FRANKFORT, Ky. (Feb. 14, 2013) — Legislation that would cap the state’s debt supported by General Fund appropriations was approved Tuesday by the Senate State and Local Government Committee.
Senate Bill 10, sponsored by Committee Chair Joe Bowen, R-Owensboro, and Senate Majority Floor Leader Damon Thayer, R-Georgetown, would prohibit the legislature from appropriating more than 6 percent of General Fund revenues to bonded indebtedness. Supporters of the legislation say that percentage is a generally accepted industry standard used by bond rating agencies.
This legislation would reign in potential high debt levels in the future and put Kentucky at the same levels as many other states, Bowen said.
“Our General Fund debt ratio is not improving,” he said. “As a matter of fact, we continue to add more debt than we pay off.”
The measure excludes debt for universities, the Kentucky Housing Authority, and other agencies not using the General Fund. It also allows the General Assembly to exceed the 6 percent limit by a majority vote if the Governor declared a state of emergency that requires additional funds.
The measure was passed unanimously by the committee, with one member passing, and now goes to the full Senate for consideration.