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Debating State Budget Priorities

Debating State Budget Priorities

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Debating State Budget Priorities

Renee Shaw and guests discuss the state budget and the 2020 Kentucky General Assembly. Guests: Jason Bailey, executive director of the Kentucky Center for Economic Policy; Terry Brooks, executive director of the Kentucky Youth Advocates; Anne-Tyler Morgan, member of the McBrayer law firm and senior fellow with Pegasus Institute; and Andrew McNeill, state director of Americans for Prosperity-KY.
S27 E5 Length 56:34 Premiere: 2.17.20

Debating State Budget Priorities in the 2020 General Assembly

The pace of the 2020 General Assembly will start to quicken this week as lawmakers hit the halfway mark of the session. So far, two bills have made it to the governor's desk for Andy Beshear's signature, leaving legislators more work to do on dozens of measures, including priority bills on immigration enforcement, welfare reform, school safety, and the state budget.

“It has been somewhat quiet," says Jason Bailey, executive director of the Kentucky Center for Economic Policy. “They’re feeling out what it means to be a divided government and what that means for what the priorities should look like.”

With a new Democratic governor, the political dynamic has changed, leaving some to feel like the pace in Frankfort has slowed to a crawl, especially compared to the 2017 session. That's when Republicans took the majority in the state House of Representatives and, with the GOP also in control of the Senate and the governor's office, the legislature passed a series of landmark bills in the first week of the session.

“[2017] served as a something of benchmark for a lot of us in the majority who have watched this session in wonder thinking, okay, when are we going to pass some of these really big bills?” says Anne-Tyler Morgan, a senior fellow with Pegasus Institute.

There has been quiet, methodical process on some issues, according to Kentucky Youth Advocates Executive Director Terry Brooks. He says 13 of their priority bills on family and child welfare have already passed one chamber; seven of those bills garnered unanimous support.

“We feel really good about the overall gestalt of where the session is headed,” says Brooks.

The one item lawmakers must pass this year is a new state budget. Gov. Beshear presented his spending plan to lawmakers on Jan. 28. House leaders say their version of the budget should arrive by the end of February.

“The budget document is the piece of legislation that’s going to take up a lot of bandwidth,” says Andrew McNeill, state director of Americans for Prosperity – Kentucky.

A Call for Smarter Spending

Beshear's plan was the first budget in more than a decade that proposes no cuts to state agencies, while offering nominal spending increases in some areas, including higher education and pay for state employees.

“When you look at governor’s budget, he makes a number of assumptions that I think are probably unlikely to come to fruition,” says McNeill.

Beshear's budget relies on one-time revenue sources, proceeds from sports betting, and new tax revenues that McNeill says are highly uncertain, especially with Republican supermajorities in the House and Senate. Instead of fighting for new revenue, which McNeill contends isn't needed given the strength of the economy, he says lawmakers should focus on state spending.

“The revenue issue, I don’t think, is nearly as acute as what has typically been reported,” says McNeill. “It's really a question of prioritization: Where are we going to put those dollars to work in areas that can invest in Kentuckians and can invest in our children in a way that respects the taxpayers so that they’re not paying any more than we need.”

McNeill says he'd put more money towards human services and parts of the public education system that provide demonstrated returns on investment.

Brooks agrees. He says investing in front-end services for children and families is generally less expensive than for paying to help kids in a crisis situation. For example, he praises Beshear for proposing more dollars for KCHIP, the program that covers children without health insurance. But he's disappointed the governor didn't fund counselors and mental health services mandated in last year's school safety bill. Brooks says the state should pursue federal Medicaid dollars that would match state funding for those services at a rate of three to one.

Brooks also wants more money to help family members who take in children when the parents can no longer look after them. Some 100,000 Kentucky kids live with relatives other than their parents, and Brooks says it's time the state gave these kinship caregivers, who often take on an enormous financial burden, the same stipend as traditional foster parents.

“If that grandma or grandpa can’t hold on to that little boy or little girl, what’s going to happen?” says Brooks “They’re going to go into [state] care which is multiplicatively more cost-wise and less effective for the kids, so… we can get much bigger bang for bucks if we do actually better practices for kids.”

Like Brooks and McNeill, Morgan agrees the state has to spend more efficiently. She praises Beshear's plan to help those with developmental disabilities, and his proposal to help quasi-governmental agencies like local health departments and domestic violence shelters pay their pension obligations.

Also on the spending side of the ledger, McNeill says the state has no business sinking more money into the KentuckyWired broadband internet project, which has been mired in delays and cost overruns, or helping the University of Louisville fund the purchase of a hospital that he says the private sector could easily finance. McNeill says those tax dollars could be put to better use in other places.

But Bailey argues the issue isn't spending – it's revenues.

“Targeted investments don't work if the fundamentals aren't being funded,” he says.

Those fundamentals, according to Bailey, include adequate pay raises for state employees, equitable funding for public education, kinship care support, and other basic services.

