jobs and revenues to Kentucky is justifiable. To put it in perspective, Kentucky would not have a budget shortfall if coal severance taxes had stayed even close to the $300 million that went to the state’s coffers two years ago. This year, Kentucky received only $197.5 million in coal severance tax dollars.
I will return to Frankfort July 24 for a Budget Review Subcommittee on Transportation meeting and the IJC on Appropriations and Revenue. I am sure the budget shortfall will be a topic of conversation.
Interim Joint Committee Meetings are open to the public and also can be viewed on Kentucky Educational Television’s website, www.ket.org. In addition, you can find meeting schedules and agendas on www.lrc.ky.gov.
If you have any issues or concerns, please call my office in Frankfort at 502-564-8100 or leave a toll free message at 1-800-372-7181. I appreciate your time and input.
Senator Ernie Harris (R-Crestwood) represents the 26th District which includes Oldham County as well as a portion of Jefferson County.