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Capitol Notes: "Tax Zapper" Bill Clears House & Frankfort Week in Review

From the Kentucky Legislative Research Commission:

BILL TO OUTLAW TAX ZAPPERS HEADS TO SENATE

Legislation cleared the Kentucky House this week that would make it a felony to possess automated retail sales tax evasion devices—commonly known as tax zappers or phantom-ware—anywhere in the Commonwealth.

House Bill 69, sponsored by Rep. Denver Butler, D-Louisville, would make the possession of the devices a Class D felony, which carries a prison sentence of 1 to 5 years. It would also allow for a 10-year revocation of the state sales tax permit of someone found to have used one of the devices to violate state sales tax law.

The automated devices run software into retail business point-of-sale systems, altering sales records and allowing business owners to report fewer transactions than have actually occurred.

HB 69 passed the House by a vote of 96-0 and is now before the Senate for its consideration.

MEASURE ON ECONOMIC INCENTIVE TRANSPARENCY ADVANCES

A bill that would require the state to keep a searchable electronic database of its economic development incentives, and the jobs those incentives have created, has passed the House and is on its way to the Senate.

House Bill 17, sponsored by House Speaker Pro Tem Larry Clark, D-Louisville, would require the database to include information on Economic Development Cabinet projects that have been approved, incentives awarded and claimed, jobs created, and the location of those projects. Clark said it would also allow lawmakers to track state investments.

“It’s all about accountability, transparency, and return on our investment,” Clark said.

The legislation is based on a study of the Cabinet performed in 2012 by The Anderson Group. That study was directed by House Joint Resolution 5, which was passed by the Kentucky General Assembly in 2011.

HB 17 passed the House 96-0 and is now before the Senate for consideration.

EGG BILL PASSES HOUSE, HEADS TO SENATE

A bill that would allow broken eggs in a consumer-labeled carton to be replaced with eggs of the same type, source, size, and sell-by date has passed the Kentucky House, 91-0.

“The bill will eliminate unnecessary waste in our food chain and our egg distribution system,” said House Bill 181’s primary co-sponsor House Agriculture and Small Business Committee Chair Tom McKee, D-Cynthiana. The bill’s other primary co-sponsor is Rep. Wilson Stone, D-Scottsville.

The process of replacing eggs is called “lot consolidation” and would be performed by someone registered with the Department of Agriculture and trained in a department-approved course, said McKee.

 

HB 181 now moves to the Senate for consideration.

FRANKFORT WEEK IN REVIEW by Scott Payton

A governor’s Budget Address is a momentary snapshot defining a version of reality. It has also, for ten years or more, been a painful picture from a bad family trip, often rock-back-on-your heels disturbing.

But it’s also the necessary opening statement in a discussion that will consume Frankfort’s deep Capitol winter, throwing terms of debate on the table, and saying ‘Now what?’ Only the Legislature can write the budget. The governor can just propose.

So now we launch.

The limited money available is explained. The felt needs and priorities are laid out, with challenges to make you sigh. That’s what happened in a joint session Tuesday night, with 138 lawmakers packed in the House Chamber to hear a fifty-minute gubernatorial speech that told the terms of their coming, bloody budget work.

A budget’s like an amoeba, moving but soft, not hard and fast. The state Constitution requires it to be balanced. But there’s tricks to do that. Not long ago, state employees were paid one day late at the end of the Fiscal Year. It saved enough money to keep the previous year in balance. That’s called ‘structural imbalance.’ There’s not really enough money for what everyone wants. But we do one-time stuff to patch the holes.

The governor proposed a form of that legerdemain this year in the face of our drearily predictable shortfalls. It will balance the budget. But some may feel pain.

The tactic? Take money from one place to put another. The newspapers call it ‘raiding funds.’

The budget before us targets 51 government funds specified for certain things to move $370 million to the General Fund, to kick start funding for K-12 education – a main gubernatorial priority -- and give state workers and teachers long-lost and longed-for raises.

Examples: $93 million from the Public Employee Health Insurance Trust Fund (which is said to be sound and able to absorb that) to comparatively minor nips like $100,000 from the Board of Chiropractic Examiners.

Actual plain spending cuts total $99 million, proposed. State universities would stare down the barrel of a 2.5 percent cut, though bonded debt for construction on campuses statewide might alleviate the sting. Other state agencies, many of them, face 5 percent cuts. Another grim picture in a steady march of cuts stretching back years.

Budget officials say fund transfers are a normal and accepted practice in the budgeting process, and have been routine in past years. Still, this year’s transfers seem to have significant scope. They reflect the gravity of this session’s challenge: Though revenues are indeed trending up, the proposed new commitment to education --  $474.4 million in new money for elementary and secondary education – means something has to give, given the pension and Medicaid obligation already claimed.

House budget review subcommittees are assembling. The January’s-end filing deadline is near. This General Assembly is about to get deeply real, real fast.

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