Beshear: New tax breaks mean bigger budget cuts

This from John Stamper and Jack Brammer at Bluegrass Politics:

Lawmakers plugged the state’s projected $1 billion budget shortfall on Wednesday, but not before approving a passel of expensive tax breaks that Gov. Steve Beshear said would bring deeper cuts than planned to most state agencies.

The list of last-minute tax breaks inserted into the economic incentives bill includes an exemption of active-duty military pay from the state’s income tax, a car trade-in benefit that will reduce taxes on new vehicle purchases, and a tax credit of up to $5,000 for those buying a newly-built house.

Previously, Beshear had said most state agencies other than Medicaid, higher education and the per-pupil funding formula for K-12 education would face 2.6 percent cuts. But the new tax breaks will “seriously and significantly increase those cuts,” Beshear said....

State Rep. Harry Moberly, D-Richmond, said it was irresponsible of lawmakers to create the new tax credits without providing new revenue to pay for them. Eventually, he said, “we’re going to have to reduce human services and education more because we didn’t pay for it.”