Bevin proposes veteran tax benefit in campaign stop

LOUISVILLE, Ky. (AP) — Kentucky Gov. Matt Bevin said Tuesday that he'll push to exempt military veterans' retirement from state taxation if he wins a second term in November. It's part of the Republican incumbent's comprehensive tax proposal.

Bevin, a former Army officer, promoted the tax break during a Louisville-area campaign event where he received support from a veterans' coalition.

"The small amount of revenue that that generates for this state is not even remotely ... comparable to the sacrifice that has been made," the governor said while flanked by about three-dozen supporters.

Bevin later told reporters he hopes to fold the veterans-related tax break into a larger tax overhaul measure during the 2020 General Assembly session that begins in January. Bevin said a slew of taxes should be reviewed, including income taxes, the gas tax and local-option sales taxes.

"All these things and more need to be talked about in 2020," Bevin said. "It's one more can that we cannot kick down the road."

The governor offered no additional details about his tax proposals.

Bevin is locked in a tough race against Democratic Attorney General Andy Beshear in the Nov. 5 election.

Beshear also has called for revamping Kentucky's tax system and repealing some tax loopholes — such as for the sale of private jets and luxury houseboats — that he says favor the wealthy. He says economic development-related tax incentives should only go to companies that create jobs that pay enough to support families.

The Democratic challenger also wants to legalize casino gambling and use the proceeds to help fund Kentucky's struggling public pension systems.

"Unlike Matt Bevin, Andy Beshear supports creating new streams of revenue, including expanded gaming, which could bring in over $500 million to Kentucky and open up new economic opportunities," Beshear campaign spokesman Sam Newton said in a statement. "He'll also make sure any changes to taxes lift up working families — instead of costing them more."

Beshear says Kentucky is losing revenue to other states where Kentuckians gamble at casinos. He says gambling revenue would free up state funds for education and health care. Bevin, however, calls expanded gambling a "sucker's bet."

Bevin has fallen short of achieving his tax reform goals so far.

He signed a tax cut into law earlier this year that's estimated to shave more than $100 million a year from the state's $11 billion General Fund once the cuts are fully implemented. Last year, Bevin vetoed a tax bill that lowered corporate income taxes and expanded the state's 6% sales tax to more than a dozen services. Lawmakers overrode the veto and the changes took effect last year.

Kentucky lawmakers will craft a new two-year budget during next year's legislative session. The task will be increasingly challenging due to rising costs for public pensions, schools and jails.

Bevin said Tuesday that exempting military veterans' retirement income from state taxation would cost a "modest" amount — a few million dollars — in state revenues.

Boyle County Judge-Executive Howard Hunt III, co-chairman of the Veterans for Bevin Coalition, praised the proposed tax break.

"I think it would be a welcome gesture to all veterans to be recognized in that way for their service to both state and country," he told reporters after the governor's campaign event.

Bevin also touted his support for initiatives in recent years to make Kentucky a veteran-friendly state, including efforts to smooth the transition from military to civilian life and to help veterans and their spouses find jobs. Kentucky is home to a pair of large Army posts — Fort Campbell and Fort Knox.

Beshear released his plans to improve job opportunities and health care access for military veterans in his first major policy rollout during the summer.

Beshear has said he wants to increase access to job-skills training for veterans and convert their military experience into credit hours at colleges or vocational/technical schools. He also wants to create opportunities for veterans in Kentucky's agritech sector and to bolster the number of veterans working as craftsmen and engineers in the construction industry.