The Kentucky General Assembly gave final passage Thursday to an executive branch budget bill spending roughly $30 billion over the next two fiscal years from the state’s General Fund.
Members of the Republican supermajority touted House Bill 6 as a historic investment in education, though Democrats criticized it for not mandating 11% raises for all K-12 public school employees and universal pre-K, as was advocated by Gov. Andy Beshear.
A conference committee made up of House and Senate legislative leaders crafted a compromise bill Wednesday to reconcile differences in the versions of HB 6 previously passed in each chamber. The Senate passed it by a nearly unanimous vote Wednesday evening and the House followed suit Thursday, sending HB 6 to the governor for his signature or veto.
The passage of HB 6 comes on the final legislative day before the governor’s veto period begins Friday, with lawmakers having the ability to overturn any potential vetoes on the final two days of the session in April.
The final version of HB 6 increased public education spending from previous versions of the bill, now raising the per-student SEEK funding formula of K-12 public schools by 3% and 6% in the next two fiscal years. It also increased spending on public school districts’ transportation costs, covering 90% of those in the first year and 100% in the second, based on the current year’s levels.
Clearing the chamber late Wednesday, Republican Sen. David Givens of Greensburg called HB 6 “the best education funded budget in the history of the Commonwealth” and said he was excited about the message it was sending to current and prospective teachers.
“Current teachers that may be thinking about retiring — don't,” Givens said. “Don't retire. Number one, we need you in the classroom. And number two, we're gonna reward you. These pay raises will have such a positive impact on your pension when you retire.”
Democratic Sen. Reginald Thomas of Lexington said the budget didn’t go far enough for education, as they should have tapped into the state’s record surplus and budget reserve trust fund to direct funding outside of the SEEK formula to mandate districts give 11% raises to all school staff.
“It confounds me and confuses me that we can't find the will and the way to fund those professionals who educate our children and grandchildren, who want to prepare those children to be the next generation of leaders in our state,” Thomas said.
GOP Senate President Robert Stivers from Manchester said it was not wise to “tinker with” the state’s SEEK formula, as what was advocated by Thomas and Beshear could create disparate levels of funding for different districts and run afoul of state law.
“This is a solid budget,” Stivers said. “It is the best budget that has been proposed or passed by the General Assembly.”
Elsewhere in HB 6, language that was inserted in the House to defund a state program directing people to drug treatment instead of jail was removed from the final bill. A last-minute amendment in January prohibited funding for the Alternative Sentencing Worker Program within the Kentucky Department of Public Advocacy, which employs social workers who coordinate with court officials on treatment plans for defendants. The program and its funding will continue with the removal of that language from HB 6.
A late amendment in the Senate that could have entirely defunded Kentucky’s new Office of Medical Cannabis was also changed in the final version of the bill, most likely freeing up that funding.
The previous version said the office could only receive funds if there is “a propensity of federal and international peer reviewed, published research with conclusive evidence as to the efficacy of medical cannabis.” The final bill changes that language to say funding is allowed when its oversight board of physicians and advisors finds “a propensity of peer-reviewed, published research with sufficient evidence as to the efficacy of medical cannabis” — a much lower bar.
The budget bill also left out significant funding sought by GOP Sen. Danny Carroll of Benton to expand child care and build new youth detention facilities. Carroll was pushing for $300 million of additional funding for child care providers to prevent many from going out of business in the wake of federal grants expiring, as well as more than $100 million to construct two new detention facilities for girls and another facility for high-risk youth. Neither request was funded.
The bill also creates an additional 750 Medicaid waivers slots to allow people to remain in their home instead of being institutionalized.
Lawmakers on Thursday are also expected to finalize and pass another state budget bill and revenue bill that are still in a conference committee to hammer out a compromise between the chambers.
House Bill 1 originally appropriated $1.8 billion from the state’s budget reserve trust fund for one-time infrastructure spending projects and public pension payments, but the Senate amended the bill to add another $1.7 billion for specific projects.
House Bill 8, the state revenue bill, contained language to change Kentucky’s 2022 law that set up a trigger mechanism to potentially lower the income tax rate by half a percent each year if certain budget thresholds are met. Kentucky’s tax rate has already dropped to 4%, though the state did not hit that threshold last summer because General Fund spending was $435 million too high in that fiscal year.
Though the trigger law already exempts spending to pay down the state’s public pension debt, HB 8 would now exclude any appropriation from the budget reserve trust fund, so long as it is specifically identified in a spending bill as not being subject to the trigger law.
This mechanism is in both versions of HB 1, as they use “notwithstanding” language to disregard the trigger law and say the non-pension appropriations do not count as General Fund spending under it.
Republicans’ longtime goal is to eliminate the income tax, with Senate budget committee chairman Chris McDaniel saying earlier this month they tried to keep spending low enough to improve the odds of hitting future tax cut triggers.
The House gave final passage to HB 6 Friday afternoon by a 72-26 vote, with most Democrats and eight Republicans voting against it.
Democratic Rep. Chad Aull of Lexington referenced these tax cut triggers in his floor speech against the bill, saying Kentucky is falling behind neighboring states on teachers’ salaries and universal pre-K because of Republicans’ pursuit of tax cuts.
“We have decided, as a body, our top priority is to hit these artificial triggers so we can cut the income tax,” Aull said. “That’s our top priority. It’s not our schools. It’s not our kids. It’s not the citizens of the Commonwealth of Kentucky.”
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