Facing Uncertain Future, Kentucky Legislature Passes One-Year Budget
Kentucky’s Republican-led legislature has passed a one-year state budget that keeps spending largely at current levels with plans to pass a new budget in next year’s annual session.
The bill now heads to Democratic Gov. Andy Beshear, who has the power to veto all or part of the budget. Lawmakers will reconvene for the last two days of the legislative session on April 14 and 15 to consider overriding any vetoes or pass new bills.
Amid the coronavirus pandemic, the state is anticipating a steep drop-off in state revenues but will also receive financial assistance from the federal government. Still, budget writers have little idea of how much money Kentucky will have on hand to pay for expenses.
Senate President Robert Stivers, a Republican from Manchester, said he almost voted against the bill because he thought it was too unrealistic.
“Right now, if you think what we have budgeted to—about 11.6 billion. Our current year revenues will probably be lucky to hit $11.4 billion. That means $200 million already that this budget is short,” Stivers said.
“That’s why I am close to being a no because this is not the budget the governor will have to deal with.”
Kentucky normally passes a budget every two years, but leaders of the legislature say they intend to pass a new spending plan next year once the effects of the coronavirus pandemic are clearer.
According to an Economic Policy Institute estimate, Kentucky could face a 16.3 percent unemployment rate and 252,000 lost jobs by July of this year.
Kentucky lawmakers are operating under the rough assumption that the state will generate $130 million less over the next fiscal year compared to initial predictions.
The coronavirus epidemic has forced lawmakers to scrap plans for increases in education spending, raises for state employees and hiring more social workers.
House Budget Chair Steven Rudy, a Republican from Paducah, said that the world was a different place when lawmakers began putting together the budget at the beginning of the year. Now the state’s financial future is uncertain.
“We have no way to know how far this recession is going to go, how deep it will truly be and what it will mean to the coffers here in Frankfort,” Rudy said.
The budget keeps the SEEK school funding formula flat at $4,000 per pupil and doesn’t include money for textbooks or instructional materials.
It also continues to freeze pension contribution rates for regional universities, local health departments and other “quasi” state agencies who are facing a massive spike in pension costs.
If the state has a revenue shortfall of five percent or less, the budget bill includes language allowing the state to reduce part of its $1.2 billion contribution to the teacher pension system.
House Minority Leader Joni Jenkins, a Democrat from Louisville, says that the state needs to generate more revenue to pay for schools, healthcare, infrastructure and a social safety net.
“These are not luxuries, they’re investments. And the more we put in them, the stronger our commonwealth becomes and the more likely we will be better prepared the next time a challenge like this arises,” Jenkins said.
The legislature did pass a new tax on vaping and tobacco products that would raise $25 million over the next two years, according to an estimate from earlier this year.
Most members of the House of Representatives voted from their offices or cars after the chamber adopted rules allowing them to electronically submit votes to a manager on the House Floor.
Sen. Robin Webb, a Democrat from Grayson, criticized leaders of the legislature for continuing to meet long after knowing about the coronavirus pandemic.
She said lawmakers could have passed the one-year continuation budget much more quickly.
“We continued on to get where we are to today, where we could have easily been done a couple weeks ago,” Webb said.
Lawmakers will return to pass another budget next January, unless Gov. Andy Beshear summons them for a special legislative session before then.
The legislature will have a higher bar to pass budget and tax bills next year. The state constitution requires a three-fifths majority to pass such bills in odd-numbered years.