Budget bill passes full House, heads to Senate

Spending approximately $11.9 billion in each of the next two years, the Kentucky House of Representatives passed its version the state’s two-year budget Friday with a vote of 86-10, sending House Bill 352 on to the Senate.

Sponsored by House Appropriations and Revenue Committee Chair Steven Rudy, House Bill 352 provides a one percent salary increase for all state and school district employees, including teachers, and also fully funds the actuarially required contribution to the Kentucky Teachers Retirement System. It includes $61.7 million for retiree health insurance premiums in fiscal year 2021 and relies on health insurance trust assets the following fiscal year.

Rep. Rudy called the amended proposal a sound budget with a focus on education, pay raises for state employees, public pensions, and safety, without deep cuts seen in recent years.

While Governor Andy Beshear called for new revenue in his initial budget proposal from sports betting, taxes on e-cigarettes, and a hike in business taxes, the House passed its budget with the only new revenue coming from an e-cigarette and tobacco tax, booking about $23 million annually through House Bill 32.

The budget reserve trust fund, also referred to as the “rainy-day fund,” was brought to $392 million under the House version, which was an increase from the $316 proposed in Beshear’s budget. The state debt ratio sits at 5.3 percent in House Bill 352, which is consistent with the Governor’s version and still below a common standard of 6 percent.

The House budget also includes an increase in the per-pupil funding model for K-12 education, bringing the SEEK formula to $4,061 in fiscal year 2021 and $4,112 in fiscal year 2022. The budget bill passed Friday also provides $18.7 million to implement the school safety requirements of Senate Bill 1 passed in 2019 and additional funding to hire school counselors.

The budget appropriates funding from the Volkswagen Settlement for transit and school buses. School districts will be able to compete for $11.7 million for new buses, with an additional $8.4 million available for transit.

Medicaid changes in the latest version of House Bill 352 proposed raises for state workers, new and expanded grants, adjustments to the performance-based funding model for higher education (including an additional $17 million in funding), and new and expanded programs in justice and public safety.

The Kentucky Communications Network Authority, which houses the controversial Kentucky Wired program, had its funding reduced $34.4 million in each fiscal year in the House budget proposal. Rep. Rudy said the budget passed in 2018 provided $110 million in bond funding for Kentucky Wired and noted that the program is now generating revenue for service and will receive an increase in restricted funds.

The bill now advances to the Senate for further consideration and changes.