Legislative Update – Week of April 3, 2014
FRANKFORT—Budget bills for all three branches of state government—including the $20.3 billion Executive Branch spending and operations plan for the next two years—were passed by the Kentucky General Assembly on Monday and sent to the Governor just in time for the 10-day session veto recess that began on Tuesday.
With that, what is often considered the hardest job of any budget session is behind us. And we still have two days to consider overriding any vetoes to the budgets or other bills when we return to Frankfort to close out the session on April 14 and 15.
Reaching a final agreement on the state budget bills and a corresponding revenue bill found in HB 445 took several days, including all last weekend which involved some energetic debates—
The budget is not perfect, but we had come a long way and I joined my colleagues as we passed HB 235 in both the House and Senate.
The final budget included fiscally responsible reductions in proposed General Fund debt and agency bond debt for capital construction—mostly in the area of postsecondary education.
In Mid March, when I cast my NO vote on the first vote of the original budget proposed by the House, part of my concern was the $2 billion in new General Fund and agency bond debt, structural imbalances, and gas tax increases.
Ultimately, HB 235 cut spending by 5 percent through fiscal year 2016 across most state agencies. It shifted priority allocations adding around $189 million in base per-pupil funding for K-12 education, preserved funding for Medicaid and for PVAs – without the crazy proposal by our PVAs in the first proposed budget that would have stripped over $1 Million tax dollars out of Boone County sending it to Frankfort! Also, we preserved funding for prosecutors, and added money to other critical areas.
HB 235 will make smaller cuts to postsecondary education than originally proposed by the Governor. State University budgets will be cut by 1.5 percent rather than 2.5 percent, with bond authorizations for many university projects restored. Community and Technical College budgets will also be reduced by 1.5 percent instead of 2.5 as earlier proposed, with those institutions’ capital projects paid for with student fees and private donations.
Also included in HB 235 are pay raises for state workers of at least 2 percent over the biennium—with the lowest-paid workers receiving higher raises in the first year. Kentucky teachers will receive a 3 percent raise; 1 percent in fiscal year 2015 and 2 percent in fiscal year 2016. Like many in the private sector, Kentucky employees had not received salary increases or COLAs in 5 years, while medical insurance premiums and co pays had increased.
Education Funding for our Schools: HB 235 provides close to $ 6.0 Billion for SEEK over the biennium, increasing the SEEK base to $3911 in FY 15 and $3981 in FY16. The budget bill also provides a total of $3.3 million in 2015 and $6.6 million in 2016 for K-12 education technology funding, rather than financing those items with $50 million in bonds as had been proposed in an earlier budget version.
HB 235 also includes: full funding of the actuarial required contribution (ARC) to Kentucky’s Public Pension system as required when the General Assembly passed the Pension System Reform ACT last year; funding for expanded preschool for four-year-olds statewide in 2016 totaling $18 million; additional funding to boost foster care rates; and restoration of child care subsidies for low-income families that had been cut from the state budget last year.
The other two branch budgets are, of course, the budgets for the Judicial and Legislative branches, which the General Assembly is also required to fund. We did so by approving an approximately $840 million Judicial Branch budget, found in HB 238, and approving approximately $100 million in funding for the Legislative Branch budget in HB 253, which includes the LRC employees and operational cost. While considered State employees, House and Senate members kept our promise, insuring the two year Legislative budget included NO salary increases for Representatives or Senators.
There were also some important “General Provisions” worth talking about;
– We inserted language relating to Executive Orders that would add the requirement that if the Executive Order is not ratified by the General Assembly, the Secretary of Finance shall return the accounts and funds to the budget unit in which It was placed in the 2014 General Assembly.
– Adds language provision prohibiting ‘debt restructuring’ during the 2014 -2016 fiscal biennium.
– Adds language limiting expenditures by the Governor, agency heads and Constitutional Officers to no more that 55% of the appropriated funds in the first half of 2016.
– Adds language stating that nothing in the enacted budget should be constructed as an approval by the General Assembly of Kentucky of the operation of the Affordable Care Act in Kentucky.
– Adds language that no General Fund dollars are appropriated in the enacted budget for any expenditure in operating or maintaining the Health Exchanges. Also, the provision prohibits the Governor from expending any General Fund resources on any expenditure directly or associated with the Health Benefits Exchange.
– Adds language provision requirement that the Medicaid eligibility and service levels return to January 2013 levels if the Medicaid funding for newly eligible individuals in 42 U.S.C. sec 1396 (y)(1) is modified to require additional state funding.
