Budget increases for education, state employees put on hold amid coronavirus concerns

Kentucky legislators preparing the next two-year state budget in the Budget Conference Committee faced tough decisions Wednesday, as they reduced the annual appropriation by $100 million in anticipation of revenue shortfalls due to the coronavirus pandemic.

To address these budget concerns, the House and Senate members in the committee agreed to remove increases in state employee pay and K-12 and post-secondary education funding that had been included in previous versions of the budget. The areas would not see spending cuts under what was discussed Wednesday but no additional funds will be allocated.

Those decisions saved the state around $67.8 million in the first year of the budget, according to lawmakers.

The conferees decided to move forward with the most pessimistic economic prediction put forth by the consensus forecasting group back in December. Previously, legislators had agreed to use a control/optimistic projection, and the difference means they need to reduce the budget by $115.7 million in the first year and $174.5 million in the second year.

House Appropriations and Revenue Committee Chair Steven Rudy noted Kentucky looks very different this week than it did last week and even more drastically different than last month, citing multiple ways the coronavirus has transformed the economy. With thousands of Kentuckians expected to file for unemployment in the coming weeks, sales tax receipts way due to temporary business closures, and the tax filing deadline pushed back three months, the legislature is forced to make the best decisions it can while facing so much uncertainty, Rudy said.

Much of the discussions in the budget discussion revolved around differences in the House and Senate versions of the budget and language changes. Bigger items included a confirmation the full actuarially required contribution (ARC) for the pension systems will be paid, full school safety funding will likely have to be put on hold while some will be addressed, and other areas of the budget.

The in-depth budget discussions will continue on Friday.