Wednesday, April 28, 2010

Governor Addresses Impact of No Budget

The Governor held a press conference in Frankfort today to address with reporters the potential impact of the state legislature not passing a state budget. The video from the press conference is below.



The Governor is talking about calling the legislature back to Frankfort for a Special Session in mid-May to address the budget situation. He has not set a date as of yet, and appears to be trying to work with House and Senate to get an agreement on the budget before calling them into Special Session. Here is a letter the Governor sent to all legislators on the budget situation, click to download: Governor Letter to Legislature


GS Analysis:
What happens now?  The Governor has said he will call a special session in May.  There is nothing on the horizon that could change the fiscal dynamics.  The state will still be facing a $1.5 billion deficit, gaming is still not going to pass and don’t expect any new state revenue.
What are the consequences?  The Governor has said a good portion of the budget he presented and both chambers adopted was predicated on restructuring debt.  He believes this must be done by June 1 to be able to utilize some $120 million in the General fund and $81 million in the Road fund.  He is also saying he would need 30 days to plan for any layoffs or shutdown in state government.  According to court decisions the last time this happened, a Governor cannot spend money that has not been appropriated by the General Assembly.
What do we think the resolution will be? We believe the continuing appropriation would be the easiest to do.  Both chambers could probably agree on additional cuts to make it work.  The House could give on their objection to a two year budget and allow for larger cuts in the second year knowing they will be back in January and the state financial future might improve by then.
Stay Tuned....

Thursday, April 15, 2010

Sine Die - No Budget

Sine Die - No Budget

The Kentucky General Assembly adjourned the 2010 Regular Session Sine Die on Thursday evening bringing the legislative session to a close. Unfortunately, the members left town knowing that they will likely be back for a special session in the near future to deal with unfinished business in regards to the state budget.

The legislature failed to pass a budget this legislative session after weeks of negotiations between House and Senate Leaders. The House and Senate made a final run at a budget compromise the last two legislative days by discussing a 1 year continuation budget. Ultimately, no agreement was reached.

Based on past rulings by the courts, the Governor has very little latitude to spend money in the event that the legislature doesn't pass a budget. Only "essential" government services like K-12 education can be funded without a budget. Thus it is likely that the Governor will call the General Assembly back into session to pass a budget before the end of the fiscal year on June 30 when the current budget would expire and non-essential services would be shuttered.

We will continue to dissect the legislature's work this session and the political dynamics of the budget situation and keep you updated.

Final Legislative Day

The End is Near

The General Assembly will begin its 60th and final legislative day today at Noon and as required by the constitution they must adjourn sine die before midnight tonight. The legislature worked until nearly Midnight last night finalizing action on some of the high profile bills of the session: House Bill 1, Amanda's Bill dealing with domestic violence, and Senate Bill 4 dealing with organ donation. House and Senate Leaders also spent much of yesterday in behind the scenes budget negotiations. 

When the session began in January, we said the biggest and most difficult issue would be the budget and how to address the 1.5 billion dollar shortfall.  It is no surprise that prediction has not changed as we enter the final day.  We still do not have a budget agreement.  Here is the status going into the final hours.
                                                                                            
The House has proposed continuing the current biennial budget through March of 2011 with the intent of re-addressing the budget in the 2011 session.  State Government would essentially continue under the same appropriation levels until the end of the 2011 Regular Session.  The Senate is reviewing and did not reject this proposal immediately, although they said it does pose some problems with programs that may need or mandate increases like state health insurance and retirements.

Whatever happens will happen today and we will get you updates as they are available.

Monday, April 12, 2010

Health Care Reform Summaries

Catching up on some old content with the current lull in the session due to the veto period....

Health Care Reform

You can access several documents and summaries HERE from America's Health Insurance Plans that dissect and summarize the Federal Health Care Reform legislation and its potential impact. We will be following this issue closely as Kentucky like other states move into implementation mode on the legislation.

Stay Tuned....