“No Tougher Year.” Legislature passes one-year budget and road plan in a cloud of uncertainty

On Wednesday, the General Assembly completed its constitutional directive to pass a balanced budget. In what is an unprecedented but not surprising move, the budget only dictates spending for one fiscal year beginning July 1, 2020, instead of two years. In discussing the one-year spending plan, Senators acknowledged the considerable uncertainty they face in revenue projection.

While describing his yes vote, Senate Majority Floor Leader Damon Thayer indicated the budget was “assembled with the best information at this time.” He recognized the need for returning next year to craft the budget for the second year of the biennium and explained this plan sets the legislature up to tackle budgeting for three years in a row.

Senate President Robert Stivers joined his fellow senators on the floor to further explain how the uncertainty of revenue will leave Governor Andy Beshear with the challenge of executing a budget built on $11.6 billion in revenue, which is likely too high.

President Stivers explained there has been “no tougher year” in trying to create a balance of safety, constitutional directives, and policy for 4.5 million people.

House Appropriations and Revenue Committee Chair Steven Rudy painted a similar picture of Kentucky’s budget situation in his comments to the House, which adopted new rules allowing members to record votes via text so long as they remained on the Capitol premises. Most members quietly retreated to their annex offices to watch televised proceedings and cast their votes.

“We are passing this budget knowing its not pessimistic enough,” Rudy said. “We thought we were going to give raises. We thought we were going to stop the cuts. We are not satisfied with this budget, but we do believe this is the best we could make of the situation at this time.”

The General Assembly also passed the two-year road plan and transportation budget. Senate Transportation Chair Ernie Harris explained that the plan maximized state funds available to match federal dollars and noted the expiration of toll credits this year, which were typically used as a match for federal dollars. He also explained that if the federal government provided increased transportation funds as part of a COVID-19 stimulus, those projects receiving federal and state dollars could utilize new federal transportation dollars, which would free up state dollars.

The plan is over-programmed by 119 percent, meaning more projects are authorized than funds are available.

Chair Rudy presented the amended House Bill 354 in the House, saying that while they did not intend to over-program state projects to the actual level in the bill, that they were doing the best they could with the numbers that they had.

Legislative activity concluded Wednesday with the House sending House Bill 356, the Judicial Branch Budget and House Bill 351, the amended revenue bill, to the Governor’s desk. The revenue bill was amended in the conference committee, and the main changes address a nonprofit property taxation issue related to masonic homes and implement language from House Bill 32, a measure imposing taxes on e-cigarettes. Under the new e-cig tax language, a 15-percent tax will be applied to vaping systems, as well as a $1.50 tax on pods.

The legislature will reconvene on April 15 to pass any additional legislation and override any vetoes from Gov. Beshear. Stay tuned to The Bottom Line for legislative updates.