Kentucky Political News Headlines

Thursday, June 28, 2018

BR Sub on Education

By Dustin Miller

Commissioner Lewis and Associate Commissioner Kinney gave a presentation on the KDE budget, and a copy of their slides are available HERE. Below is a summary of key points and legislative questions, but would say the two main takeaways from the meeting are: 

- Though P-12 education received more dollars in SEEK, overall it was underfunded.
- On JCPS, Commissioner Lewis could not provide an estimate of the possible costs for state management of JCPS. He says this isn't possible until JCPS in coordination with KDE puts together a school improvement plan and that plan can not be developed until the KBE puts JCPS under state management and that process is not complete.

Other notes and legislative questions:
- Slide 3 notes - Didn't get SB 1 and full-day kindergarten dollars. Also only received 1/2 of funding for SEEK transportation
- Overall message...glad to have gotten more dollars, but still $300 million short
- Slide 8, noted that FRYSC's down in KDE budget, but received additional dollars in CHFS budget, up slightly over this biennium.

Rep Huff asked if 25 positions removed worked with districts or were they administrative? A. All district focused

Rep. Flood asked about technology funding and FRYSC's?
Lewis answered and said that FRYSC's is very important helps impact poverty which impacts learning. In addition that decisions at KDE should be data-driven and thus technology is important. 

Rep. Flood asked about PD funding and teacher development resource funding that was cut and isn't that important?
Lewis says PD is important and understands the difficult budget situation legislators faced but hopes in the future that PD funds can be increased.

Rep. Flood asked what are your top 3 goals for funding in the future?
Lewis hard to say at this point. Dealing with the current budget and will work with current KBE to set those goals in the future. 

Rand asked about program elimination in the instructional resource, what is in the $16.7 million?
Kinney: could be textbooks, computer purchases, but it varies by district.

Rep. Rand asked about cuts at KDE office, and whether there were resources necessary to manage JCPS, will it divert funds from other districts?
Lewis clarifies that he has made a recommendation, but nothing has happened yet. Hard to answer the question, because the management plan won't be put together until after the district is actually under management. Statutes and regulations say that a plan doesn't have to be put together until the KBE puts the district under management. It will be costly, but reminds members that a significant amount of dollars from KDE are already spent in JCPS.

Rep. Rand asked about Lewis' top priorities for KDE?
1. Skills Gap and CTE
2. Early grade literacy and numeracy before 3rd grades including public preschool
3. High school graduation requirements - Needs to be stronger
4. Closing the achievement gaps

Rep. Brown asked about Safe Schools funding? 
Kinney says that KDE partners with KY Center for School Safety who will get those funds. Things they do include district audits and training that are district-facing. Lewis mentions that some go for school resource officers.

Rep. Brown asked about preschool and full-day kindergarten funding?
Lewis gave a detailed answer about how the funding works for both. But specifically noted that public preschool works well and is a good program and that there are lots of kids who qualify who don't get in because of funding, which is a problem. *Very supportive of public preschool.

Rep. Brown also concerned about quality of diploma and shares concerns of Lewis about graduation requirements. 
Lewis coming to KBE in August with new regulation strengthening graduation requirements 

Rep. Huff asked about number and list of districts that don't provide full-day kindergarten? Lewis thought it was very low, but would get data to her.

Rep. Tipton noted that an alarming number didn't meet the ACT benchmarks set by CPE, which is the "college ready" number.

Sen. West how much was KDE cut? 
$54 million, but specific to Frankfort, 6.25% cut of $24 million KDE Frankfort operations

Sen. West asked about SEEK increase, do districts have an ability to use those dollars for PD, textbooks, etc? 
Yes those are flexible 

Sen. West wants to see changes to PD and new teacher development. If in two years PD is increased then would like to see these changes as part of that

Rep. Riley also spoke about PD and new teacher development and echoed the comments of Sen. West.  

A&R Notes

By Dustin Miller

The A&R Committee met in Frankfort to receive an update on General Fund receipts and a presentation on the Limited Liability Entity Tax.

