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Tough budget session ahead for Kentucky legislators

By DANIEL ELLIOTT

State Representative 

FRANKFORT — It was 2018 when Kentucky lawmakers last put together a two-year state budget for the Commonwealth. More than three months were spent poring over budget forecasts, combing through state agency budget requests and reaching agreement on a statewide spending package of around $23 billion.

Now lawmakers are back in Frankfort preparing to work on a multi-billion-dollar budget to carry us through 2022, but it won’t be an easy task. Demands placed on state government by public pensions, criminal justice, education and other costs continue to outpace revenue growth in some areas. There has even been talk of a possible $1.1 billion budget shortfall, based on an Executive Branch memo received by state lawmakers last year.

If lawmakers determine that a budget shortfall is likely over the next two years, the next state budget will reflect that — but more data will need to be considered before such a determination is made. That data will come from Legislative Branch staff and other sources in coming weeks, giving lawmakers a firm footing for this session’s budgetary balancing act.

This is not a new process. Ensuring that revenues line up with spending has always been a challenge for lawmakers. Fortunately, there are options available that give lawmakers some leeway, with tightened spending, new or expanded revenue streams, and tax-reform measures among them.

Proposals that put some of these options on the table were being filed as lawmakers began their 2020 regular session this week — certain exemptions, exclusions, and/or credits for existing taxes, along with a proposed constitutional amendment on expanded gaming and proposals for sports wagering are among the bills introduced so far. It will be up to lawmakers to decide which proposals, if any, can pass legislative muster.

Anyone who takes a hard look at the state budget will notice most of the state’s general fund dollars go to a few big needs. Education, which consumes approximately 43% of state general-fund dollars, is historically the largest expense, followed by Medicaid at around 16.8%. Coming in at around third place is the cost of public pensions, which some estimate consume as much as 14 percent of the general fund, with criminal justice close behind at around 12 percent. But it’s only been in the last decade or so that biennial state appropriations for public pensions have grown to what they are today.

Public pensions were, in fact, fully or nearly fully funded until around the time of the Great Recession in 2008. Pension system investment losses and funding issues led to massive state appropriations being approved over the past decade to keep the pension systems afloat, with at least $1 billion more per year appropriated to the systems today than five years ago.

And public pension needs will continue to dominate budget and other policy talks in Frankfort this session, with some bills regarding the state pension systems already introduced. Those bills now await consideration, along with proposals that could impact other top funding priorities, like education.

Dozens of education bills have been introduced in the past few days alone, including proposals to make completion of the FAFSA (Free Application for Federal Student Aid) form a high-school graduation requirement, change the state kindergarten requirement to full-day instruction, and provide incentives for high-school students who wish to pursue a military career. More bill filings will follow in the days and weeks ahead.

There is also some expectation this session that lawmakers will consider funding for 2019 Senate Bill 1, the comprehensive school safety bill passed into law by the General Assembly last year. The legislation — which requires improved security at school entrances, an increase in school resource officers and guidance counselors, and the appointment of a state school security marshal, now in place — remains a priority for many lawmakers, and a likely contender for funding in the next state budget.

Another top issue for many lawmakers this session is restoration of felon voting rights. At least three proposed constitutional amendments concerning the issue have been filed for legislative consideration so far, including proposals in both the House and the Senate.

Lawmakers will spend the 56 days remaining in this session considering these issues and more, as dozens more bills and resolutions expected to be filed before the last day to file legislation in the House and the Senate arrives in early March.

 

Daniel Elliott represents Boyle and Casey counties in the Kentucky House of Representatives. Messages can be left for him on the toll-free legislative message line, (800) 372-7181.