Ky. state budget passes General Assembly

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Photo Courtesy:LRC Public Information News FRANKFORT, January 9 -- Rep. James Tipton, R-Taylorsville, presents Senate Bill 1, a bill that would limit executive orders, in the House.

UPDATE POSTED 10 P.M., MONDAY MARCH 15, 2021

FRANKFORT, Ky. (LRC/WTVQ) – Kentucky lawmakers have passed a new state budget. But a Senate leader said Monday it’s only the start as they decide how to spend pandemic-related federal money headed to the state.

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The bill that cleared the legislature mostly holds the line on spending.

It sets significant money aside in a “rainy day” fund as they decide how to use the federal money.

Gov. Andy Beshear says he’s disappointed the budget stripped his spending priorities.

He’s hoping to reach an agreement with lawmakers on how to spend the federal aid before the legislative session ends in late March.

The Kentucky General Assembly approved the second half of the state’s 24-month spending plan Monday after uncertainties from COVID-19 cut budget negotiation short nearly a year ago.

House Appropriations & Revenue Chair Jason Petrie, R-Elkton, described the $12 billion budget as a near continuation budget from the previous fiscal year with necessary modifications.

“Our economy has certain structural signs of strength, but we’ve also had a lot of federal money infused into our economy, which makes analysis of the economy data, difficult at best,” he said. “We remain hopeful that things will get better, but we’re still not certain.”

With the economy in mind, Petrie said HB 192 would open up more funds for roads and the state’s reserve trust fund. With $958 million in the reserve trust fund, that would give the state 29 days in emergency funds instead of 10 to 14, Petrie added.

Senate President Robert Stivers, R-Manchester, said HB 192 would not budget the billions of dollars in federal COVID-19 relief money from the American Rescue Plan. The bill does contain language stating the stimulus money cannot be expended without the “express consent” of the General Assembly.

Stivers said the federal government hasn’t released “guidance” on exactly how it can be spent. The stimulus package was signed into law on March 11, well into the eleventh hour of state budget negotiations. While Kentucky is expected to receive $2.4 billion from the latest stimulus package, Stivers explained the actual amount could be much more. He said other federal money would go directly to cities, counties and school districts.

“In the aggregate, close to $6 billion will be spent in this state in the next 14 months,” Stivers said. He added that HB 192 was a flat-line budget with lots of reserve cash because he would prefer to spend those federal dollars, when the guidance is released, rather than state tax money.

Stivers said the one-time infusion of cash could be used in revolutionary ways such as creating a research pool for universities to access. He said similar research funds were successful in Pittsburgh, Boston and Raleigh, N.C.

“We need to pass this,” Stivers said of HB 192. “Then, we really need to sit down and start the real work of what we need to do and shoot for the moon. If we miss, we will still be in the stars.”

Critics of the state budget said they would have liked to see the budget increase access to clean water and the internet in addition to school funding and COVID-19 relief for small businesses.

Rep. Cherlynn Stevenson, D-Lexington, said she felt it was time for the General Assembly to take “bold action” and create a “forward-thinking” budget, but instead she found the budget was “simply disappointing.”

“Kentucky families need our help right now more than ever,” she said. “Small businesses need our help right now more than ever. Nonprofits need our help more than ever.”

Sen. Phillip Wheeler, R-Pikeville, said he strongly supported HB 192 because it would return coal severance money, or the tax revenue from mining coal, back to coal-producing counties at record percentages.

Petrie said the budget also would include relief for long term care facilities, address unemployment and recruiting of state troopers.

Other appropriations in the 2021-22 fiscal year executive branch budget would include:

  • $1.7 million for Bluegrass Station Airport and Air Park in Lexington;
  • $4.1 million in federal funds for pandemic related-relief programs;
  • $500,000 to address security concerns for the Attorney General;
  • and full funding of the actuarial required contributions for the Kentucky Teachers’ Retirement System and Kentucky Employees Retirement System.

Sen. Whitney Westerfield, R-Crofton, said he voted for HB 192 but wished lawmakers would adopt rules to force them to take up budgets earlier in sessions. The General Assembly has met 27 of the 30 days constitutionally allowed for regular sessions in odd-numbered years. Those sessions also cannot extend beyond March 30.