State Revenue Update
Greg Harkenrider with the Governor's Office Economic Analysis provided an update on state revenues. A copy of his presentation is available HERE and the highlights and key legislative questions are summarized below:

- Expected that June receipts will be up and that receipts overall will be up for the 2018 fiscal year. 
- It is expected that Road Fund revenues will be in line with the enacted estimate and that it will be within $10 million. Two notes: gallonage appears to have gone up slightly on motor fuels tax and that although the estimate was accurate the overall revenue was not good to keep up with road fund needs
- Language in HB 487 makes KY look like South Dakota for purposes on online sales tax collection related to the recent US Supreme Court decision. Sets a de minimum standard of $100k in gross receipts or 200 transactions to have economic nexus.

Rep. Fleming asked about Wayfair timing?
Harkenrider - Going to take a prospective approach, so no back taxes. Tough part is reaching out to retailers to get them to register as a retailer in KY for sales tax. Thinks it will be a slow start and told legislators not to get their hopes up for large revenue increases in Kentucky for FY 2019.

Rep. Rudy asked about Wayfair...Estimates?
Harkenrider - Nothing official from GOEA.
Rudy said GAO says $94-140 million per year?
Harkenrider - We think those are a little high because of efforts around streamlined sales tax
Rudy asks if streamlined sales tax program that compensates online vendors for voluntary collection will fall apart?
Harkenrider - Not sure will have to follow up

Rep. Tipton asked about expansion of sales tax and questions from nonprofits and charitable organizations?
Harkenrider - Sales tax expanded to participatory admissions. Legislative intent was to catch for-profit entities. Court case in Feb. said for-profits and not for profits can't be treated separately. Thus charities are caught in this as well. McDaniel said there is interest in fixing this quickly the next time the legislature is in session.

Limited Liability Entity Tax
The LLET- Cost of Goods Sold Definition presentation was provided by Charles George, Kentucky Society of CPAs; Eric Scott, Ernst & Young; and Kevin Doyle, CFO with Congleton-Hacker Company.  A copy of their slides are available HERE.

Legislative Tax Expenditures Task Force

Provided by Mike Helton

The Joint House and Senate Legislative Tax Expenditures Task Force met for the first time this afternoon.  The group is co-chaired by Rep. Ken Fleming of Louisville and Senator Chris McDaniel of Northern Kentucky. McDaniel is also Chair of the Senate Appropriations and Revenue Committee.  We will be keeping a close watch on the activities of the Task Force because it could develop into a forum for more comprehensive tax reform.

The Task Force was created in House Bill 200, the state's biennial Budget this past session. The group was appointed by House Speaker Pro Tem David Osborne and President Robert Stivers  to review, examine and analyze all tax expenditures. Tax expenditures are exemptions from the state tax code and are compiled once per year and published for purposes of tax policy planning and for policymakers as tax policy is considered. The memo creating the Task force is available HERE and the members of the House and Senate are identified.

Today's initial meeting was for educating members on the various exemptions.  Two of the State's Deputy Budget Directors and economists testified with a power point that is available HERE. They gave an overview of the process in identifying and gathering data to compile the State Tax Expenditure Document including what an expenditure is and how they estimate annual costs for each expenditure.  The estimating process is similar to the Consensus Forecast Group estimate used to craft the biennial budget. 

Revenue Commissioner Dan Bork testified on the interaction of the Department of Revenue with the State Budget office in sharing the data used to compile the expenditure reports.  He went into great detail explaining the confidential protections Revenue employs for protection and for complying with federal IRS confidentiality rules. Commissioner Bork's presentation is also available HERE

The other presentations were on the film industry's incentives that have received significant debate in the General Assembly and other Economic Development incentives.

Tuesday, May 22, 2018

KY Primary Election Results

2018 Primary Election Results

Kentucky voters went to the polls today to determine party nominees for the General Election in November. There were 51 state legislative primary races with 19 incumbents facing primary challenges. Based on unofficial results, we have provided this spreadsheet, with House & Senate primary tabs, showing the outcome of tonight's elections. In addition, we want to highlight a few key races:

- Anti-Incumbent sentiment hit the State House with 4 incumbent State Representatives losing their primary election. Horlander (D-Louisville), Shell (R-Lancaster), Morgan (R-Richmond), and Couch (R-Hyden).

