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Kentucky’s ‘Pessimistic’ One-Year Budget Drops Sports Betting

April 1, 2020, 8:49 PM

The Kentucky General Assembly passed a “pessimistic” budget package Wednesday that includes cash from a new tax on vaping but casts aside proposals to reap revenue from sports betting.

In an unusual move, the Kentucky General Assembly passed a one-year budget package (H.B. 352), adopting the most “pessimistic” forecast created by state economists last September. But Senate President Robert Stivers (R) said even the most conservative projections reached in December 2020, which he called “pessimistic,” probably won’t account for the loss in revenue the state will see from the economic havoc wreaked by the novel coronavirus pandemic.

“If you really think about what we’re doing, we’re taking a total shot in the dark,” Stivers said during floor debate Wednesday. “Our current year revenues of $11.6 billion are going to be lucky to hit $11.4 billion—that means it’s $200 million already that this budget is short.”

The accompanying revenue bill (H.B. 351) includes $50 million in new revenue through a tax on vaping products. But some Democratic critics of the package said the state was wrong to leave behind proposals to increase revenue from sports betting (H.B. 137), expanding gambling licenses to casinos, and eventually, to tax sales of recreational marijuana.

Pot sales wouldn’t have been taxed as medicine under House Bill 136, which passed the House and stalled in the Senate. But proponents believe that would come from recreational sales following permitted medical use.

“Some of my problems with the budget have nothing to do with what’s in this bill, since the 2008 economic collapse the cupboard has been bare,” Sen. Morgan McGarvey (D) said during floor debate. “Right now we have sports betting and medical marijuana bills that lie dormant in this chamber. The crisis that we are facing now shows revenues will drop, and we don’t know what they are.”

Stivers said sports betting wouldn’t have been a boon to the state, regardless, because sporting events have closed because of the health crisis; and racing tracks, where bets would have been placed, are shuttered due to state emergency orders.

On Tuesday, Gov. Andy Beshear (D) has said he was in favor of the Legislature’s plan to pass a one-year budget so lawmakers can go home and practice social distancing. He’s expected to sign House Bill 351 and House Bill 352. He’s also expected to issues line-item vetoes to House Bill 352, which super-majorities in the House and Senate are expected to override.

To contact the reporter on this story: Alex Ebert in Columbus, Ohio at aebert@bloomberglaw.com

To contact the editors responsible for this story: Jeff Harrington at jharrington@bloombergtax.com; Yuri Nagano at ynagano@bloombergtax.com

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