Senate targets teachers in ‘scorched Earth’ state budget, reduced by coronavirus
With COVID-19 wrecking the economy, the Senate budget committee late Wednesday approved a two-year, $22 billion state spending plan for Kentucky that is markedly less optimistic than the one Gov. Andy Beshear proposed in January.
“We will struggle, I think, to provide the revenue to do what I call this scorched Earth budget over the next 12 months,” state Sen. Tom Buford, R-Nicholasville, told his colleagues. “We could be down $1 billion in revenues — and I think that’s a conservative estimate — from what we collected last year.”
Certain to provide controversy: Teachers would lose the guaranteed $2,000 pay raises Beshear promised them, and $1.13 billion in funding for their pension system would be held in limbo unless “structural changes” are made to reduce benefits for new hires.
“KY teachers & school personnel are working day & night to teach kids ... yet you’re trying to do this when they can’t get into the Capital?! We’re watching,” teacher advocacy group 120 Strong tweeted immediately after the Senate committee hearing.
The state Capitol is closed to the public due to the novel coronavirus, but teacher advocates circled the Capitol in their vehicles Wednesday afternoon, honking their horns and yelling that lawmakers should pass a budget and go home.
The full Senate is expected to vote on the budget as early as Thursday, after which House and Senate members will negotiate on a final compromise version to present to Beshear. Both chambers are led by Republicans; Beshear is a Democrat.
The Senate’s version of the budget shovels $211 million more than Beshear did into the state’s “rainy day” reserve fund, preparing for new demands on state services as Kentuckians are thrown out of work; carries less debt; and includes “bumpers” to halt spending increases in certain areas if the state falls short of revenue projections.
For example, Beshear and the House budget included 1 percent pay raises in each of the next two years for state employees, most of whom haven’t seen across-the-board raises in a decade. But in the Senate budget, they would not get a raise in the second year unless the General Fund and Road Fund collect all expected sums.
When Beshear crafted his budget plan, full of pay raises for teachers and other public employees and increased spending for various programs, Kentucky had an unemployment rate of 4.3 percent, with 1.9 million people going to work each day.
However, to curb the spread of COVID-19, Beshear has ordered the closure of restaurants, bars, theaters and other leisure and hospitality businesses where people congregated — and an estimated 205,100 tax-paying Kentuckians worked, according to the U.S. Bureau of Labor Statistics.
“We are in a lot of ways in uncharted territory in terms of economic forecasting,” said University of Kentucky economist Christopher Bollinger, a member of the Consensus Forecasting Group that estimates how much the state will collect in revenue. “We haven’t seen anything like this in my lifetime, so it’s hard to guess what’s going to happen.”
The Senate budget committee has asked the state budget office for a revised revenue forecast, chairman Chris McDaniel, R-Taylor Mill, told the other senators.
“The governor did the best he could with the revenue numbers he had, the House did the best they could with the revenue numbers they had,” McDaniel said. “However, the situation now versus the situation that existed a mere two weeks ago is dramatically different in this nation, both culturally and economically.”
Among the highlights of the Senate plan, it:
▪ Steers $1.13 billion in actuarial recommended contributions for the Teachers’ Retirement System of Kentucky into the state’s Permanent Pension Fund — a holding account — unless there are cuts in the benefits provided newly hired teachers. If the benefits changes were not made by Aug. 1 of each fiscal year, then that year’s funds would go into the primary pension fund for state workers at the Kentucky Retirement Systems.
▪ Increases the SEEK per-pupil base guarantee funding for school districts to $4,161 in each fiscal year. SEEK funding would rise to $4,112 by the second year of the House budget compared to $4,040 in Beshear’s budget plan.
But the Senate plan would require school districts to use their SEEK funding to cover additional spending they might want, such as teacher pay raises and textbooks and other instructional materials. Beshear’s budget handled those items separately, earmarking funds for the $2,000 teacher raises that were a cornerstone of his election campaign last year.
▪ Cuts tens of millions of dollars in pension assistance the House had proposed for public employers that work with state government, including $23.3 million less annually for local health departments, many of which already are struggling financially.
▪ Removes $14.3 million intended for recruitment and retention of state social workers, although McDaniel said there would be adequate funds in the budget to hire 50 new social workers. Beshear’s budget called for hiring 350 social workers to deal with Kentucky’s epidemic of child abuse and neglect.
Once the two chambers agree on a budget, Beshear will have 10 days, excluding Sundays to sign it or veto items in it. Lawmakers would have to return to the Capitol to consider whether to override any gubernatorial vetoes.
Also Wednesday, the Senate budget committee approved a slimmed-down House Bill 32, which originally would have raised $94 million over the next two years with new taxes on vaping and other tobacco products, although not cigarettes.
As amended by the Senate committee, HB 32 would apply only to vape products, taxing the pods at $1.50 each and applying a wholesale tax on the liquid nicotine at 15 percent. The new version would raise an estimated $25 million over the next two years, McDaniel said.
This story was originally published March 18, 2020 at 9:21 PM.
