House Republicans unveil slimmer state budget with raises but little new revenue
The state budget process advanced Thursday as House Republicans released a two-year, $24 billion spending plan that is in some ways slightly less generous than Democratic Gov. Andy Beshear’s.
“This is not the end of the process, but a step,” House budget chairman Steven Rudy, R-Paducah, told his committee as the budget bill was presented. “Our friends in the Senate will probably make a few changes as well.”
The GOP-led House — which is expected to approve the budget bill Friday — is largely ignoring Beshear’s call for new revenue, such as sports betting and business taxes, other than a pending bill to raise $50 million over the next two years with new taxes on vaping and tobacco products. It also rejected some of his suggested fund transfers.
In his budget recommendation, Beshear proposed a $2,000 pay raise for teachers, which would be a 3.7 percent increase for the average Kentucky teacher who made $53,923 in 2019. The House bill replaced that with 1 percent pay raises in each of the next two years for teachers as well as other school district employees, including office staff, cafeteria workers and bus drivers.
However, the House would keep Beshear’s recommended 1 percent pay raise in each of the next two years for state employees, who haven’t seen across-the-board raises for most of the last decade. The offices of commonwealth’s and county attorneys and property valuation administrators would be included in the 1 percent raises.
The most expensive single item in the budget is pensions, lawmakers said, from the $1.13 billion necessary to fully fund the Teachers’ Retirement System of Kentucky for this period to the roughly $20 million to help regional universities with their rising pension contribution costs.
Lawmakers are pushing a proposal to change how the state pension system — and its $14.2 billion unfunded liability — is supported in the future, with some public employers paying less than they presently do and others paying more.
The new model, included in House Bill 171, would charge public employers based on their proportionate share of the fund’s liability, rather than continuing to charge everyone the same flat rate.
The House budget includes many tens of millions of dollars to help the affected public employers carry the extra pension load they’re about to face, said Rep. James Tipton, R-Taylorsville.
“A big portion of this budget is going straight to increased retirement costs,” Tipton told reporters Thursday.
Other differences in the House budget, compared to Beshear’s proposal, include:
▪ Beshear called for the hiring of 350 new social workers at the Cabinet for Health and Family Services. The House budget would include funds to hire 100 new social workers, but it also would have money for additional pay raises to help recruit and retain these personnel.
▪ House members said they are proposing a higher per-pupil state funding rate for K-12 schools than Beshear did. This funding, known as SEEK, would rise to $4,112 by the second year of the House budget compared to $4,040 in Beshear’s budget plan.
▪ Beshear called for a 1 percent funding increase for state universities, or $17.2 million more from the General Fund over two years, freed from the controversial “performance-based funding model” that was favored by former Republican Gov. Matt Bevin, in which the universities competed against each other based on certain criteria. The House restores the performance-based funding language but adds an additional 2 percent of funding to what Beshear offered.
▪ The House would withhold $34.4 million budgeted in each of the next two years for Kentucky Wired, the statewide broadband project run by the Kentucky Communications Network Authority.
Rep. Angie Hatton, D-Whitesburg, raised concerns about the Kentucky Wired cut, asking whether it would violate a contract on the project or leave rural areas like hers without the service they once were promised, because the broadband initiative still is incomplete.
Rudy, the committee chairman, said the state approved $110 million in bond funds for Kentucky Wired in 2018. On top of that, he said, and apart from the $24 million that remains for it in the current budget bill, some public agencies are now paying Kentucky Wired for broadband service they have begun receiving, so it should be collecting income of its own.
This story was originally published March 5, 2020 at 6:38 PM.
