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McCreary Roads Benefit from Kentucky’s Latest Budget

In addition to discussing recent teacher pension reform, State Representative and Transportation Committee Chairman Kenneth Upchurch and Senator Max Wise shared information and answered questions concerning Kentucky’s 2018-2020 budget.
A few items to note are:
-A total of $15 million has been set aside for completion of road construction on HWY 92 from Pine Knot to Williamsburg ($8 million in 2019 and $7 million in 2020.)
-A total of $1.5 million was budgeted for a scoping study to make HWY 92 from Stearns to Monticello a scenic route by improving highway safety and establishing scenic views
-Substance abuse funding is included.
-Funding for kinship care-paying relatives caring for children removed from homes because of abuse or neglect-is included in the latest budget.
-Funding for public schools increased from the current level to a base level of $4,000 per student with no set-aside funding for textbooks or professional development. Preschool and extended school service funding decreased while funding of Family Resource and Youth Services Centers increased.
-Funding for public libraries is included.
-Funding for charter schools is not included.
-Kentucky’s public pension plans are fully funded in the two year budget.
-Partial funding of health insurance for pre-age 65 retired teachers is included in the budget with the Kentucky Teacher Retirement System assuming the remaining cost.
-The budget Increases funding for social work and provides raises for social workers.
-Funding is provided for cancer research.
Tax Reform Offers a Mixed Bag
The Kentucky House and Senate took a first step in moving the state to a consumption based model (similar to neighboring Tennessee) by legislating a tax reform bill which sets a flat state income tax rate of 5% for everyone while broadening the base of the 6% sales tax. The current state income tax is based on a multi-leveled system capping out at 6% with most Kentuckians who work paying a minimum of 5.8%.
The latest legislation expands the KY sales tax by placing the current 6% tax on many services including veterinarian services for small animals, pet grooming, automotive services, golf courses and country clubs, weight loss centers, fitness centers, campgrounds, landscaping, janitorial services, laundries, and dry cleaning.

Other components of the tax reform legislation include:
-Removal of itemized deductions (medical expenses, taxes paid, etc.) The federal 20% deduction is no longer allowed. Deductions for charitable donations, Social Security income, and mortgage interest are still permitted for individuals.
-The state cigarette tax increased fifty cents per pack.
-The retirement income (pension, IRA, etc.) exemption of $41,110 per person was reduced to $31,110.

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