“There are a lot of things in this budget I can get behind and really support,” Westerfield said. “There are a lot of things I’m not particularly crazy about. Some of that is because we do not have enough resources and some of it comes down to whether I would prioritize the same way others would.”

HB 192 passed the Senate 30-0-6 before being passed in the House of Representatives by a 74-23 vote.

The General Assembly also passed the legislative branch budget, contained in House Bill 194, and the judicial branch budget, contained in House Bill 195.

All these bills now go to the governor who has 10 days, excluding Sundays, to sign the measure or veto any items in the budget or the entire spending plan. Any vetoes will be taken up in the final two days of the session. A majority vote of elected members in the House and Senate is required to override a veto.

ORIGINAL STORY POSTED MONDAY AS OF 6 P.M.

FRANKFORT, Ky. (AP) — Kentucky Republicans edged closer Monday toward passing a state budget that mostly holds the line on spending but sets significant money aside in a “rainy day” fund as they consider how to use massive amounts of pandemic-related federal money headed to the state.

Democratic Gov. Andy Beshear, disappointed that the budget stripped his proposals for across-the-board pay raises for school employees and state workers and increased spending for public education, fired back immediately with a clear message: It’s already raining.

The Senate passed the one-year budget — a continuation of most of the spending now in place. The measure was sent to the House for a vote later Monday or Tuesday that would send it to Beshear, who doesn’t have enough Democratic votes in either chamber to sustain any line-item vetoes. The bill resulted from negotiations among top lawmakers in the GOP-led chambers.

The Democratic governor said the huge sums added to the state’s “rainy day” fund were intended to help the state confront an emergency.

“That is not the state’s money, it’s the people’s money,” Beshear said at a press conference. “And at a time of a pandemic, at a time of significant unemployment, is this not the rainy day that the rainy-day fund was meant for?”

Republican Senate President Robert Stivers said the budget stockpiles money in the reserve account while lawmakers await federal guidance with specifics on how they can they can spend the infusion of pandemic federal aid to state government— expected to total about $2.4 billion.

“It’s going to have a lot of reserve cash left in it, because we prefer … to use the federal dollars, once we find out what it can be used for, instead of our state dollars,” Stivers said.

That could free up state money to spend elsewhere, the Senate leader said. He noted that lawmakers were talking about putting hundreds of millions of state funds into broadband expansion, but then found out that part of the federal aid can be used for that purpose.

Lawmakers only found out about the scope of the federal aid as they were in budget negotiations. Stivers said multiple state budgets might pass this year as lawmakers discuss how to spend the money.

An undercurrent of the friction between Beshear and Republican leaders may be the question of who decides how the federal money is spent. Republican lawmakers added a provision to the budget bill giving them “express authority” over how the federal money is spent. But Beshear and Stivers struck similar tones in discussing overall strategy in investing the money, and discussions between the governor and lawmakers are ongoing.

“We need to think big and we need to think bold,” Stivers said in a Senate speech Monday.

Beshear has urged lawmakers to be bold in fashioning a budget that positions Kentucky to better compete in the post-coronavirus economy.

Stivers talked broadly about potential opportunities with the huge amount of money.

“What if we did create a research pool for our universities to access?” he asked, noting the lucrative jobs and long-term federal research money that could flow into Kentucky.

Sen. Morgan McGarvey, the chamber’s top-ranking Democrat, called it a “once-in-a-generation opportunity” for the state.

“It is time for us to rise and meet the challenge that has been set before us, and to use this money to meet the needs of Kentuckians and invest in our future and to do it this year,” he said. “This cannot be the final budget that comes out of this legislature.”

As the budget work continues, McGarvey said, lawmakers should circle back to “fill those holes” left in the continuation budget by spending more on education and health care.

Beshear said he hopes an agreement can be reached on how to spend significant amounts of the federal money before the legislative session ends in late March. Lawmakers are scheduled to meet Tuesday and two days at the end of this month before their 30-day session ends.

In January, Beshear proposed a separate virus relief bill that included $220 million in aid for small businesses. That proposal is missing from the budget bill winding through the legislature, he said.

Investments in school construction, broadband expansion and water and sewer projects would create tens of thousands of jobs in the next year or so, he said Monday.

“That is exactly what the doctor ordered in making sure that our recession is short, that our people get to work and that we jump-start our economy,” the governor said.

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The budget bill is House Bill 192.