Options for More Revenue

To generate more revenue, Gov. Beshear proposed a cigarette tax hike, sports betting, and higher licensing fees for limited liability corporations.

One tax measure seeing action in the legislature would put a 25 percent excise tax on vaping products, which could generate $50 million over two years, according to the bill's sponsor, Rep. Jerry Miller (R-Louisville).

A Democratic tax proposal introduced in the House would take a more comprehensive approach to revenue. Rep. Lisa Willner's House Bill 416 proposes a range of changes, including applying the sales tax to luxury items not currently taxed, raising taxes on tobacco products and e-cigarettes, and taxing bets placed on horse races. The biggest change would remove the flat state tax rate approved by the Republican majorities in 2018 and reinstate a tiered system.

“The bottom 80 percent of Kentuckians by income would not pay any more than they're paying now," say Bailey. "Only the people at the top would pay more under HB 416, but those are the people who have received enormous tax cuts at the state and federal level the last couple years."

One estimate puts the proceeds of Willner's proposal at $1 billion in new revenues.

Morgan says the plan has little chance among Republicans who are focused on broadening the tax base while lowering rates even further.

“What I'm hearing is a lot of pipe-dream talk about what we could do with a big-bang revenue generator,” says Morgan. “We need to be smart with the money we do have [and] stop thinking about things that won't happen realistically with the political environment we’re in.”

Brooks says comprehensive tax reform won't fly in the current political climate. He suggests a more incremental approach whereby lawmakers work on a few smaller measures that can gain bipartisan support. One such idea, House Bill 422, is a plan from Republican Representatives Jason Petrie of Elkton and James Tipton of Taylorsville that would create a new legislative committee to regularly review tax expenditures offered by the state. Brooks, Bailey, and McNeill say that's a worthy proposal.

“Evaluate those [exemptions] that are corporate welfare, that have been justified by groups in Frankfort that have been able to effectively lobby... to put into place preferential treatments in the tax code that in terms of the value that’s created is pretty limited,” says McNeill.

Welfare Reform Draws Swift Opposition

There is one comprehensive reform measure that is a high priority for Republicans: House Bill 1 proposes a sweeping overhaul of public assistance in the commonwealth.

Morgan says the bill includes provisions to consolidate management of Medicaid, food stamps (SNAP), and temporary assistance to needy families (TANF) in the state under a welfare oversight committee of the legislature. She says it would also require Medicaid beneficiaries who work to enroll in their employer's health care plan. The Kentucky Integrated Health Insurance Premium Payment Program (KI-HIPP) would then reimburse the beneficiary for the cost of their employer's premium.

Another provision would make Medicaid coverage available to those who earn up to 200 percent of the federal poverty level, instead of the current 138 percent. Morgan says that's an effort to ease the so-called benefits cliff that occurs when people lose all their health care coverage even though they may earn just a few dollars more in income.

Bailey says HB 1 has a number of other provisions that would make it harder for welfare recipients to use their benefits and could result in people losing public assistance, in some cases permanently.

“For example, if you serve time and are released under a drug felony, if you do not enroll in treatment within 90 days, you have a lifetime ban from Medicaid,” says Bailey.

Last week, 94 social service organizations signed a letter opposing HB 1, according to Bailey. He says the bill has provisions that would be overly expensive to implement and could be illegal under federal law, and it also perpetuate myths about welfare fraud.

From his perspective, Brooks says the bill contains both very encouraging and very worrisome aspects.

“When we look at this bill, I get seasick,” says Brooks. “There’s real concerns among certain sectors, kinship families for one... [but] there's some really positive things in this bill to address addiction.”

HB 1 has yet to be discussed in the House Health and Family Services Committee. Morgan says she's already heard that a committee substitute to scale back the original version of the legislation could be in the works.

“A lot of these ideas are brand new and they've taken a lot of reading and reinterpretation, says Morgan. “This bill was lightning fast and these are very serious issues that will take some real consideration to anticipate the needs of the employer community and certainly the beneficiary community.”

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Season 27

Health, Legal and Voting Issues During the COVID-19 Outbreak

S27 E10 Length 57:23 Premiere Date 3.30.20

Kentucky's Response to the COVID-19 Pandemic

S27 E9 Length 58:03 Premiere Date 3.23.20

Finding Agreement on State Budget Issues

S27 E8 Length 56:34 Premiere Date 3.16.20

Election and Voting Legislation

S27 E7 Length 56:33 Premiere Date 3.9.20

State Budget

S27 E6 Length 56:36 Premiere Date 2.24.20

Debating State Budget Priorities

S27 E5 Length 56:34 Premiere Date 2.17.20

Medical Marijuana

S27 E4 Length 56:33 Premiere Date 2.10.20

Sports Betting Legislation

S27 E3 Length 56:36 Premiere Date 2.3.20

2020 Kentucky General Assembly

S27 E2 Length 56:37 Premiere Date 1.13.20

2020 Kentucky General Assembly

S27 E1 Length 56:34 Premiere Date 1.6.20

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