Amid talk of slashing the state's income tax, experts say Kentucky's tax-code reforms should focus instead on eliminating tax breaks for the wealthy and corporations.

The Kentucky Chamber of Commerce and other supporters of doing away with the income tax say it is a necessary step to retain businesses.

Jason Bailey, executive director of the Kentucky Center for Economic Policy, pointed out income tax revenue is critical to ensure quality schools, health care, roads and other public investments affecting quality of life. He believes the state should instead work to close loopholes and eliminate tax breaks for the highest earners.

"When we clean up the tax code by asking those at the top to chip in and pay what they owe, we're able to invest in things like early childhood education, which we know pays off in the short and long-term for families and the economy," Bailey contended.

He emphasized in the past decade, Kentucky has continued to expand tax breaks for businesses that, in some cases, completely exempt them from paying corporate income taxes. More recently, in 2019, lawmakers passed a slew of bills further slashing taxes for corporations.

Bailey noted sales and use taxes are not a replacement for income tax, because sales-tax increases drain a much bigger share of the family budgets of working-class Kentuckians and low-income households.

"So, it's just shifting the responsibility to pay for these things over to people who are already struggling to make ends meet," Bailey asserted. "That's not sustainable for the revenue stream, and it's not fair."

Bailey also pointed to the state's current budget surplus, with billions of extra dollars he hopes will be spent on community resources.

"And we've had 20 rounds of budget cuts since 2008, and this is our opportunity to reinvest," Bailey stressed. "But there is the potential that we give that away, you know, we squander it, on tax cuts to the people at the very top."

A 2020 study by the Institute on Taxation and Economic Policy found low- and middle-income Kentucky residents pay between 9.5% and 11.1% of their income in state and local taxes, while people with incomes in the top 1% pay 6.7%.

West Virginia lawmakers are clamping down on corporations trying boost environmentally and socially responsible investing. A new report by EcoConsult Solutions finds their actions will likely cost taxpayers at least $9-million, and perhaps as much as $29-million dollars annually. Senate Bill 262, passed last year, restricts the state from investing in companies deemed to be energy boycotters. Among those boycotted include BlackRock, Goldman Sachs, JP Morgan Chase, Morgan Stanley and Wells Fargo.

Jim Kotcon, chair of the West Virginia Sierra Club, said restricting long-term financial investments in the form of bonds could end up costing residents and taxpayers by reducing the amount of money the state has for public services and programs.

"This appears to be an effort by the state government to help bail out the coal industry and to deny the real cost of climate change on West Virginia citizens," Kotcon said.

More than two dozen states are suing the federal government over a U.S. Department of Labor rule change on environmental, social and governance, or ESG, in workplace retirement accounts. The rule allows 401(k) providers to consider climate change and other issues when making investments.

Kotcon said environmental groups believe state investment funds should take into consideration environmental and social factors, especially since West Virginia communities are struggling to cope with increased flooding and extreme weather events driven by climate change.

"It has become sort of an extremist initiative," he said, "trying to penalize financial institutions that are attempting to do the right thing."

More than a dozen states so far have passed or have pending bills that would pull state funds from investments deemed to be adverse to the oil and gas industry, according to the report.

A Minnesota House committee heard testimony Thursday about the governor's proposed spending plan for education. As these talks unfold, public polling indicates voters want to see more dollars go toward improving public schools.

Gov. Tim Walz's plan calls for boosting the general education funding formula over the next two years and tying it to inflation, while adding more staff such as counselors and social workers.

State Education Commissioner Willie Jett touted the overall proposal during the committee meeting.

"We must never lose sight of the fact that a well-supported educator workforce is fundamental and critical to the survival of our schools, and the well-being and academic success of our students," he said.

Nationally, a new American Federation of Teachers poll found 66% of voters think the government spends too little on education, and nearly 70% want to see more funding. The governor's plan closely aligns with education priorities among legislative Democrats. Republicans, who are in the minority this session, have voiced concerns that too much surplus money would go to underperforming schools.

Minnesota is also looking at boosting unemployment insurance aid to include hourly school workers when they struggle to stay employed over the summer. Rep. Emma Greenman, DFL-Minneapolis, said it's encouraging to see more conversation about helping support staff.

"If your district is like my district," she said, "you're hearing a lot about the staffing shortages, about the need for 'paras' - I hear a lot about that from parents and teachers - about the bus driver shortage."

By "paras," she meant paraprofessionals who help in clasrrooms.

In the AFT poll, teacher shortages and unsafe campus environments were listed as among the most serious problems at schools. The survey was conducted in late December and included input from 1,500 registered voters nationwide.

Gov. Greg Gianforte delivered his State of the State address to the Montana Legislature Wednesday night, discussing his plans for the state's hefty budget surplus.

Lawmakers are looking at a surplus of $2.5 billion. Republican Gianforte's top priority for the money is tax cuts.

Rose Bender, director of research for the Montana Budget and Policy Center, said the governor's proposal disproportionately benefits wealthy Montanans.

"The governor's income-tax cut proposal gives the wealthiest 1% of Montanans, on average, $6,000 each year in tax cuts, while middle-income families or those near the median income receive on average $50," Bender explained.

Bender noted most of the other tax cuts proposed, such as a property tax rebate, also would skew toward higher-income Montanans. However, she said a child tax credit the governor touted in his speech would be helpful for people with more modest incomes. The proposal would provide $1,200 to families with children age six and under, similar to a federal Child Tax Credit, which expired at the end of 2021.

Bender argued the Montana Legislature should do more this session to make health care costs more affordable and invest in child care, which is costly for families. She added other issues need addressing, as well.

"Montana's experiencing a serious housing crisis, and investing some direct state dollars into long-term housing solutions for families living on lower incomes should be another priority," Bender contended.

In his speech, Gianforte also asked lawmakers to focus on education reforms this year, including what he's calling more "parental rights." The session is scheduled to adjourn April 25.