Kentucky Lawmakers Seek Lottery Tax

Some legislators want to add a 6% sales tax to lottery purchases, an effort to generate revenue for Kentucky's struggling pension system.

February 26, 2013

FRANKFORT - In an effort to generate revenue for the state??s ailing pension system, Democratic House leaders in Kentucky are proposing adding a 6% sales tax to Kentucky Lottery purchases while expanding the selection of games, the Lexington Herald-Leader reports.

House State Government Chairman Brent Yonts estimated the sales tax could generate roughly $49 million a year for the state, while offering more games could generate an additional $70 million to $90 million. Combined, the changes would provide the $120 million in General Fund money needed by July 1, 2014, to fully fund the state??s pension system for state workers, he said.

Senate Republicans criticized the lottery proposal, with Senate President Robert Stivers maintaining the lottery tax would hurt sales and therefore impact lottery-financed college scholarships. "You'd be robbing Peter to pay Paul," said Stivers, who called the House plan "a bad idea."

House Democrats considered a variety of proposals to generate revenue for the state??s pension system, including increasing the tax on cigarettes. However, House Speaker Greg Stumbo said he thought changes to the lottery would be the most likely option to pass. Any proposal to raise revenue during the current 30-workday legislative session requires 60 votes, which means Republican support is essential. There are 55 Democrats and 45 Republicans in the House.

Chip Polston, vice president of communications for the Kentucky Lottery, took an apolitical stance on the House??s proposal, declining to comment on what he thought the impact might be should the tax measure pass. "We view it as our role to follow the lead of decision-makers in Frankfort as to the direction in which they want our operation to go," he said.

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