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Wednesday, April 1, 2020

Kentucky General Assembly passes “bare bones” budget in anticipation of COVID-19 impact on state revenue

Members of the Kentucky House and Senate met in Frankfort today to approve a one-year executive branch budget that guides the state’s spending for the fiscal year beginning on July 1. The spending plan includes $11.4 billion in funding for state agencies and programs, including public education, Medicaid, and programs currently engaged in mitigating the spread of COVID-19.

The budget, crafted as a substitute to HB 352, is a departure from the version approved by the House prior to the COVID-19 pandemic. The House version included funding increases for education, additional social worker positions, and raises for school and state employees.

House Appropriations and Revenue Chair Steven Rudy shared that the version approved today reflects early estimates of how the pandemic will impact the state’s economy and revenue collections. However, while the state expects a major decrease in revenue, Rudy stressed that it is still to early to know exactly how bad it could be.

“We were extremely pleased with the budget we sent to the Senate and the record investment made in education. But the world has changed and 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 approved version of HB 352 keeps funding flat for many areas of state government, including the $4,000 per pupil allocation for Kentucky’s public schools. The House had increased per pupil spending – referred to as SEEK funding - to record levels in its original version. Also removed from the House plan was funding for additional social worker positions, as well as pay increases for teachers, school and state employees.

“We are obviously disappointed at these changes. Per pupil funding has been a priority for us from the beginning. In fact, the 2018 budget - the first crafted by this Majority – included a record level of per pupil, or SEEK, funding and was the first budget in decades to fully fund the teacher pension system,” House Speaker David Osborne said.

Osborne added that legislators worked with limited resources in January but were able to produce a budget that served the state’s needs while being accountable to taxpayers.

“We were able to invest every dollar of our budget in areas that could move this state forward. We applied the same philosophy we have since becoming the majority and for good reason, our policies were working. Until now, we have enjoyed record low unemployment and historic investments in business growth from both in-state and out-of-state companies,” Osborne added. “We’re going to work with what we have, but make no mistake, while our short term priorities have changed, our long erm commitment to Kentucky and its people remains the same.”

According to Rudy, the budget does fully fund the actuarially required contributions to the Kentucky Retirement System and the Kentucky Teacher’s Retirement System and fully funds teacher health insurance. It also continues the freeze on pension contribution rates for quasi-governmental agencies, which include regional universities, local health departments, and domestic violence shelters across the state.

To conduct legislative business, the House implemented a remote voting procedure. This process allowed House members to transmit that vote to designated members who would record it formally with the House Clerk. This change is in addition to steps taken in early March as public health officials began warning about the spread of COVID-19. Doing so limited the number of individuals on the House Floor at the same time while still ensuring that members can cast votes on behalf of their constituents. While a legislative first, these actions reflect House Majority Leadership’s intent to preserve each district’s right to participate in the budget process.

In addition to the executive branch budget, legislators also approved an updated version of the judicial branch budget, transportation road plan, and transportation cabinet budget. All bills will be sent to Governor Andy Beshear for his consideration. The Governor has ten days to consider any vetoes he may wish to make, and legislators are scheduled to return to Frankfort to override vetoes and finish business on April 13.

Legislative Research Commission 

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