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Budget, Labor Bills on the Menu in Frankfort

Kentucky state Capitol
Kentucky state Capitol

Crafting a state budget for the next two years will suck up most of the attention during the upcoming legislative session, which begins Tuesday. But lawmakers will also be pushing for — or against — several other key bills.

And the legislative process will be complicated by the turbulent political environment in the state Capitol.

Democratic leaders in the state House of Representatives — the last legislative chamber in the South still controlled by Democrats — will try to maintain a slim majority of seats after two defections and two resignations from their ranks.

Meanwhile, Senate Republicans and newly elected Republican Gov. Matt Bevin will push for a battery of conservative priorities, likely putting increasing political pressure on Democrats.

The Budget

Bevin has said the state must undergo across-the-board spending cuts in the next two-year spending plan. Budget architects will be looking under the couch cushions to find money to pay for Kentucky’s depleted pension systems and mounting Medicaid obligations.

Bevin and lawmakers haven’t hinted at what services or agencies will be targeted.

Bevin must submit his proposed budget by Jan. 26. The new administration says the state is facing a financial crisis and expects to have a $500 million shortfall for the upcoming two-year budget cycle.

The administration has already issued a moratorium on hiring new state employees. Bevin says his administration is reviewing currently vacant positions to determine whether they are necessary.

Fixes and Funding for the Pension Systems

The main driver of the state’s budget woes is the underfunded teacher pension fund, which currently has about 42 percent of the money it needs to make future payouts to current and future retired teachers. Teacher pension managers have requested an additional $1.35 billion over the next two years to keep the system on sound financial footing.

Another of the state’s pension funds has less than 18 percent of the money it needs to make future payouts — the worst public pension funding ratio in the nation. The Kentucky Retirement Systems non-hazardous fund holds pensions for many state, county and local employees.

Lawmakers have been divided for years over how to fix the pension system.

Democrats maintain that the state needs to put a large chunk of money into the pension systems — either by coming up with a new source of revenue or borrowing in the form of a large pension obligation bond.

Republicans have focused on structural changes. Bevin has proposed moving future employees in the pension systems onto 401(k)-style retirement plans, eliminating the guaranteed rate of return that the state provides for employees’ retirement funds.


A central plank of Bevin’s platform has been enacting a “right-to-work” policy, which would mean unionized companies wouldn’t be able to require workers to pay union dues.

The Republican-led state Senate has approved such legislation for the past few years, but it has languished in the Democrat-led House.

Supporters hope Bevin’s backing and Democrats’ dwindling House majority will mean the bill's time has come. But the legislation would still have to overcome a number of House Republicans who are wary of the measure.

Eliminating the Prevailing Wage

In Kentucky, contractors who work on state public works contracts are required to pay their employees a rate at least equal to the “prevailing wage,” an amount determined by the state’s Labor Cabinet based on what private contractors pay.

Republicans have long tried to eliminate the prevailing wage requirement, saying it inflates construction costs for the state and stymies growth. The issue’s fate will likely track that of so-called right-to-work: Supporters will have to overcome House Democrats’ slim majority and a handful of House Republicans who oppose the measure.

Local Option Sales Tax

This constitutional amendment would allow local governments to add 1 percent onto the state’s 6 percent sales tax in their jurisdictions.

The measure passed out of the state House last year but died in the Senate, after energy industry lobbyists requested an exemption from the tax. The bill hit a tailspin when other industry groups came forward requesting similar carve-outs.

Backers claim the initiative’s changes are better during the upcoming legislative session, although Bevin’s support has been tepid.

Mayor Greg Fischer, perhaps the state's biggest supporter of the local option sales tax, told WFPL News last year that he was unsure how the bill might fare under the new Republican governor.

“Right now it’s a dynamic time with him coming into office and the state understanding what his priorities might be,” said Fischer, a Democrat. “We’ll certainly be pitching, not just me but people all over the state, the importance of having a local option.”

Because the bill is a constitutional amendment, the governor wouldn’t have to sign it. But the House and Senate would have to each approve the measure with a two-thirds majority of votes.

Felon Voting Rights

As one of his final moves in office, former Gov. Steve Beshear issued an executive order that restored voting rights to an estimated 180,000 non-violent ex-felons. But Bevin rescinded the order as one of his first moves, saying the measure needed to be enacted through the legislative process.

House Democrats have for more than a decade approved various bills that would grant voting rights to people convicted of non-violent felonies who have served out their sentences. The bills have received little support in the state Senate.  Support appears to be growing for the measure; Bevin says he supports such a bill.


There is also growing support for a bill that would allow Kentuckians to clear some Class D felonies from their records. Currently, only some misdemeanors can be expunged in Kentucky.

Like the felon voting rights issue, this bill would only apply to those convicted of committing non-violent crimes. Individuals would only become eligible 5 years after completing their sentence.

The Administrative Office of the Courts estimates that more than 100,000 Kentuckians would become eligible for expungement under the proposed law.

Expungement has gained steam in Louisville, with a coalition of business, civil rights and religious groups publicly supporting the legislation. They say criminal records block job prospects, even after those convicted of crimes have served their sentences. They are painting the issue as an economic opportunity, not just a civil rights matter.

On the campaign trail, Bevin said he would support expanding expungement. The bill has passed out of the House for the last several years but received little support in the Senate.