Branch budgets clear House, move to Senate

FRANKFORT—A nearly $21 billion state budget bill that supporters say would restore some funding cuts proposed by the Governor to many areas of state government and authorize less debt than proposed in the Governor’s budget narrowly passed the House tonight by a vote of 53-0.

House Bill 303, sponsored by House budget Chair Rick Rand, D-Bedford, restores funding cuts proposed by Governor Matt Bevin for constitutional agencies, PVAs, postsecondary education, several K-12 programs and several other offices while agreeing with the Governor’s plan to preserve per-pupil school funding, boost pay for state troopers and other front-line state employees. It also proposes a way to fully fund the state’s required contribution to the state employee and teacher pension systems, although using a different mechanism than that proposed by Governor Matt Bevin.

Cuts of 4.5 percent this fiscal year and 9 percent over the next biennium—known as “budget stabilization reductions”—proposed by the Governor for most other state government agencies were retained in the House bill with some exceptions: Constitutional offices like Secretary of State, the state Treasurer and Attorney General which were slated for the cuts would have that funding restored in the House plan, as would the Department of Veterans’ Affairs and specific other agencies

Absent from the House plan is a $100 million bond pool for workforce development proposed by the Governor (although the bill would appropriate over $32 million for a proposed Work Ready Kentucky Scholarship Program for community colleges) and a “permanent fund” the Governor proposed as a repository for funding future pension needs.

As for total debt in the plan: A summary of HB 303 provided to the House budget committee before its vote on the bill on Tuesday states that HB 303 carries less debt than the Governor’s plan. Total debt in the Governor’s plan, according to the summary, is $624.6 million, $460.2 million which would be supported by the state. HB 303 would reduce that proposed debt to $548.6 million, with $384.2 million supported by the state General Fund, with $283 million left in the state rainy day fund at the end of fiscal year 2018.

Those who opposed the bill did so for a variety of reasons ranging from the belief that the budget includes funding for Planned Parenthood, which Rand said it does not, to frustration voiced by many House Minority party members that projects requested for their districts were left out of the proposal. Rep. Suzanne Miles, R-Owensboro, said she submitted a list of requested coal severance projects for Union County only to find those projects omitted from the bill.

“I did submit my list as I did two years ago, exactly in the same form. … I’m extremely disappointed that my projects are not listed,” said Miles.

Rand said HB 303 accomplishes his budget goals which include fully funding the state’s actuarial required contributions (ARC) for the Kentucky Teachers’ Retirement System and the Kentucky Employees Retirement System (which would receive an additional $90 million above its ARC) without any bonding, protecting learning and results programs like family resource centers and Gifted and Talented programs, and holding down state debt.

Rand defended the proposal’s handling of the pension issue—including the proposal’s elimination of the permanent fund proposed by the Governor.

“Our theory was, why wait? Why are we waiting? Why aren’t we investing in teachers’ retirement now? We have the money, it’s there. Why just let it sit in escrow, for what purpose? … That’s why we chose to fund the ARC,” said Rand.

Several amendments were proposed to HB 303 but only one in addition to the House committee substitute to the bill made it through. That was House Floor Amendment 10, sponsored by House Minority Leader Jeff Hoover, R-Jamestown, which passed by a vote of 49-46. The amendment authorizes debt service for the planned Bowling Green Veterans’ nursing home which is on track to receive federal approval, according to Rep. Michael Meredith, R-Brownsville, who presented the amendment for a vote.

Also approved by the House was the Judicial Branch budget found in HB 306, also sponsored by Rand, which passed by a vote of 51-48, and the Legislative Branch budget in HB 499, sponsored by Rand, which passed 69-31. Both of the budgets would spare the branches from 4.5 percent cuts this fiscal year but apply the budget stabilization cuts of 9 percent over the biennium as is proposed for most of the Executive Branch. The proposed cuts in both bills, said Rand, would only be applied to the branches’ nonconstitutionally-required and nonstatutorily-required duties.

HB 423, also sponsored by Rand, was passed by a vote of 63-37. Known as the “revenue bill,” the measure authorizes revenue needed to balance the Executive Branch budget as proposal in HB 303.

All bills now go to the Senate for its consideration.

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