State lawmakers have come to an agreement on a budget that makes nearly across-the-board spending cuts, enacts performance funding for higher education and puts more money into the ailing state pension systems.
House Speaker Greg Stumbo called it “an adequate and effective blend” of the House, Senate and Gov. Matt Bevin’s budget priorities.
Senate President Robert Stivers said the bill was ready for a vote.
"I believe we have an agreement on all issues related to the budget," Stivers said.
The final document is expected to be approved by both legislative chambers on Friday, the last day of the General Assembly.
Lawmakers did not have specific appropriation amounts available when they announced the budget compromise at about 3 a.m. on Thursday, but they gave details of many of the priorities.
Sen. Chris McDaniel, chair of the Senate Appropriations Committee, said the plan put more than $1 billion into the state pension systems.
“Higher than pensions have ever been funded,” McDaniel said.
The spending plan includes most of the priorities Bevin laid out in his budget address in January: 9 percent spending cuts over the next two years and a “permanent fund” to save money for the pension systems. Lawmakers wouldn’t say how much would be put into the permanent fund, but they said it would be “codified” as a receptacle for surplus money and windfalls from legal settlements.
Higher education would be partially shielded from the cuts under the agreement. State universities and community colleges would be cut by 4.5 percent over the next two years instead of the governor’s proposed 9 percent.
State colleges and universities -- except for Kentucky State University -- would also compete with each other for a portion of their funding, another one of the governor’s priorities.
Bevin has already cut state colleges and universities by 4.5 percent during the current fiscal year. Democratic Attorney General Andy Beshear filed suit against the administration this week over the move, saying the governor can’t cut an already enacted budget unless the state is projected to have a revenue shortfall, which it does not.
The compromise budget sets aside about $25 million for a free community college tuition program to Kentucky high school graduates who maintain at least a 2.5 GPA.
K-12 education funding is totally shielded from the cuts.
Lawmakers increased the amount of coal severance tax revenue that would be sent back to coal-producing counties from 50 percent to 60 percent, though lawmakers say the criteria for projects funded by the revenue would be “different.”
Other provisions included in the budget proposal:
- The budget boosts salaries for state police and restores some of the cuts proposed to the Judicial Branch.
- A $60 million bond to help Lexington expand its downtown convention center was included — contingent on the legislature passing a companion bill on Friday.
- Not included in the budget was $6.2 million for 44 new attorneys to help reduce caseloads in public defenders’ offices across the state.
- The registration fee for lobbyists would increase from $125 to an undisclosed amount to help fund the Executive Branch Ethics Commission.
One wrinkle in the budget process is that because lawmakers came to an agreement with only one day left in the session, they will not have an opportunity to override any line-item vetoes Bevin makes to the budget.
Stivers said he wouldn’t ask the governor to veto parts of the budget.
“We both have stronger feelings about certain aspects of the budget than others, but that’s purely a decision for the governor’s office,” he said.
Stumbo said it was Bevin’s prerogative to veto what he sees fit, but he asked the governor to leave the budget intact.
“I would hope he would bear in mind that it took a great deal of effort for us to get here given how far we were apart, both monetarily and philosophically,” he said.
Bevin thanked the budget conferees in a statement released early Thursday morning.
"For the first time in decades, we can say that Kentucky is investing in our pension system in a meaningful way," the statement read. "We look forward to reviewing the details of the compromise and its final passage.”
