Who were the biggest winners, losers of the 2014 General Assembly?

jcheves@herald-leader.comApril 19, 2014 

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    Bourbon industry: The legislature awarded a lucrative tax credit to Kentucky's booming bourbon distilleries, part of a stack of business tax breaks that are estimated to drain about $10 million a year from state revenue by 2016. Other tax break recipients include the upscale 21c Museum Hotel planned for downtown Lexington. Critics say that much of this money will be thrown at projects that were happening anyway.

    Public schools: Gov. Steve Beshear committed to restoring much of the basic K-12 school funding lost since the 2008 recession. Most of that extra money will go to long-delayed teacher pay raises. Smaller sums will be available for textbooks, teacher training and after-school services.

    Rural smokers: They won't face a statewide ban on lighting up in offices, restaurants and other public places because Rep. Susan Westrom, D-Lexington, could not round up enough support for her measure. For now, smoking bans will continue to be enacted locally, as they have been in Lexington, Frankfort, Danville, Georgetown, and Woodford, Clark and Madison counties.

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    Lexington Mayor Jim Gray: His ambitions for a $310 million "reinvention" of Rupp Arena and the attached convention center were dashed by the Senate when he couldn't publicly produce a financing plan or a signed lease with the UK men's basketball team. In the end, Lexington was ordered to repay $2.5 million in coal severance funds that it got for Rupp Arena planning and design back in 2012.

    College students: Kentucky continued to reduce spending on its universities. UK and other state schools, including the community and technical colleges, will have seen a 27 percent decline in state support from 2008 to 2016, adjusting for inflation. Tuition will have doubled at many schools, making it unaffordable for some families.

    Horse racetracks: Once again, despite support from Beshear and several House and Senate leaders, the racing industry was unable to come together behind a plan to legalize casino gambling in Kentucky. For a consolation prize, the legislature agreed to impose a lower tax rate on instant racing, an electronic game finding favor at some tracks that is soon to be found at Lexington's Keeneland Race Course and The Red Mile.

FRANKFORT — One problem facing Kentucky, state lawmakers said during the 2014 General Assembly, is that underground coal mines are too frequently inspected for safety problems.

Led by Senate Republicans, the legislature reduced the number of mandatory state inspections at each mine from six per year to four. It also slashed the budget of the Office of Mine Safety and Licensing by 30 percent, compared to 5 percent for most state agencies. Eastern Kentucky's coal industry is declining, so less regulation is needed, Senate President Robert Stivers, R-Manchester, told reporters.

It's not yet clear how the mine inspectors can absorb the losses — through layoffs and district office closures, slower responses to emergencies or other methods. The state strengthened mine inspections after a series of fatal mine disasters in the mid-2000s. Since then, mine fatalities have sharply decreased.

"We raised concerns at every step of this process about the damaging consequences these cuts could cause," said Dick Brown, spokesman for the Office of Mine Safety and Licensing. "We are now reviewing the options to implement these cuts, and we will work hard to limit the safety impacts for our miners, although we know that these reductions will undoubtedly have a detrimental impact on our mining safety programs."

Many people were left unhappy by the 2014 General Assembly that ended Tuesday.

It's an election year, and with Republicans hoping to win a House majority in November, which would give them full control of the legislature, lawmakers shied away from anything they feared could prove controversial back home. That included tax reform (although they handed out an estimated $10 million a year in tax breaks to select industries), casino gambling and a statewide smoking ban.

The session's signal achievement was a $20.3 billion, two-year budget that restored much of the K-12 school funding lost since the 2008 recession and fully paid the state's annual obligation to the Kentucky Retirement Systems, one of the nation's worst-funded public pension systems. The chief KRS account covering more than 90,600 current and former state workers is only 23 percent funded.

However, the budget was balanced only through another round of spending cuts to state agencies and public universities, as well as $1.5 billion in new debt, raising the state's projected debt ratio from 5.95 percent to a projected 6.7 percent and committing more tax money in the future to rising debt payments.

"It's the 14th round of cuts since 2008 for things like higher education, environmental protection, the attorney general's office, adult education, public health and other services meant to help people," said Jason Bailey, director of the Kentucky Center for Economic Policy in Berea.

"There was some relief for K-12 education — not enough to make up for what's been lost since 2008, but enough to keep us from sinking any further," Bailey said. "We obviously still have a lot of ground to make up in education."

Lawmakers relied on a variety of maneuvers to balance the budget, such as withdrawing $285 million from the bank accounts of various state boards and agencies and $13.6 million from the state's "rainy day" reserve fund.

They also rejected a plea from the Kentucky Teachers' Retirement System for $873 million over two years to "stabilize" the $16 billion system, which has 51 percent of the assets it's expected to need for future liabilities for 122,000 active and retired teachers. Gov. Steve Beshear didn't include the KTRS request in his budget proposal for lawmakers in January.

"Where's the money gonna come from?" Beshear asked reporters at the time. "The short answer is, we don't have any extra money to infuse into that system at this time."

Most Kentuckians aren't aware of the problems at KTRS, but it's quickly becoming a concern, said Dave Adkisson, president of the Kentucky Chamber of Commerce. Adkisson said he was disappointed the legislature not only rejected the system's plea for aid, it ignored a call by House Minority Leader Jeff Hoover, R-Jamestown, to create a task force that would study KTRS and report back for the 2015 session.

"I think KTRS is the big cloud now hanging over Frankfort," Adkisson said. "The teachers' retirement system is not yet broke, but it certainly needs our attention. Just for a matter of scale, if we snapped our fingers and tomorrow we got expanded gaming in Kentucky, this would take all of that additional revenue, and then some."

However, the legislature passed scores of other bills. They include:

■ Senate Bill 98, which creates an adult protection registry so individuals, families and care providers could see whether the Kentucky Cabinet for Health and Family Services has substantiated abuse allegations involving an employee or a prospective employee.

■ SB 109, which bans the sale of e-cigarettes to minors.

■ SB 124, which allows the hospitals at the University of Kentucky and University of Louisville to provide oil derived from marijuana and hemp to children who suffer from certain severe seizures. The benefits also could apply to adults.

■ SB 200, which encourages community-based alternatives for children younger than 18 who are charged with "status" offenses, such as skipping school or running away from home. Some judges now sentence such nonviolent offenders to detention centers.

■ House Bill 90, which requires parents or guardians to make a court appearance for any driver under age 18 who is charged with a traffic violation.

■ HB 154, which requires better training and certification for school district finance officers, some of whom have proven incapable of balancing their districts' books.

With HB 260, which Beshear signed into law April 10, Kentucky will allow all-terrain vehicle riders ages 16 and up to cross a public road without a helmet in order to get from one trail to another.

Kentucky led the nation in ATV crash fatalities, with 122 deaths between 2007 to 2011, according to a report released last winter by the Insurance Institute for Highway Safety. Most ATV deaths in Kentucky result from blunt-force trauma to the head, Kentucky State Police said.

"It's just a matter of personal choice," said Rep. Ken Upchurch, R-Monticello, who sponsored HB 260.

"We had an ATV club in my district that was having issues with that," Upchurch said. "They was riding the trails and getting citations for that (not wearing helmets) when they was crossing from one trail to the next. So this will clarify the law."

John Cheves: (859) 231-3266. Twitter: @BGPolitics. Blog: Bluegrasspolitics.bloginky.com.

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