– Adds provisional language that any federal funds received as a result of the ACA shall NOT be used to permanently expand existing programs or permanently create new programs.
Now, let’s talk a moment about the revenue. In general the budget is funded by tax receipts, federal funding that is allocated to the States especially in the Human Services area, and a provision of sweeping funds of excess reserves. My goal was to assure that Kentuckians did not see an increase in taxes and make every attempt to achieve a budget where our Commonwealth lived within its means. That is very challenging when there are so many budget requirements and budget requests facing the Kentucky taxpayers. After much heated discussion, we won the debate and struck down the recent proposal to increase the motor fuel tax (gas tax) by 1.5 to 2.2 cents a gallon!!
HB 445 is the document outlining the revenue dollars to fund of the state’s needs over the biennium. New provisions include, but aren’t limited to: a phased-in barrel tax credit for distilled spirits, an angel investor tax credit, an expanded historic preservation tax credit, and “new markets” tax credit to help underserved areas of Kentucky.
You may wonder about tax credits, but tax credits have the potential to make Kentucky more competitive and attractive to a new business or economic development project. They come in to play only when a threshold of investments, income and/or jobs, are created. Government does not create wealth, but we need to assure we do not hinder our future by doing all we can to keep Kentucky competitive and stimulate investments and business opportunities that will grow and expand our economy and produce good jobs.
Much more was accomplished in the final hours of Monday before gavels fell in the House and Senate and the General Assembly recessed until April 14. Among the bills that cleared their final legislative hurdles shortly before the veto recess began were:
– HB211 became the School Calendar Bill when HB 383 (primary sponsor) & HB 410 were attached to the bill. HB 383, which I sponsored, permits “local control”, allowing all local school districts and local school boards the flexibility to set their calendars, school days and hours as long the integrity and excellence of our students’ education is assured, as is set in current law at 1062 Instructional hours. I would again like to thank Superintendent Poe, the Boone County School Board, teachers and parents for all their input and support. HB410 dealt with the forgiveness hours for school districts that could not complete the mandated 1062 instructional hours. HB 212 also establishes the “date for certain” last day of school as June 6th after utilizing all holidays and spring break.
– HB 232, which requires consumer notification when a data breach compromises a consumer’s personal information. This legislation grew out of the Target Corporation security breach that occurred last holiday season. It was amended to require “cloud” computing service providers that contract with schools to ensure that student data is secure.
Senate Bill 124, a bipartisan bill that will allow medical use of cannabis oil to treat specific medical conditions—including epilepsy—under the guidance of a physician and oversight of the University of Kentucky or University of Louisville research hospitals.
– HB 99 (primary sponsor) and HB 128 (co-sponsor) Concealed Carry legislations, a broad concealed carry bill that does numerous things, including: allowing retired law enforcement officers who were granted a concealed carry license pursuant to their work to carry concealed anywhere in the state except for detention facilities; making school security officers eligible for certain Homeland Security grants; providing a process whereby those protected by emergency protective or domestic violence orders who apply for a temporary concealed carry permit can carry concealed as long as firearms training is completed in 45 days; and allowing honorably discharged veterans to waive training requirements for a concealed carry license with required documentation.
– HB 343 (co-sponsor), which amends current law to include possessing or viewing of child pornography within the definition of a sex crime in Kentucky, requiring those convicted of such offenses to be registered as sex offenders. The bill also changes when state financial responsibility for newly convicted offenders begins, specifies the medical payment rate for state inmates in county jails, and includes cell phones to the list of items considered as dangerous contraband in detention facilities.
So, with only two days remaining in this 2014 Regular Session of the Kentucky General Assembly, much has been done but there is much left to do. We may have literally dozens of bills to try to move through the process in the session’s final moments in mid-April. One of those bills is SB 5 (the Heroin Legislation) filed by Senator Katie Stine. I am a very active advocate in the House for SB 5 and have drafted a Committee Amendment I have asked to be added that would ban another potentially deadly Rx opioid from coming into Kentucky –Zohydro. SB 5, now on the House side of the Chambers, has passed the House Judiciary Committee and we are working to gather the votes for passage on the House floor when we return April 14.
Thank you again for allowing me the privilege of serving you as your voice in Frankfort.
Please continue to stay informed of all legislative action of interest to you this session by logging onto the Kentucky Legislature Home Page at www.lrc.ky.gov or by calling the toll-free Bill Status Line at 866-840-2835. To comment on a bill, please call the General Assembly’s toll-free Legislative Message Line at 800-372-7181 or you are welcome to call my office at 502-564-8100
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