David Williams Seeks Special Session To Tackle Employer Tax Matter, Governor Steve Beshear Undecided.
David Williams says special session needed to avoid lost tax credit for Kentucky employers
Written by Tom Loftus
FRANKFORT, Ky. — Kentucky employers could be socked with as much as $660 million in added federal taxes if the state can not make a pending $28 million interest payment on the money it has borrowed from the federal government for unemployment benefits, state officials said Thursday.
And Senate President David Williams said, if necessary, Gov. Steve Beshear should call a special legislative session to get authority from the General Assembly to make the interest payment using money from the state's recently replenished budget reserve.
“I'm calling on the governor to show cause why he should not call the General Assembly back into session to give him the authority to make that interest payment,” Williams said.
Beshear released a statement Thursday night saying his administration has been working “to explore every possible option” to avoid the problem, which he said is also facing 29 other states.
Beshear said he “remains open to any suggestions from the General Assembly,” but did directly address the issue of a special session.
Williams, a Republican, and Beshear, a Democrat, are running against each other in the Nov. 8 gubernatorial election.The issue surfaced at a meeting of the legislature's interim budget committee, where Budget Director Mary Lassiter said the administration has been working with the Kentucky business community to get Congress to approve a federal resolution before the interest payment is due Sept. 30.
“Business groups are being vigilant on this issue, and so are we,” Lassiter said.
The federal government's penalty if Kentucky fails to make the interest payment would be the loss of a big federal tax credit for Kentucky employers. This would amount to employers paying $400 per worker. Williams said the total statewide tab for all employers would be about $660 million.
Lassiter said state law does not give the governor authority to make the interest payment from state funds.
Williams said at a news conference: “The governor never sought that authority.”
Just this week the Beshear administration put $122 million into what had been an empty budget-reserve account, or rainy day fund. That money came from a $156.8 million state surplus at the end of last fiscal year June 30.
Williams said while no lawmakers want a special session, this issue is worth one if that's what it takes to avert the loss of the federal tax credit to Kentucky employers. He said the loss of the federal credit would be “devastating” to employers.
“We're fighting to hold on to every job that we can,” he said.
House Speaker Pro Tem Larry Clark, D-Louisville, said later, “I hope we can get this done without the need for a special session.” Clark said he believed the governor had the authority to use state funds to make the payment as an emergency state expense. “That's what I would do if I was governor,” he said.
At issue is Kentucky's debt of about $948 to the federal government for borrowings over the last three years to make unemployment benefit payments to Kentuckians.
Kentucky's trust fund that pays the benefits — which is funded with taxes on employers — went dry in 2009 as the national recession caused unemployment rates to skyrocket.
Last year the federal economic-stimulus program waived interest payments that were owed by many states on such debt. But interest payments due Sept. 30 have not been waived.
Kentucky owes an interest payment of about $28 million, Lassiter said.
But the only money available to make that payment under current law is about $8 million in a special account within the state unemployment program that gets its revenue from penalties and interest charged within the state program.
That means Kentucky needs to come up with $20 million.
Written by Tom Loftus
FRANKFORT, Ky. — Kentucky employers could be socked with as much as $660 million in added federal taxes if the state can not make a pending $28 million interest payment on the money it has borrowed from the federal government for unemployment benefits, state officials said Thursday.
And Senate President David Williams said, if necessary, Gov. Steve Beshear should call a special legislative session to get authority from the General Assembly to make the interest payment using money from the state's recently replenished budget reserve.
“I'm calling on the governor to show cause why he should not call the General Assembly back into session to give him the authority to make that interest payment,” Williams said.
Beshear released a statement Thursday night saying his administration has been working “to explore every possible option” to avoid the problem, which he said is also facing 29 other states.
Beshear said he “remains open to any suggestions from the General Assembly,” but did directly address the issue of a special session.
Williams, a Republican, and Beshear, a Democrat, are running against each other in the Nov. 8 gubernatorial election.The issue surfaced at a meeting of the legislature's interim budget committee, where Budget Director Mary Lassiter said the administration has been working with the Kentucky business community to get Congress to approve a federal resolution before the interest payment is due Sept. 30.
“Business groups are being vigilant on this issue, and so are we,” Lassiter said.
The federal government's penalty if Kentucky fails to make the interest payment would be the loss of a big federal tax credit for Kentucky employers. This would amount to employers paying $400 per worker. Williams said the total statewide tab for all employers would be about $660 million.
Lassiter said state law does not give the governor authority to make the interest payment from state funds.
Williams said at a news conference: “The governor never sought that authority.”
Just this week the Beshear administration put $122 million into what had been an empty budget-reserve account, or rainy day fund. That money came from a $156.8 million state surplus at the end of last fiscal year June 30.
Williams said while no lawmakers want a special session, this issue is worth one if that's what it takes to avert the loss of the federal tax credit to Kentucky employers. He said the loss of the federal credit would be “devastating” to employers.
“We're fighting to hold on to every job that we can,” he said.
House Speaker Pro Tem Larry Clark, D-Louisville, said later, “I hope we can get this done without the need for a special session.” Clark said he believed the governor had the authority to use state funds to make the payment as an emergency state expense. “That's what I would do if I was governor,” he said.
At issue is Kentucky's debt of about $948 to the federal government for borrowings over the last three years to make unemployment benefit payments to Kentuckians.
Kentucky's trust fund that pays the benefits — which is funded with taxes on employers — went dry in 2009 as the national recession caused unemployment rates to skyrocket.
Last year the federal economic-stimulus program waived interest payments that were owed by many states on such debt. But interest payments due Sept. 30 have not been waived.
Kentucky owes an interest payment of about $28 million, Lassiter said.
But the only money available to make that payment under current law is about $8 million in a special account within the state unemployment program that gets its revenue from penalties and interest charged within the state program.
That means Kentucky needs to come up with $20 million.
Labels: General information
posted by KYJurisDoctor at 8:55 PM
0 Comments:
Post a Comment
<< Home