State Senate proposes tax repaid to state taxpayers

Up to $1,000 for households, $500 for singles

FRANKFORT, Ky. (WTVQ) – In response to the news that inflation is at a 40-year high of 7.5 percent, the Senate rolled out Thursday morning a tax rebate plan in Senate Bill 194. The plan will keep more money in taxpayers’ pockets and empower them with the tools to make appropriate choices for their families, sponsors said during a special meeting of the Senate Committee on Appropriations and Revenue.

Under the Senate’s plan, each working Kentucky taxpayer will receive up to $500 and a maximum of $1,000 per household. This tax rebate is possible because of the conservative budgeting of the commonwealth; unexpected and exceptional revenue growth is expected to yield over $1.94 billion in excess funds that belong to Kentucky taxpayers. The program will cost $1.15 billion and still leave “plenty of money” in the state’s budget reserve fund which currently contains $1.5 billion and likely will grow more after the current budget year ends June 30.

“As our nation is experiencing the highest inflation in 40 years, it’s important that lawmakers respond in a way that helps ease the burden on tax-paying Kentuckians,” said state Sen. Chris McDaniel (R-Taylor Mill), the bill’s sponsor.

Under current financial conditions, the state is experiencing a projected $1.94 billion in revenue above expenditures and projections. McDaniel noted the proposal would cost $1.15 billion, leaving $870 million in the current year budget that can be used for other requests.

“This does not touch the biennial budget process and leaves a substantial amount to carry forward,” McDaniel said during the committee meeting.

“I think being able to share the financial success we’ve achieved over the last two or three years is timely, particularly with the inflation we’re facing right now. Is this the perfect bill? There is no perfect bill, we know this, but I think this goes a long way toward showing the people who are paying the bills for this state that we recognize that and that we are willing to share in the wealth we’ve been able to achieve for various reasons,” added state Sen. Stephen Meredith, a Leitchfield Republican.

Gov. Andy Beshear has recommended the Legislature lower the state sales tax from 6% to 5% for a year to give residents a break.

“This sales tax proposal decreases tax costs for Kentucky families by more than 16%, considering the U.S. inflation rate is currently 7.5%. We are talking about savings on purchases at retailers and restaurants; on building and hardware materials; on clothing; as well as on purchases at grocery stores that are not food or medicine, because those items are already tax-free. Our families need relief, and our proposal provides it. And, I have suggested adjustments to my budget recommendation that allows us to provide this relief while retaining a balanced budget,” Beshear said. “So, if we are going to alter our tax structure, let’s do it to address current inflation and in a way that will help our all of our families, regardless of their wealth. Let’s do it in a way that will make things cost less and help everyone’s dollar go further. Right now, we can keep our economy moving, make historic investments in education, health care and the jobs of the future, all while we provide our families and small businesses relief.”