Government Relations News
Banks Get Higher Taxes
Notes from Ballard Cassady
2018 LEGISLATURE LEAVES TOWN AFTER RAISING TAXES ON BANKS
The legislature once again stuck it to the banking industry by lowering the corporate rate to 5% while leaving the Bank Franchise tax intact. As an industry we went into the 2018 legislative session paying 60% more in taxes than any other corporation in Kentucky. Coming out of the legislative session the Banking industry is now paying 92% more than any other corporation in Kentucky. This was accomplished by exacerbating the same mistake they made in 2006 which is to lower the corporate tax rate without adjusting the Bank Franchise tax along with it.
We made everyone in Frankfort aware of this discrepancy and to the last person they all exhibited disbelief that this disparity could exist and that it needed to be fixed. Next time you see your local republican legislator thank them for their consideration (sarcasm in case you missed it). Beside passing an unbalanced budget this is what else happened yesterday:
The 58th day of the 60-day Kentucky Legislative Session started with the budget conference committee, made up of both House and Senate leadership, they tackled what they described as the first step toward tax modernization. Changes included:
- Individual and corporate tax code cut to a flat 5 percent tax.
- An increase in taxes on cigarettes by 50 cents
- Taxes on certain services, specifically car repair services, pollution control facilities, gyms, landscaping services, janitorial services and dry cleaning, among others.
- Passed Senate 20-18
- Passed House 51-44
- HB 366 http://www.lrc.ky.gov/record/18RS/HB366.htm
The budget conference committee also presented its version of the state’s spending plan for the next two years. Highlights include:
- Completely funds transportation costs for K-12 schools and it provides an increase to $4,000 per pupil in the funding formula for K-12 schools, known as SEEK.
- Provides $31 million back to the universities through performance based funding.
- Excepted revenue is $234 B in FY 19, $244B in FY 20
- Passed Senate 25-13
- Passed House 59-36
- HB 200 http://www.lrc.ky.gov/record/18RS/HB200.htm
The House and Senate now adjourn for ten days (April 14th) to override any of the governor’s vetoes and to pass any remaining bills.
Are we angry? More so than you can imagine (hopefully so are you). What did we learn? Well, if you go to Frankfort and storm the capital, yell and scream at legislators all day they will give you what you want. But, if you try to act professional and work within the process you get nothing.