New state budget plan lets KY lawmakers control COVID-19 relief money, not Beshear
The Republican-led Kentucky General Assembly quietly released its proposed state budget Saturday, a one-year continuation plan that puts off decisions on how to spend billions of dollars in federal COVID-19 relief money that will come from the American Rescue Plan.
Sen. Chris McDaniel, R-Taylor Mill, said the nearly $12 billion budget is “95 percent” a continuation of the budget the General Assembly passed in 2020 while in the unpredictable throes of the coronavirus pandemic. On Saturday, he said uncertainty about the country’s economic future continues to hamper their ability to plan.
“By and large we did not want to make a lot of commitments based on a complete economic recovery before we are there,” McDaniel said.
The budget does not allocate any of the $2.4 billion the state is expected to receive in COVID-19 relief from the federal government, but it gives the General Assembly the “express authority” over how the money is spent. That move severely handcuffs Gov. Andy Beshear, a Democrat who was able to use the previous $2.4 billion package from last April to set up myriad programs, such as an eviction relief fund and statewide systems for COVID-19 testing, contract tracing and vaccine distribution.
McDaniel said the provision only deals with money the state government has flexibility in spending, not federal money that flows through the state and is directly allocated to city and county governments.
The legislature has only four days left in their 30-day legislative session — this Monday and Tuesday and March 29 and 30. It’s unclear whether the General Assembly and governor’s office would be able to come to an agreement on how the $2.4 billion should be spent before they are required to close the session on March 30.
If not, a special legislative session to allocate the federal stimulus money would likely be needed.
When asked about that possibility, McDaniel demurred.
“Ideally, we’d be able to come up with some agreements here in the final veto days,” McDaniel said.
Crystal Staley, Beshear’s spokeswoman, said the governor has been in discussions with House and Senate leaders and that he plans to continue the discussions Monday.
“With our country in a recession, the governor does not believe we should be timid, but instead use these dollars to build the better Kentucky we all deserve,” Staley said.
Senate Minority Floor Leader Morgan McGarvey, D-Louisville, said he isn’t convinced this will be the final version of the budget and that he believes there will be another version that factors in the federal stimulus money.
“If this is the final budget, I’m outraged,” McGarvey said. “This is a once in a generation opportunity for us to meet the needs of Kentuckians and make a meaningful impact on the future. We should reach across the aisle and across the state to build consensus so we can rise and meet this moment.”
The House and Senate leaders who have been hammering out details of the executive-branch budget behind closed doors for weeks unveiled their plan on the Legislative Research Commission website without any public meeting to vote on or explain the lengthy document. They also made no public announcement and held no news conference to answer questions from the media.
Members of the House and Senate are expected to vote on the bill this coming week and send it to Beshear for his consideration. The governor has the power to issue line-item vetoes in a budget, but Republicans hold large majorities in both chambers and would likely override any changes Beshear makes.
The budget plan for the fiscal year that starts July 1 is similar to the budget for this year, but it differs dramatically from the budget proposed in January by Beshear.
There are no across-the-board raises for teachers and most state workers, as Beshear proposed. Instead, workers in only three areas of state government would get raises: the Kentucky State Police crime lab, the medical examiners office, and retention and incentive pay for Kentucky State Police troopers.
“I think raises will be difficult for anyone in this environment,” McDaniel said earlier this week. “Very few folks in the private sector have seen a raise.”
The total amount going into higher education will stay at current levels, but the General Assembly put $20 million into a performance based funding model that requires universities to meet certain goals to get the money, McDaniel said. Beshear had proposed a 2 percent increase for the state’s public universities.
The SEEK formula, which determines how money is spent on public schools, would have about $26.8 million less than in the current fiscal year. McDaniel said the decrease comes as the federal government is directly allocating $1.9 billion to the Kentucky Department of Education.
Beshear had proposed increasing the SEEK formula by 1 percent.
The new budget bill also removes $47.5 million Beshear proposed spending to replace the state’s antiquated unemployment claims system, which has struggled to process the high number of claims that came during the pandemic, and $50 million Beshear proposed setting aside for a broadband deployment fund. Separately, though the House of Representatives has passed a bill that would provide $250 million to increase internet access in Kentucky.
The bill adds $608.5 million to the “Rainy Day” budget reserve fund in fiscal year 2021, compared to the $100 million Beshear added. Beshear’s proposal already would have put the rainy day fund at an all-time high.
Some other highlights of the legislature’s budget plan include:
▪ $500,000 for security for Attorney General Daniel Cameron.
▪ $343,000 to support security upgrades for the Capitol campus.
▪ $500,000 for rape crisis centers, $500,000 for domestic violence centers and $1.6 million for childcare assistance.
▪ A reimbursement rate increase to nursing homes of $29 a resident per day for Medicaid eligible nursing home residents for coronavirus pandemic relief.
▪ The School Facilities Construction Commission will offer assistance to several school districts, including $19.7 million for Mason County Middle School, $12.9 million to Garrison Elementary in Lewis County, $7.5 million to Clearfield Elementary in Rowan County and $7.2 million to Green County High School.
▪ $1.76 million for preliminary work on the Bluegrass Station Industrial Airport and Airpark project in Fayette County.
▪ $33 million for debt service on previously issued bonds for the Teachers’ Retirement System.
▪ $1.5 million for the Operation UNITE drug program from the settlement funds of a lawsuit against drug maker Purdue Pharma.
▪ $11.2 million to make lease payments for Eastern State Hospital in Lexington.
▪ No General Fund appropriation for the Commission on Women.
Democrats said they would like to see the state spend more money with the unprecedented relief they’ve gotten from the federal government.
“We have a billion dollars in the rainy day fund when most Kentuckians are bailing water out of their basement with a broken sump pump,” McGarvey said.
This story was originally published March 13, 2021 at 12:16 PM.
