The Kentucky Senate sided with Gov. Matt Bevin on Wednesday in passing a state budget that imposes deep funding cuts to education and many other areas of government to find money for huge new outlays for Kentucky's ailing pension plans.
Sen. Chris McDaniel
The Republican-controlled chamber passed its revised version of the 2016-18 budget on a vote of 27-2, with nine Democrats voting "pass."
As it leaves the Senate, the budget bill includes the 9-percent funding cuts that Bevin originally proposed for state universities, support programs for public schools and many other state agencies. The Democrat-controlled House restored funding for those cuts in the budget bill it passed last week.
"It's not something we particularly wanted to do. It's something that we had to do," Sen. Chris McDaniel, the chairman of the Senate budget committee, said of the cuts to education. "We have got to make our primary investment in getting these pension plans solvent. The problem only gets worse and worse and worse every year."
All three versions of the budget - Bevin's, the House's and Senate's - make big new direct appropriations to address the crisis in state pension funds, which together have unfunded liabilities of more than $31 billion.
McDaniel, R-Taylor Mill, said the Senate budget appropriates more overall to pensions than the House budget did - particularly for the Kentucky Employees Retirement Systems.
And the pension watchdog group Kentucky Government Retirees released a statement later Wednesday commending the Senate's approach.
McDaniel, R-Taylor Mill, said his committee's budget is a sound one that leaves $371.5 million in the state's "rainy day" fund to protect against revenue shortages and $250 million in a new reserve fund called the "permanent fund," which is to be used to make future additional payments to pension funds. Bevin had wanted more in both funds.
But the House had left the rainy day fund at $283 million and spent all of the $500 million Bevin wanted in the permanent fund to pay for restoring the funding Bevin proposed be cut to education and other areas.
Among scores of changes it made to the budget, the Senate budget would:
» Delete all funding for the House priority of scholarships that would make community college tuition-free for high school graduates who enroll in the state's community colleges.The two senators who voted no were Reginald Thomas, D-Lexington, and Brandon Smith, R-Hazard. Thomas objected to the education cuts and the scrapping of the bond issue for Lexington's convention center. Smith protested changes made to the House budget that will reduce the amount of coal severance tax revenues that are returned to coal counties.
» Begin basing 25 percent of university funding in 2017-18 on its complex model for grading university performance.
» Delete $450,000 per year that the House added for Louisville Waterfront Development Corp.
» Delete $550,000 per year that the House added for the Home of the Innocents in Louisville.
» Delete a $65 million bond issue for renovation of the Lexington Convention Center that both Bevin and the House had included in their budgets.
» Delete funding both Bevin and the House had provided to add 44 additional attorneys for the Department of Public Advocacy.
» Restore $32 million in appropriations to the Justice Cabinet to fight the heroin abuse problem. The House had reduced this to $20 million.
» Restore two provisions Bevin had included: one that would ban any public funds going to Planned Parenthood, and one that would repeal Kentucky's law requiring prevailing wage be paid to workers on public construction projects.
» Apply the same cuts Bevin proposed for programs that support public schools like preschool, textbooks and safe schools. However, McDaniel said his committee provided more money than Bevin did for one program: Family Resource and Youth Service Centers.
The budget bill, House Bill 303, is a plan for spending about $22 billion in state tax revenues (plus additional federal and other funds) for the two-year period beginning July 1.
It now goes back to the House, which is certain to reject the Senate’s changes. That means leaders of each chamber will attempt to resolve the differences in a conference committee.
The conference committee has only a few days to accomplish that task. Wednesday was the 54th meeting day for the legislative session. Under the Kentucky Constitution, lawmakers can meet no more than 60 days in this session.
For now, legislative leaders are planning to pass a final budget bill by Tuesday. But the constitution gives them until April 15, when this session must adjourn.