Kentucky lawmakers will consider whether to override Gov. Matt Bevin’s vetoes of the state budget and revenue bills and whether to pass any other last-minute bills during the final two days of this year’s legislative session on Friday and Saturday.
Plus, teachers are expected to descend on the state capitol for another rally Friday after Bevin signed controversial changes to public employee pension benefits into law earlier this week.
On WHAS Radio Tuesday evening, Bevin floated the idea of continuing the budget and tax reform talks in a special legislative session that would take place in the coming months.
“Whether we get it done in the next couple days, whether we get it done within the next couple months, it’ll get done before the fiscal year ends and that’s what’s important,” Bevin said.
The legislature is constitutionally required to pass a balanced budget by the time the next fiscal year starts on July 1.
This is the first time that Republicans have had control of both legislative chambers and the governor's office and been in charge of writing the state budget. But they've still found plenty to disagree on.
Bevin vetoed the two-year state budget on Monday, saying it “ignores fiscal reality” by spending $600 million more than his proposed budget and funding programs using dollars from the rainy day fund or a surplus.
He also vetoed the two-year revenue bill, which helped fund some of those spending increases with a series of tax hikes on previously untaxed services like automotive repairs, pet grooming and country club dues.
That tax bill would also increase the cigarette tax by 50 cents per pack to $1.10.
In his veto message of the revenue bill, Bevin said it would “disproportionately harm small business, while failing to provide relief from other antiquated taxes that harm small business.”
Bevin’s budget director calculated that the revenue bill would bring in at least $50 million less than the legislature budgeted for.
Leaders of the House and Senate haven’t indicated whether they will try to override Bevin’s vetoes, only saying that Bevin’s interpretation of the bills were “misguided.”
“To our knowledge, the Governor has had no discussions with any legislators on the details of this budget and what he might consider to be a shortfall,” acting-House Speaker David Osborne and Senate President Robert Stivers said in a statement on Monday.
“We believe Governor Bevin would be best served to meet with legislators to understand their thoughts and rationale before making a final decision on vetoing the revenue and/or budget bills.”
It takes a constitutional majority of lawmakers in the House and Senate to override the governor’s veto — 51 of the 100 seats in the House and 20 of the 38 seats in the Senate.
Last week, the budget bill easily passed the Senate with a vote of 25-13 and the House with a vote of 59-36.
But the votes on the revenue bill were close: 20-18 in the Senate and 51-44 in the House.
Other Measures In Limbo
Meanwhile, lawmakers will have another chance to consider a variety of other bills that haven’t passed out of the legislature.
- Gang Bill — House Bill 169 would broaden the definition of criminal gangs, give longer prison sentences to those labeled as gang members and increase penalties for gang recruiting. Supporters say the measure would discourage gang activity in the state, while opponents argue it would wrongly label some defendants as gang members and disproportionately affect African-American communities. This bill has already passed out of the state House and is awaiting consideration by the full Senate. It was amended in the Senate Judiciary Committee, so if it passes the Senate it would have to be approved again by the House.
- Solar Bill — House Bill 227 would change the way Kentucky’s net metering law works. Net metering requires electric utilities to give credits to Kentucky households that produce energy that goes back out onto the grid. Those credits can be used on future power bills. Under the bill, state regulators would set net metering rates for future solar households. Currently, households get one-for-one credits for energy they put out onto the grid.
- Charter Schools — Last year, the legislature passed a law allow charter schools to open up in Kentucky. Lawmakers also passed a mechanism to fund the schools, but it expires at the end of the fiscal year, June 30. Though no charters have opened up in Kentucky yet, charter advocates have been hopeful that the legislature would include a mechanism to fund the schools if they open up in the next two years. The state Senate initially included language in the revenue bill that would have funded charter schools, but it was not included in the final revenue bill that passed the legislature.
- Pension Contribution Phase-In — Last fall, the main retirement system for public employees in Kentucky adopted more pessimistic assumptions for the pension systems — forecasting they would make less from investments and employee contributions than previously predicted. That meant that local government employers would have to drastically increase the amount they contribute to the systems. Under House Bill 369, those increased payments would be phased-in over 10 years. But last week Gov. Bevin vetoed the bill, saying he didn’t support a provision that would allow agencies to “buy out” of the pension systems. The legislature now has the opportunity to override Bevin’s veto.
- Taxing Pensions — currently, pensioners receive their first $41,000 in retirement income tax-free. The revenue bill — which passed the legislature but Bevin vetoed — would lower that amount to $31,000. But the House tried to walk back the changes after the revenue bill passed by inserting language into a separate bill, Senate Bill 197, that they said would raise the amount back to $41,000. But, first pointed out by Courier-Journal columnist Joe Gerth, instead of raising the exemption amount, lawmakers actually deleted the entire exemption, meaning that retirees’ entire pensions would be taxable — a massive tax increase.
