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Friday, April 6, 2018

Everything That Happened This Week at the State Capitol

This week, lawmakers fulfilled a main duty the state constitution requires of them as final approval was given to a state budget that will guide more than $22 billion worth of spending over the next two years.

The budget plan does not include all of the program cuts that received much attention when they were unveiled in the governor’s original budget plan. Rather, lawmakers approved a tax measure on the same day they approved the budget that raises revenue to stave off many of the proposed cuts.

In passing the budget plan, lawmakers emphasized that it fully funds the state’s main public pension systems at the levels recommended by actuarial analysis.

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The budget includes 6.25 percent baseline cuts for most state agencies, although some agencies are spared. Agencies that will avoid cuts include the Department of Veterans’ Affairs, Kentucky State Police, and local school-based Kentucky Family Resource and Youth Services Centers.

For K-12 education, the budget plan, known as House Bill 200, would boost base per-pupil funding for K-12 education to a record level of $4,000 per student in each fiscal year. It would also increase school transportation funding to $127.8 million in each year of the budget cycle. It would also provide more than $10 million next fiscal year to help 31 school districts replace lost revenues following a drop in the assessment on unmined coal, among other provisions.

HB 200 also includes more than $60 million in new revenue to help implement proposed adoption and foster care reforms, including more than $23 million for placement of foster children with relatives, and tens of millions of dollars to hire more social workers and increase social worker salaries.

Additional funds for spending on social workers and prosecutors is also included in the budget, with provisions that would add $10 million to hire 94 additional Youth Workers for the Department of Juvenile Justice and around $6 million to hire more prosecutors.

The budget bill passed the House by a 59-36 vote and was approved by the Senate on a 25-13 vote.

Increased revenue that the budget depends on for some of its spending will be generated by the provisions found in House Bill 366, a tax reform measure that has been approved and sent to the governor. The measure, which includes a 50 cent tax increase on packs of cigarettes, would generate nearly a half of billion dollars in additional money for the state over the next two fiscal years.

Besides the cigarette tax, the plan would create a flat rate for personal and corporate income taxes in Kentucky while expanding the sales tax to certain services.

The personal income tax rate would be set at a flat five percent instead of the current brackets ranging from two percent to six percent, while the corporate income tax would also go to a flat rate of five percent instead of the current brackets ranging from four percent to six percent. The inventory tax would also be phased out over a four-year period.

The only itemized deductions allowed under HB 366 would be for Social Security income, mortgage income and charitable giving. It would disallow the deductions for such things as medical costs, taxes paid, interest expense on investments, and casualty and theft losses. It would also remove the $10 state personal income tax credit.

Another provision would lower the pension income exclusion to $31,110 from $41,110.

The plan would also place a sales tax on some services associated with certain repairs, installation and maintenance related to personal property, such as a car. The sales tax would also be expanded to other selected services including landscaping services, janitorial services, veterinarian services for small animals, fitness and recreational sports centers, commercial laundries, golf courses and country clubs, dry cleaning, pet grooming, weight loss centers and campgrounds.
The tax measure was approved by the Senate on a 20-18 vote and by the House on a 51-44 vote.

While much attention was on the budget and tax reform measures approved this week, lawmakers also approved a number of other bills, including legislation on the following topics:

Road Plan. House Bill 202 will guide over $2.4 billion in spending for Kentucky’s bridges, repaving projects and other road needs throughout Kentucky over the next two fiscal years. The bill has been approved and delivered to the governor. Lawmakers have also approved House Joint Resolution 74, which identifies projects for in the last four years of the state’s six-year Road Plan. Projects in this plan are prioritized but not yet funded.

Adoption and foster care. House Bill 1 would reform Kentucky’s adoption and foster care system with the goal of ensuring that a child’s time in foster care is limited and that children are returned to family whenever possible. The legislation would also expand the definition of blood relative for child placement and ensure that children in foster care are reunified with family or placed in another permanent home in a timely manner. It would also require more case reviews for each child in foster care, create a “putative father registry” so that a child’s possible (but not verified) biological father can be notified of the child’s prospective adoption, and allow the state to seek termination of parental rights for new mothers who won’t seek drug treatment after giving birth to a drug-addicted baby.

Abstinence education. Senate Bill 71 would require the abstinence education be included when schools offer any human sexuality or sexually transmitted diseases curriculum.

Alcohol. House Bill 400 would allow direct shipment of alcoholic beverages to people’s homes. The legislation would allow visitors at bourbon distilleries to ship limited amounts of spirits home as well as join bourbon of the month clubs. HB 400 would also permit vineyards to ship specific amounts of wine out of state. Another provision would allow liquor stores to ship a limited amount of spirits purchased from their shops. In addition, it would also require the shippers of the spirits to verify the delivery is made to someone at least 21 years old living in a “wet” area.

Lawmakers have now returned to their homes districts for a ten-day “veto recess.” This is the period of time in which lawmakers wait until the end of the time period in which the governor can cast vetoes on legislation that has recently passed. This waiting period ensures that lawmakers have a chance to consider overriding any vetoes before officially adjourning the 2018 session. The session’s final days are scheduled to be held on April 13 and 14.

PHOTO: Sen. Chris McDaniel, R-Taylor Mill, speaks on Senate Bill 151, the pension bill, in the Senate on March 29.

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