As this year’s legislative session winds down, Kentucky lawmakers still have to make hard decisions on how the state will spend and make money over the next two years.
Republicans are solely in charge of writing the $22 billion two-year budget for the first time in state history, but leaders of the state House and Senate still disagree on the thorniest spending issues.
Many of the disagreements center on whether the state should try to generate new revenue in order to put more money into public education.
The House proposed raising the cigarette tax by 50 cents per pack and creating a new 15-cent tax on opioid pain pills — allowing them to set aside more money for K-12 and higher education.
But Senate leaders have been opposed to the tax increases so far. Senate President Robert Stivers said there isn’t room for much compromise on the issue.
“Senate members, Republicans and Democrats are very much trying to do all we can do for education, but we have to make sure we do it in a way and a budget that we don’t create a burdensome tax structure,” Stivers said.
Rep. Steve Rudy, chair of the House budget committee, said that he’s “open to discussion on everything,” even if the all of the cigarette and pain pill tax proposals don’t make it into the final revenue bill.
“We threw those out there as placeholders to generate the necessary revenues to keep from devastating public education — both K-12 and higher education — and we hope to reach some kind of consensus and agreement on part of it,” Rudy said.
So far, House and Senate budget negotiators have tentatively come to agreements on major issues like private prisons (they won’t fund new ones), the troubled KentuckyWired broadband project (it’s too expensive to discontinue) and allowing universities to bond capital projects using their own funds.
Beyond the budget, House and Senate leaders say it’s still unlikely lawmakers will make any changes to the state’s pension system after state workers forcefully opposed Senate Bill 1, the Republican plan to overhaul public retirement benefits.
As a result, Republican leaders of the Senate say they won’t advance a bill that would provide relief to local governments that have to pay larger contributions into the pension systems starting in July.
In an interview on WKDZ radio in Cadiz Tuesday morning, Gov. Matt Bevin said he wouldn’t sign the relief bill if it passed.
“If that were to pass by itself, that’s just simply saying we’re going to kick this problem down the road,” Bevin said. “We’re not going to do that, I would never sign that bill. Because yes, it would give relief to people. It would give relief by pretending the problem doesn’t exist.”
Last fall, state officials adopted more pessimistic assumptions for the pension systems — forecasting they would make less from investments and employee contributions than previously predicted.
As a result, local governments, school districts, universities and other quasi-governmental agencies will have to contribute about 50 or 60 percent more into the pension systems.
Local officials have warned that the increased contributions would create major cash flow problems without a relief bill.
Lawmakers have altered their official schedule to allow more time to negotiate on the budget.
Instead of convening on Wednesday for the 57th day of the 60-day legislative session, they will meet on Thursday.
Senate President Stivers also indicated lawmakers would likely convene on Monday, April 2 for the 58th legislative day in order to pass the compromise budget out of the House and Senate.
They are already scheduled to meet on April 12 and 13 for the final two days of the session in order to consider overriding any vetoes Bevin makes to the budget or other bills.