Politics & Government

House takes $480.6 million from public workers’ health plan to balance budget

A general view of the House of Representatives during the General Assembly at the Kentucky State Capitol in Frankfort, Ky., on Wednesday, January 24, 2018.
A general view of the House of Representatives during the General Assembly at the Kentucky State Capitol in Frankfort, Ky., on Wednesday, January 24, 2018.

House Republican surprised many Wednesday when they released a budget that called for tax increases to help fund education, but tax increases alone were not enough to balance their proposed two-year budget.

Republican leaders have proposed grabbing $742 million in cash earmarked for specific purposes throughout state government and dumping it into the General Fund, which pays for most of state government. That’s a 57 percent increase over the $472.3 million that Gov. Matt Bevin had proposed to transfer.

The largest transfer came from the Kentucky Employees’ Health Plan, where the House took $466.5 million over the next two years and an additional $14.1 million earmarked for the current fiscal year. Bevin had proposed taking $201.5 million from the state health plan.

“It’s just another way that we’re balancing the budget on the backs of public employees and teachers,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy. “The reason this money exists is because they cut their benefits.”

The health plan, which provides insurance for about 260,000 public workers and their families, has accumulated surpluses in recent years as health claims have dropped for public employees. Over the years, lawmakers have chosen to use that surplus to shore up the General Fund instead of providing better insurance or sending it back to cash-strapped local governments and school districts or their employees.

As of September 30, the health plan had $705 million in its trust fund.

“We’ve got an actuary that says there’s enough money to pay the claims,” said Rep. Steven Rudy, R-Paducah, who sponsored the budget bill.

Bevin’s office was not immediately available for comment about why it chose not to take as much money from the health plan.

“If there’s extra money there, why wouldn’t the governor use it?” Bailey asked.

House Republicans made several other transfers in their proposed budget, including stripping $150 million from the “permanent” pension fund created by Bevin in the last budget. Bevin had also proposed to spend that money.

The House uses the additional money, combined with about $500 million over the next two years in tax increases, to help fund K-12 education and eliminate a 6.25 percent budget cut for Kentucky colleges and universities. The money also allowed them to save some of the 70 programs Bevin targeted for elimination.

House budget chairman Steven Rudy, left, and House Speaker Pro Tem David Osborne talk with reporters on Wednesday, Feb. 28, 2018, about a 50-cent increase in the cigarette tax and a new tax on opioids in the House version of Kentucky's two-year bu

Daniel Desrochers: 502-875-3793, @drdesrochers, @BGPolitics

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