Citing Financial Uncertainty, Kentucky Legislators To Consider Short Budget

Mar 31, 2020

Credit Kentucky LRC

When they reconvene in Frankfort on Wednesday, Kentucky lawmakers will consider a one-year budget instead of the normal two-year plan. Legislative leaders say the change is due to uncertainty about how much revenue the state will bring in during the coronavirus pandemic and ensuing economic downturn.

Rep. Steven Rudy, a Republican from Paducah and chair of the House budget committee, said that lawmakers will try to pass the short budget on Wednesday and write a new spending plan next year.

“Hopefully in January 2021, we will be able to come back in here, make modifications to the budget that we will be in at that time, and more accurately craft the second year of the budget,” Rudy said.

Like most states, Kentucky is bracing for a hit in the amount of money it collects from sales and income taxes, which make up more than 75 percent of state revenues.

The state’s official revenue forecast—set in December—already predicted lackluster growth in tax revenue amid rising budget demands from Kentucky’s public pension, corrections and healthcare systems.

Legislators are now operating under a rough assumption that the state will make $130 million less over the next fiscal year.

Rudy said that at the beginning of the year, he was optimistic about passing a budget without severe spending cuts, “but the world has changed.”

“No number we budget to will be anything close to what’s correct,” Rudy said.

During a meeting of the budget committee negotiating the budget, Rudy provided some details of what would be in the spending plan.

Unlike all versions of the budget proposed this year, it will not raise the SEEK K-12 school funding formula and it will not provide raises to state employees.

The budget will still fund the state’s pension systems at their actuarial required amounts, Rudy said.

The new version of the budget will also continue a freeze on pension contribution rates for regional universities and “quasi” state agencies like local health departments that are facing a sharp increase in their pension costs.

Similar moves in recent years have been criticized for putting less money into the state’s ailing pension systems.

The bill will also delay implementation of the pension bill that passed out of the legislature during a special session last summer, allowing those agencies to exit the pension system to avoid a spike in pension costs.

The full legislature has been meeting intermittently during the pandemic and is scheduled to reconvene on Wednesday at noon to consider the finalized spending plan.

The ACLU, League of Women Voters and some education groups have criticized lawmakers for continuing to meet and pass a variety of bills while access to the Capitol is restricted to the public.

A legislative staffer was diagnosed with coronavirus on Monday. State officials say there is a “relatively low-risk” that other legislative employees were exposed because the individual had been working from home since March 16.