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Amended State Budget Approved by Senate with Many Changes

The state’s biennial budget plans are one step closer to becoming law after being amended and approved by the Kentucky Senate today.

Many of the changes made by the Senate to House Bill 235 -- the operational budget for the executive branch -- were aimed at reducing the state’s level of debt.  The Senate’s version of the bill would authorize $263 million in general fund debt, compared to more than a billion dollars in the House-approved version.  Proposed agency bonds were cut by more than $700 million to $270 million over the biennium.  Any debt restructuring during that time would be prohibited.

The plan would not authorize the Rupp Arena and Lexington Convention Center renovation project, or the Kentucky International Convention Center expansion in Louisville. 

As amended, the Budget Reserve Trust – or “rainy day” – Fund would increase to $125.2 million.  Any unexpended debt service authorized by the measure would also be transferred to the fund.

“The result of the strategies in the Senate budget do a number of positive things,” Senate Appropriations and Revenue Chair Bob Leeper, I-Paducah, said.

Beyond trimming the proposed state debt ratio from 7.05 percent in the House version to 6.26 percent, the proposal would also shift some educational spending projects.  The Senate plan removed proposed expansions to preschool funding, the Governor’s Scholars program and the Governor’s School for the Arts, as well as proposed funding for the creation of Commonwealth College.  It added funding for vocational education, educational technology, need-based student financial aid and the public library construction fund.

The amended bill would prohibit the use of general funds for a health benefits exchange or for expansion of the Affordable Care Act in Kentucky. 

The Senate version concurred with proposed five percent cuts to many executive branch agencies found in the Governor’s recommendation and House-approved plan.  A proposed 2.5 percent cut to the Kentucky State Police and Revenue Cabinet was also included.  Critical areas, such as secondary education, student financial aid, Medicaid and corrections, were exempt from cuts.  The Senate plan would also exempt state universities from cuts.

Both the House and Senate version of the budget proposal included the Governor’s recommendations for salary increases for state employees and full funding of the actuarially required contribution to Kentucky’s public pension system. 

The measure was approved on a vote of 25-2, with 11 members passing.  Several lawmakers casting pass votes expressed a desire for more time to closely review the bill.

The judicial branch operational budget, found separately in House Bill 238, was approved by a 31-0 vote, with seven lawmakers passing.  That measure was amended to exclude authorizations for capital projects, including the construction and renovation of judicial centers included in the previous plan.

Approved by the same vote count, House Bill 253 would authorize the legislative branch budget over the next biennium.  As amended, the measure would cut that operational budget by $6 million over the biennium, a number legislative leaders said is comparable to the five percent budget cut proposed for many executive branch agencies.

The Energy and Environment Cabinet was not pleased with the Senate's version of the biennial budget and released this statement:

“The action this evening of the Kentucky Senate to further reduce the coal severance portion of the General Fund budget for the Office of Mine Safety and Licensing (OMSL) by another 50 percent will greatly compromise the ability of OMSL to maintain current safety levels for Kentucky miners. Overall, this will significantly hurt our coal industry in Kentucky. The General Assembly, following the Darby Mine disaster, wisely increased funding for mine safety and safety training so that this would not occur in Kentucky mines. The rate of injuries and fatalities in Kentucky mines has been decreasing since that time. With the passage of the Senate version of the House budget plan, every miner in Kentucky will be put at great risk every time they enter a mine. This budget will force a reduction of approximately 55 to 60 percent in staffing for OMSL from the current 145 down to approximately 85 full-time employees. With the federal and state mandate that mine safety rescue teams be located no further than an hour away from every mine in Kentucky, 72 of the remaining 85 employees would have to be dedicated to rescue efforts for OMSL to maintain this service. The remaining number of employees cannot operate OMSL to provide our miners a safe working environment.”

The bills now go back to the House of Representatives for consideration.  If House members do not agree with the changes, lawmakers from both chambers will likely meet in conference committee to iron out differences.

From the Legislative Research Commission & the Energy and Environment Cabinet