FRANKFORT, Ky. (March 21, 2018) – The latest version of Kentucky’s next budget passed the Senate today – and it contained no new taxes.
“It reflects our priorities by committing to not raising taxes on hardworking Kentuckians for errors of omission or commission from previous generations of politicians,” said Senate Appropriations and Revenue Chair Christian McDaniel, R-Taylor Mill. “We placed high priority, and honored the requirement of the constitution, to present a balanced budget.”
He said the budget, contained in House Bill 200, reflects a commitment to public safety by investing in law enforcement, the state crime lab, frontline social workers and foster and adoption services.
McDaniel said HB 200, as amended in committee, further reflected a commitment to education. He said it did this by investing record amounts in per-pupil funding for schools, known as Support Education Excellence in Kentucky (SEEK), and funding school transportation at historic records. That’s in addition to moving to performance-based funding for the state’s eight public universities while ensuring funding for Western Kentucky University and Northern Kentucky University are on par with the state’s other six universities.
“We also maintain our focus on solving the thorniest issue facing the commonwealth, which is the unfunded liabilities in our pension systems by investing record dollars into the Kentucky Retirement Systems, while fully funding the statutory requirement to the Kentucky Teachers’ Retirement System,” McDaniel said.
He added that the Senate’s version of the budget does not continue to fund the legislators’ own retirement plan. That money is instead budgeted for the Kentucky Employee Retirement System non-hazardous plan, which McDaniel said was the worst-funded pension in the nation.
The Senate plan added another $100 million per fiscal year for the state police retirement system. That is in addition to $425 million for the fiscal year 2019 and $392 for fiscal year ’20 for that non-hazardous retirement fund.
For the teachers’ retirement system, the Senate plan provided the 13 percent statutory required funding. While the Senate plan doesn’t contain $59.5 million for retired teachers’ health care, it would use a nearly $1 billion trust fund to pay for the insurance. McDaniel said the bill would also ensure the retirees’ premiums wouldn’t go up just because of that funding change.
The Senate plan added language to direct $8.5 million in the fiscal year 2019 to the state education department for local school districts that are impacted by the loss of tax revenue on unmined mineral assessments. That’s in addition to $1.75 million in each fiscal year for school technology in coal counties.
Those provisions, and others designed to help Eastern Kentucky, prompted Sen. Brandon Smith, R-Hazard, to praise the Senate plan. He said the budget would keep some Eastern Kentucky school districts from having to close their doors. Smith said, however, that he hopes more funding for the area could be added as the bill works its way through the remainder of the legislative process.
“But every investment comes with a cost,” McDaniel said. “We are not able to invest in many programs to attract new industries and create expansion opportunities, but we do invest in our most valuable resources. That is our teachers, public servants and our children.”
McDaniel said the governor’s proposed budget recommended reductions of 6.25 percent in the upcoming biennium in most budget areas. He said the Senate’s version of the budget generally applied the cut to the executive branch except for veterans’ affairs and state police.
Sen. Morgan McGarvey, D-Louisville, said legislators should have been given more time to review a measure that directs how Kentucky will spend about $22 billion over the next two fiscal years.
“But no matter what is in the budget, I don’t think that it fully and accurately captures the idea that we don’t have enough money to run the basic needs and obligations of state government as it currently exists,” he said. “Until we recognize that, and until we do something about that, we will not be passing or providing the funding for a government the people of Kentucky require.”
Sen. Tom Buford, R-Nicholasville, said the Senate vote was just a step in the process, adding the budget would change in a conference committee. That’s a group of legislators who meet for the purpose of reconciling differences between House and Senate versions of bills.
“Yes, to many this is a hard-candy Christmas,” he said in reference to the lean budget. “There comes a time when you have resources that are tight. We have a lot of issues here we have to deal with that are not normally on the table.”
He then warned of the chaos of not passing a budget.
“I can tell you that’s very unpleasant,” Buford said. “The schools don’t get their money. No one gets their money. You kind of leave it on the governor’s table to make these necessary government expenditures, and it is not fun.”
HB 200 passed by a 26-11 vote.
Also approved today were the amended legislative budget (House Bill 204) and judicial budget (House Bill 203), which where were passed by Senate votes 36-2 and 26-12 respectively. McDaniel said both HB 204 and HB 203 budgets contain 6.25 percent cuts for all non-constitutional functions.
All three bills now go back the House for consideration of the Senate changes.