Legislative Update March 12, 2010

FRANKFORT – The oft-times sticky job of late-session policymaking has produced a $17.5 billion House budget plan that would free up billions of dollars for infrastructure and critical needs while erasing a looming $1 billion-plus budget shortfall facing the Commonwealth over the next two years.

Supporters of House Bill 290, which passed the House by a vote of 65-33 on Wednesday, say the bill will keep the Executive Branch running smoothly through 2012 without merit employee layoffs or furloughs. It does so by trimming agency and higher education spending, drawing down revenue from existing revenue sources, and various business-tax code tweaks.

It also provides for over $2 billion in bond issues for school construction, roads and water-and-sewer infrastructure.

The House did not propose any cuts to the state corrections budget, the base school funding formula or state Medicaid—three areas we always try to spare—but it does require that the state take a closer look at spending in areas like Medicaid, personal service contracts and the hiring of political appointees (which would be rolled back to 2007 employment levels under the plan).

Existing revenue used to beef up the House budget plan would come from over $370 million in some business-tax adjustments we passed last week, about $40 million in one year’s worth of excess base SEEK school funds, about $250 million in anticipated federal stimulus dollars for Medicaid and about $150 million from tweaks to the state employee insurance program.

As far as new spending goes, the House plan would take care of some critical needs not addressed in the governor’s original budget plan, including much-needed protections for social workers and social service aides who often have to work in dangerous and even deadly situations. To help these front-line social workers, the House plan budgets $20 million over the biennium to restore funding for social workers safety measures that were authorized in a 2007 bill named in honor of slain social-work aide Boni Frederick. Other funding for human services in our plan that was left out of the governor’s earlier proposed budget includes $700,000 to fund newborn vision screenings in addition to the hearing screenings now required, and $2 million for aging services to support the Meals on Wheels program that provides hot meals to senior citizens.

Education would also receive some funding not found in the governor’s rejected plan, including an additional $1.1 million in each year of the biennium for Family Resources and Youth Service Centers and $2 million over the next two years for Kentucky Education Television.

Kentucky’s public school system has historically been the  largest spending item in the state budget, though the financial demands placed on the state by the its burgeoning prison system is growing incredibly fast—about 11 percent faster than overall state government spending, according to a 2009 report by the Kentucky Chamber of Commerce. The House hopes to save around $30 million in Corrections spending over the biennium by ordering the Department of Corrections to parole 1,000 nonviolent inmates by the start of fiscal year 2012. Doing so, lawmakers hope, will help the state avoid making what could be much more painful future cuts to the corrections system.

Concern about the Commonwealth’s underfunded state employee retirement system also plagues Kentucky lawmakers. Years of dwindling state revenues have made it practically impossible for the state to honor both its recommended contribution to the retirement system and Kentucky’s mounting costs in other areas. The House plan would meet this challenge over the biennium, however, by fully funding the retirement system as recommended and lessening problems in the system further down the road. The plan would also restore funding to the teachers’ retirement system that had been removed to cover health insurance costs.

Other areas of state government that will see budget improvements as a result of the House plan, supporters say, are vocational education, funding to prepare for base realignment and closure relocations at Fort Knox, energy development and agriculture, to name a few.

Like all House budget plans, this budget plan must be approved by the Senate before it can take effect. And as in most budget years, it is unlikely the Senate will leave the House budget unchanged. The Senate is expected to make significant changes of its own to the plan within the next several days and return the amended budget to the House. At that point, the final chapter of the 2010-2012 state budget process will begin, with lawmakers from both chambers meeting to work through budget challenges and reach agreement on a single bill. It is that bill that will carry most of state government financially through the next two years.

The House also voted this week to pass a two-year state road plan that includes more than $3 billion for road projects. Projects in the plan are part of a larger six-year road plan, although projects scheduled for the last four “out” years of the six-year plan were included in separate legislation also passed by the House. Budget leaders said projects outside of the immediate two-year plan will become priorities as the state’s budget outlook improves.

The Judicial and Legislative branch budgets—both which are significantly smaller than the Executive budget but would also undergo some financial belt-tightening over the next biennium—also cleared the House on Wednesday by votes of 97-0 and 97-1 respectively.

Please continue to  stay informed of action in the House budget committee and all other legislative action during the 2010 Regular Session by checking our website, www.lrc.ky.gov, or by calling the LRC toll-free Bill Status Line at 866-840-2835. To find out when a committee meeting is scheduled, check the website or call the LRC toll-free Meeting Information Line at 800-633-9650.

If you would like to share your comments or concerns with me or another legislator about a particular bill under consideration this session, please feel free to call the Legislative Message Line at 800-372-7181. You can also write to any legislator by sending a letter with your lawmaker’s name on it to: Legislative Offices, 701 Capitol Ave., Frankfort, KY 40601.

Paid for by Dennis Keene for State Representative Campaign
LRC photos courtesy of LRC Public Information