Session Ends

The General Assembly brought the 2012 Session to a close on their final legislative day just before midnight on Thursday adjourning Sine Die. The major items of unfinished business for the final day were passage of the 6 year road plan,the Transportation Budget, and legislation to crack down on "pill mills." When all was said and done the only item that received final passage was the Road Plan, however without the corresponding Transportation Budget there was no money appropriated for the plan.

It appeared most of the day that agreements existed on all three items, however it appears that those dissolved over political brinksmanship related to overriding the Governor's budget vetoes and whether the Governor would sign the Road Plan without the Transportation Budget. The Session ended much how it began.

This Session was slow out of the gate, mired in political battles over redistricting and casino gambling. However, the session ended with a flurry with over 100 bills passing in the last 11 days. Among those bills were several notable accomplishments, including: approval of the State Budget, legislation to crack down on Meth labs, and unemployment insurance reforms. These lack of action on the transportation budget and pill mill legislation puts a blemish on what had been a productive end to the session.

When the General Assembly adjourned they did so until January 8, 2013, though a special session to address the transportation budget may be on the horizon.

Gov. Beshear Issues Line-Item Vetoes on Executive Branch Budget

Governor Beshear issued his line item vetoes today of the Executive Branch Budget passed by the General Assembly. The vetoes seemed to fall under two main categories: the additional $80 million in budget cuts from increased efficiencies and other bills that were passed that impose unfunded mandates on the administration.

You can download a copy of the veto message HERE and the press release is below.

Commonwealth of Kentucky Office of the Governor
FOR IMMEDIATE RELEASE	Contact:	Kerri Richardson 502.564.2611 502.330.6633 Terry Sebastian 502.564.2611 502.229.6130

Gov. Beshear Issues Line-Item Vetoes on Executive Branch Budget

Governor's budget proposal largely intact; line-item vetoes preserve flexibility in management

FRANKFORT, Ky.  (April 11, 2012) – Today, Governor Steve Beshear issued line-item vetoes on House Bill 265, the state's biennial budget.  Below is his statement regarding the bill and the line-item vetoes:

"This is the most difficult budget I have ever drafted, and it will also be a challenge to implement and manage over the next two years.  I appreciate that the legislature passed my budget with very few changes.  We have worked hard to make wise decisions regarding the use and investment of taxpayer dollars, and the approval of this budget indicates the legislature's support of our strategies. 

This budget funds SEEK, the primary funding formula for K-12 education, at my recommended level.  It maintains funding for Medicaid and corrections, two of the largest budget expenditures. 

Despite the budget's challenges, we are making key investments in our future.  My budget reduces social worker caseloads in the area of child abuse and neglect, funds colon cancer screenings for 4,000 uninsured Kentuckians, funds aggressive substance abuse treatment in Medicaid, and provides funding for an elder abuse registry to protect senior citizens from unscrupulous caretakers.

I remain disappointed that legislators removed funds to expand preschool to more 4-year-olds.  I am convinced that preparing our youngest children for success in school will pay enormous dividends for the future for our state, and I will continue to work to make sure all our children enter school ready to learn.

Unfortunately, the recession's aftermath forced further spending cuts of up to 8.4 percent for many state agencies.  This marks the eleventh time that we have cut programs and services since I took office, with some agencies enduring collective cuts of 30 percent. 

Legislators did make some changes in the budget that inhibit the administration's ability to successfully manage the implementation of the budget.  Lawmakers added $80 million in unspecified reductions over the biennium – on top of the 8.4 percent already mandated for many agencies.  They also passed other bills with financial impacts that are not reflected in the final numbers, which expands the budget gap.

As a result, I am vetoing several provisions of the budget which add new obligations, limit necessary flexibility, and reduce the ability to manage this budget.

Although this is a very challenging budget, this budget does allow us to continue to provide the most critical services while making strategic investments in education and health to position us for the future.

However, this legislature still has work to do.  The biennial Transportation budget and Six-Year Road Plan must be passed on the final day of the session.  By putting off these important votes, lawmakers are endangering the road and bridge maintenance and construction projects scheduled across the state.  Kentucky needs a safe, dependable road system, and that requires a Transportation budget and Road Plan.  No one wants a costly special session, and I am again calling on the legislature to come to an agreement on these bills quickly."

A copy of the veto message is attached.  The Governor has also signed the judicial and legislative branch budgets.

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Follow Governor Beshear on Twitter @Govstevebeshear, read the Governor's personal notes on his blog at http://blog.governor.ky.gov/, and view the Governor's video commentaries at http://www.youtube.com/governorbeshear.

Tax Commission & Monthly Receipts

Tax Reform Commission Meeting

The Governor's Tax Reform Commission held its second meeting today. Gov. Abramson opened the meeting by stating that a decision has not yet been made on the hiring of a consultant for the Tax Reform Commission.  He added that a decision would be made and the hiring would be announced to Commission members via email sometime before the May meeting of the Commission and that he expected the consultant would be present at that meeting. 

Greg Harkenrider began his presentation with a review of similar tax reform efforts since 1983.  He described 15 to 20 such efforts, noting that most took place during or soon after times of recession that strained state tax policy and revenues.  Among the numerous studies mentioned, Harkenrider singled out the 1995 Blueprint for Comprehensive Tax Reform as a well done review with sound policy recommendations that continue to be pertinent today.

You can download a copy of Harkenrider's presentation HERE.

Monthly Receipts Report Released

The General Fund and Road Fund have experienced solid revenue growth through the first three quarters of Fiscal Year 2012 and the March tax receipts were a large part of that. The March receipts report released yesterday by State Budget Director Mary Lassiter showed that the General Fund revenues grew 8.4% and Road Fund revenues grew 6.1% compared to March 2011. 

Three takeaways from the March receipts report:

1. Through three quarters General Fund receipts are exceeding the revenue forecast made by the Consensus Forecasting Group. The CFG had predicted 2.8% growth and actual growth is at 4.3% thus far. However, the fourth quarter of FY 2011 was a very strong period of revenue growth, so receipts will have to be very strong over the next three months to match last year's growth and book additional surplus for FY 2012.

2. Road Fund revenues are up 7.3% year to date and need to increase 0.5% over the next three months to meet the Road Fund revenue forecast of 5.5% growth for FY 2012. The Road Fund is lead by significant growth in motor fuels tax revenue increases.

Download a copy of the press release and March revenue report HERE.