Kentucky budget

Kentucky lawmakers voted to override most of Democratic Gov. Andy Beshear’s vetoes on the second-to-last day in this year’s legislative session, securing the passage of several conservative laws and shifting power from the governor to Republican officeholders.

Beshear vetoed all or part of 27 bills during the 10-day veto period that ended last weekend.

But Republican legislators easily overrode Beshear’s actions, doubling down on bills weakening open records laws, limiting worker safety rules and barring Beshear from spending federal coronavirus aid.

They also overrode Beshear’s vetoes of the state budget bill: zeroing out funding for the Commission on Women, freezing new mine safety inspector positions and giving Republican Attorney General Daniel Cameron, not the governor, final say on lawsuits over the budget.

Gov. Andy Beshear issued several line-item vetoes to the budget and revenue bills on Friday, rejecting language that blocks him from spending funds from Kentucky’s share of the recent coronavirus-relief package.

Beshear also vetoed parts of the budget zeroing out funding for the Commission on Women, freezing new mine safety inspector positions and requiring the state treasurer to approve travel on the state aircraft.

The Republican-led legislature will likely override Beshear’s vetoes when lawmakers return for the final two days of this year’s session on Monday and Tuesday.

In his veto message about the executive branch budget bill, Beshear wrote that by requiring legislative approval to spend relief money, lawmakers were hindering the state’s ability to recover from the pandemic.

Republican lawmakers released a state budget bill over the weekend that would make sure the legislature, and not Democratic Gov. Andy Beshear, has final authority in deciding how federal coronavirus relief money gets spent.

Kentucky will receive about $2.4 billion from the recently-passed relief package. That money can be used for a wide range of needs like testing and vaccination programs, relief for businesses and individuals, infrastructure investment and “premium pay” for essential workers — an additional $13 per hour.

But under the Kentucky budget bill quietly filed over the weekend, Beshear wouldn’t be able to use that money unless the legislature authorized him to do so.

Kentucky’s state and local governments will get about $4 billion from the federal coronavirus relief bill making its way through Congress, according to Gov. Andy Beshear’s administration. That’s in addition to the $5 billion individuals in Kentucky stand to get from stimulus checks, an extension of unemployment benefits and other programs.

The figures come as lawmakers are trying to put the finishing touches on a one-year state budget after a year of economic uncertainty caused by the coronavirus pandemic.

John Hicks, Kentucky’s state budget director, said the administration is still waiting for the relief package to pass and for formal instructions from the federal government.

Kentucky lawmakers resumed budget talks on Monday after a nearly two-month break.

Legislators still have little to show for the one-year state spending plan even though they only have about a week before the deadline to send it to Democratic Gov. Andy Beshear’s desk.

Part of the holdup is uncertainty over how much aid Kentucky will receive from the federal government as part of the coronavirus relief package making its way through Congress.

Senate President Robert Stivers, a Republican from Manchester, said he’s still not sure how much money the state will get.

Kentucky lawmakers have advanced a continuation budget as they head into a three-week long break during this year’s legislative session, though the spending plan will likely change.

The budget bill continues state spending at current levels, but legislators say it’s a “placeholder” and ultimately the final budget will be hammered out in the coming months.

Sen. Chris McDaniel, a Republican from Latonia and chair of the budget committee, said the unusual process is due to the shorter-than-usual legislative session.

“This is merely a continuation, but with the time constraints upon us, it’s important to go ahead and work ourselves to what we believe to be a free conference committee,” McDaniel said.

The Kentucky House of Representatives quickly advanced budget bills on Monday that continue state spending at current levels.  The bills do not include Gov. Andy Beshear’s initiatives like state employee raises and relief during the coronavirus pandemic.

The move is intended to speed up the budget writing process. Once the bills pass each chamber, the Republican-led House and Senate will begin a conference committee where they can hammer out the final budget in a small group.

Rep. Jason Petrie, a Republican from Elkton and chair of the House Appropriations and Revenue Committee, said the budget bills that moved forward are largely the same as the ones that passed last year, with only small adjustments like debt service.

Gov. Andy Beshear unveiled his proposal for how the state should spend its money over the next year, calling on lawmakers to slightly increase education funding, overhaul the state’s unemployment system and provide direct payments to businesses and people struggling during the pandemic.

Beshear’s budget would also give $1,000 raises to teachers and 1% raises to other state employees.

Beshear proposed paying for the new spending by using more than $600 million in one-time funds, largely from federal CARES Act money.

But ultimately the final budget will be decided by Republicans in the legislature, who command veto-proof majorities in both the state House and Senate.

Beshear called on lawmakers to “put aside squabbling and petty partisanship.”

Gov. Andy Beshear’s administration says federal assistance led to higher-than expected tax revenues during the coronavirus pandemic and that the state hopefully won’t need to make budget cuts this year.

Still, officials predict that Kentucky will have a $99 million shortfall for the current fiscal year, which ends in June 2021. And the year after that will depend on the state and nation’s ability to recover from the coronavirus pandemic.

Revenue from sales and income taxes has been higher than expected, but has dropped off since the expiration of federal stimulus programs, said John Hicks, Kentucky’s state budget director.

Kentucky’s top budget official says the state’s financial future is uncertain as federal programs like the $600 supplement to unemployment benefits and the Paycheck Protection Program expire during the pandemic.

Part of why Kentucky has been able to weather the financial storm is federal assistance, according to John Hicks, the state budget director in Gov. Andy Beshear’s administration.

“We’ve got many strong signals that fiscal [year] 21 will be a significant budget challenge and will have lower revenues than in fiscal 20,” Hicks said during a legislative hearing on Wednesday.

Kentucky Gov. Andy Beshear said he’s optimistic the state will end the fiscal year without the originally projected $457 million budget shortfall. 

During a COVID-19 media briefing Wednesday, Beshear said they “don’t have all the numbers in” yet, but the state made cuts and had more revenue come in than expected. That means he’s hopeful that they won’t have to make any cuts “to education, health, public safety, or the judicial or legislative branch in the budget that we just ended,” he said. “We would have been paying for that going forward. We also expect to increase our Rainy Day Fund.”

The Kentucky House Appropriations and Revenue Committee presented its vision for the biennial budget on Thursday.

The committee presented bills for funding plans for the executive and legislative branch as well as the committee’s revenue proposal. There was no mention of major spending cuts that have characterized budgets over the past 14 years. 

Committee chairman Steven Rudy, a Republican representative from Paducah, noted that his committee’s budget proposal kept the same debt ratio of 5.3% as the governor’s, but contains some key differences. While both proposals included a 1% raise for all state employees, the governor’s budget proposed a higher raise for teachers that Republicans didn’t include.

Lawmakers are returning to Kentucky's Capitol to start a 60-day session that will be dominated by work on a new state budget. The House and Senate will convene at midday Tuesday.

This year's session will stretch into mid-April. Republicans hold supermajorities in both chambers, but there's a new political dynamic with Democrat Andy Beshear now in the governor's office.

In their budget work, Beshear and lawmakers will confront spending pressures amid projections for only modest revenue growth in coming years. Rising costs for pensions, health care and corrections will complicate their work.

The president of Western Kentucky University unveiled phase two of the school’s budget cuts on Thursday. WKU President Timothy Caboni says this second round of cuts will result in $14 million in savings. The two rounds of budget cuts amount to $27 million.

The second round of cuts includes 10 filled staff positions and the elimination of 20 vacant positions. Of those 20, 12 are faculty and eight are staff.  The specific positions will be announced in about week, after employees are notified.