Saturday, December 04, 1999
Economist: Rework Ky. taxes
Urban areas pay more, get less
BY KRISTINA GOETZ
The Cincinnati Enquirer
COVINGTON — The economist who made headlines when he showed that major urban areas — including Northern Kentucky — are subsidizing the rest of the state said Friday that it's time to revamp Kentucky's tax system.
Paul Coomes, an economist at the University of Louisville, found an audience that was willing to listen.
“I think Kentucky is ready for that,” Dr. Coomes told a group of local leaders at a government forum at the Metropolitan Club in Covington. “I know urbanized areas are. State government wouldn't be.”
He suggested the commonwealth eliminate its state income tax in favor of a system more like that in Tennessee. The state has no income tax, only a base sales tax that's set by the state. Local communi ties can add to that tax if they wish.
“That piece that they vote on, they keep,” Dr. Coomes said, adding that the system would help Northern Kentucky capture more of its resources and spend them at home.
Ways of getting more money has been the topic of conversation since Dr. Coomes' study came out last summer. He found that the state collected far more from Northern Kentucky counties in the 1996-1997 fiscal year — $311,088,647 — than it spent in them.
Boone County gets back about 30 cents for every dollar that's sent to Frankfort, the study said. In Kenton County, it's about 50 cents; in Campbell County, it's 82 cents.
A total overhaul of the state's tax system may not come soon, but some in attendance said the idea should be considered.
“There's no doubt we would need to get through this legislative session first,” said Boone County Judge-Executive Gary Moore. “Even the discussion of doing something like that is in its very early stages.
“It's just speculation at this point.”
A majority of the state benefits from the system that's now in place, he added.
“Legislators will be reluctant to change the system. More of Kentucky benefits from this system now than those who are paying the way,” Mr. Moore said. “I don't know if the votes would be there.”
Some legislators suggest keeping taxes low. The fewer dollars send to Frankfort, the better, they say.
“That's allowing us to do things at the local level that we can do better anyway,” Mr. Moore said.
Others at the forum urged local and private industry to help lobby in Frankfort and to have politicians team up with other areas of the state that have the same problem.
“Major population centers need to work together through the legislative process to have a stronger voice,” said Kenton County Judge-Executive Richard Murgatroyd.
“This study has given us an opportunity to get fired up and do something about it,” he said.
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