Kentucky House, Senate pass budgets

Special session not likely

By Kevin Wheatley, Published:

The process wasn’t always pretty, but lawmakers adjourned Monday after passing by wide margins compromise budgets for Kentucky’s executive, judicial and legislative branches.

And for the first time in recent memory, a budget session is nearing its end without the specter of a special session as midnight April 16 approaches. Lawmakers must pass spending plans by April 15, and failures to do so have prompted swift returns to Frankfort in the past.

Now the legislature will wait as Gov. Steve Beshear considers whether to uncap his veto pen for bills enrolled by the General Assembly during a recess until April 14. House Speaker Greg Stumbo said his chamber would “take a very serious look” at any vetoes made by Beshear “in light of legislative independence.”

Whether the Democrat-led House would override the Democratic governor’s budget vetoes proved a sticking point early during budget negotiations this weekend as Senate President Robert Stivers, R-Manchester, sought a firm commitment from Stumbo.

Voices were raised and tempers sometimes flared, but legislative leaders said they were pleased with the final products, namely the $20.3 billion biennial state budget.

“It’s been an experience to stay up for 24, 25, 26 hours in a row,” Stivers said during a speech on the Senate floor. “… But it is, as I said, an amazing process.”

Breakdowns in that process are sometimes alarming, Stumbo said, but he said he was proud of the final products and the work and compromise that went into them.

“It worked here,” Stumbo, D-Prestonsburg, told reporters. “That room (the budget conference committee that met in a marathon 18-hour session Saturday and Sunday) was democracy at its finest. People with different ideas, different visions, coming from different parts of the state, obviously different backgrounds, different geographies; representing really different people, to be honest with you.

“But what made it work was that everybody wanted it to work.”

House Bill 235, the $20.3 billion biennial state budget, includes tiered pay raises for state workers in the plan’s first year and a flat 1 percent for all employees in the second. Public school teachers and employees, too, will see a boost in their paychecks, with 1 percent raises slated for fiscal year 2015 and 2 percent raises the next year, while districts would have flexibility to shuffle funds to finance the salary increases.

HB 235 also calls for full actuarially required contributions to the Kentucky Retirement Systems as mandated in a pension reform package passed last year.

The move drew praise from a state retiree group, which has expressed concerns in the past of lawmakers underfunding the state pension system.

“The legislature and Gov. Beshear have followed through on a commitment made last year to stabilize the financially fragile pension fund covering most state employees,” Jim Carroll of Kentucky Government Retirees said in a statement. “In future sessions, we hope Frankfort will secure a dedicated funding source for pensions, so that employer contributions are not subject to the inevitable fiscal uncertainty of an irrational budget process.”

The state budget also provides $400,000 for the Personnel Cabinet and the Cabinet for Health and Family Services to launch cost-saving demonstration projects, with goals of cutting 10 percent of the $1.5 billion spent on health care for public workers, teachers and retirees, and 5 percent from the $8 billion Medicaid budget. That puts the potential windfall at $550 million.

Sen. Julian Carroll said he has been working to find health care savings for the state since he joined the legislature in 2005. Toyota’s lean system employed in its manufacturing process — wherein employees have the ability to halt the assembly line if vehicle problems are spotted — inspired Carroll to seek efficiencies in state government’s administration of health care, he said, and any potential solution would be required to maintain premiums and benefits for recipients.

The state would issue requests for information and proposals for the projects, which must be ready by 2015, said Carroll, D-Frankfort. The projects would examine efficiencies of providers, not consumers, he said.

“I’m optimistic it’s going to show us that we can save some money,” he said, noting some go to hospitals and emergency rooms for preventable ailments. “... No other state has ever done this as a state project. I’ve not found any state that has attempted to take a look at applying the Toyota lean system concept to health care. I’ve only found one major project were it was tried.”

Other highlights of the budget include:

>Cutting many state agencies 5 percent.

>Authorizing $743 million in General Fund-supported bond projects and $721 million agency-bonded projects, with a 6.7 percent debt ratio.

>Increasing SEEK per-pupil funding from $3,827 to $3,911 in fiscal year 2015 and $3,981 the next.

>Providing $18.7 million in fiscal year 2016 to expand preschool eligibility for 4-year-old children who live in families within 160 percent of the federal poverty line.

>Recommending funds paid to finance debt for the Kentucky Teachers’ Retirement System be used in future years for the pension systems’ unfunded liability once the aforementioned bonds are retired.

>Providing $96 million in the biennium to restore childcare subsidies scaled back by the federal government.

>Cutting 1.5 percent from public universities and the community college network. Universities would have one General Fund-supported bond project and another bonded by the university under the plan.

>Providing $30 million in bonds for the Next Generation Kentucky Information Highway.

>Providing nearly $1.8 million to contract 15 retired Kentucky State Police troopers for the law enforcement agency’s Trooper R program.

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