State budget deal reached, Chamber says pension funding should send positive signal to Wall Street
After many hours behind closed doors working to hammer out specifics of the state’s next two-year budget, legislative leaders reached a deal at around 3 a.m. Thursday that brings into play many of the main priorities of the House, Senate and Gov. Matt Bevin.
The agreement was reached in time to get the large budget document printed and delivered to each member of the legislature for a vote on Friday afternoon.
The Kentucky Chamber is “generally very pleased with the budget compromise,” said President and CEO Dave Adkisson, who offered additional comments on other elements of the spending plan:
- Pensions– More than $1 billion in funding for the state’s ailing retirement systems and new “permanent fund” with money to go toward the pension systems in the future.
- “This is the most responsible budget in years because it deals with our pension problems head-on. This budget should send a strong signal to Wall Street that Kentucky is acknowledging the severity of its pension obligations and is making a serious down payment toward a longer-term solution. We don’t know whether it will prevent another bond rating downgrade, but Wall Street has got to notice – and hopefully reward – our demonstration of increased budget discipline and that fact that we’re making serious payments toward our pension obligations.”
- Higher Education– Cuts to higher education at 4.5% each year—a compromise from the originally proposed 9% cuts and the desire of the House to hold the state’s colleges and universities harmless.
- “While we regret the cuts to higher education, we are pleased with the compromise that softens the blow to our community colleges and our universities.”
- Performance Based Funding– Criteria for a performance-based funding model for the state’s colleges and universities.
- “We are pleased to see that the Chamber’s call for performance based funding for higher education will be initiated with this budget, and we are eager to see the details of how it will be structured for the future.”
- Workforce– A $100 million bond pool for workforce development—a proposal from the governor which legislators added specific criteria to including only allowing one project per congressional district.
- “The most common challenge facing Kentucky businesses is finding employees with the right skills for the modern workforce. This budget should help develop new ways to improve Kentucky’s talent pipeline.”
- Rainy Day Fund– “This budget increases the amount of money set aside in reserves, demonstrating a more fiscally responsible approach to budgeting.”
Other items in the agreement include:
- $25 million for the “Work Ready” scholarship program proposed by the House to provide free tuition to the state’s community and technical colleges for incoming students
- Fully restoring any cuts to K-12 education
- Maintaining the 4.5% cuts across many state government agencies
- An agreement on the state’s two-year Road Fund
Much more is included in the budget agreement which lawmakers will vote on Friday, the final day of the 2016 legislative session.
Because of the decision to work through the veto period, the governor will now have the ability to veto parts of the budget without the possibility of legislative override. That means the final version of the budget could differ from what the legislature approves.
For more details on the agreement and reaction from legislative leaders and the governor, read cn|2 Reporter Kevin Wheatley’s story on the late night deal here.
The Bottom Line will continue to monitor the budget and other legislative action on the final day of the session. Check back on The Bottom Line Friday for the latest news and updates from the halls of the capitol.