- The surprise of the evening was the defeat of House Majority Floor Leader Jonathan Shell losing by 115 votes to high school teacher Travis Brenda. It appears this race was the focal point of advocacy for the teacher's unions, who are upset with the pension reform legislation that the legislature passed during this most recent session.

- The anti-incumbent bug didn't seem to hit the State Senate, where all 5 incumbent State Senators with primary races won.   

- Two former State Representatives won primary elections tonight, Democrat Cluster Howard in the 91st and Bill Farmer in the 88th. Both will have opponents in the General Election. 

- There were several congressional primary elections as well, but most attention was on the 6th Congressional district. Incumbent Andy Barr (R-Lexington) successfully won his primary. The focus, however, was on the Democratic primary to determine his challenger in November. Lexington Mayor Jim Gray ran against political newcomer and former Marine pilot, Amy McGrath. Gray was thought to be the frontrunner, however, McGrath defeated Gray in a 6-way primary garnering 49% of the vote. The Barr-McGrath race will likely draw national attention as Democrats see this as a place to possibly pick up a seat, but Barr will be well financed with a campaign fund of over $2 million.

We will have more analysis in the days ahead. 

Sunday, April 15, 2018

Friday, April 13, 2018

Bill Lists - Day 59

From Government Strategies:

During the 2018 session of the General Assembly, you can view the following bill lists updated nightly.

Education Bill List

Energy-Environment Bill List

General Business Bill List

Health Care Bill List

Health Insurance Bill List

Insurance Bill List

Transportation Bill List

KY Legislative Update - Day 59

One to Go...

The KY General Assembly convened today for the 59th legislative day of the 2018 Regular Session, after returning from the ten-day veto recess break. Priorities for both chambers included consideration of vetoes issued by Governor Bevin. As we've previously reported, earlier this week Governor Bevin vetoed both the budget bill (HB 200) and the tax reform bill (HB 366). He had previously vetoed legislation allowing for a phase-in of pension contributions by local governments and school districts (HB 362). As thousands of protestors gathered in Frankfort again today, the House and Senate voted to override all three of these gubernatorial vetoes. HB 200, HB 366, and HB 362 all stand as passed by the General Assembly.

The House and Senate will meet tomorrow, April 14, for the final day of the legislative session. They plan to consider what is described as "clean up" legislation to make several changes to the tax reform bill and perhaps the budget bill as well. Both the House and Senate will convene at 9:00 am and must adjourn sine die by midnight, as required by the Constitution. 

Thursday, April 12, 2018

Bill Lists - Veto Recess

From Government Strategies:

Though the General Assembly hasn't been in session, over the veto recess bills are acted on by the Governor, so we wanted to send out updated lists with actions through Thursday, April 12.

Education Bill List

Energy-Environment Bill List

General Business Bill List

Health Care Bill List

Health Insurance Bill List

Insurance Bill List

Transportation Bill List

Tuesday, April 3, 2018

KY Legislative Update - Day 58

Day 58 - Budget & Tax Bills
Amid thousands of protesting teachers, the House and Senate voted on a budget and tax plan today. After reaching an agreement between the House and Senate Republican conferees over the weekend, the Conference Committee met and unveiled their tax reform proposal in HB 366 and their 2-year spending plan in HB 200. The Free Conference Committee Report for HB 200 and HB 366 did pass both chambers today and has been delivered to the Governor. 

Access the FCCR to HB 200, a summary of FCCR to HB 200, FCCR to HB 366 and summary and scoring analysis of HB 366. A few details of note we wanted to highlight in each bill:

The conference committee budget was truly a combination of the budgets from the Governor, House, and Senate. A few items of note:
- Fully funded teacher and public employee pensions
- Increased SEEK per-pupil funding level at $4000, restored SEEK transportation funding at current levels, restored funding to many of the additional school support services like FRYSC's.
- Restored some of the cuts to postsecondary education by putting those dollars into the performance-based funding formula
- Included language that the General Assembly must approve private prisons.
- Agreed with the Governor's recommendation for increased funding to improve social worker pay and technology improvements.

The revenue bill accompanying the budget, HB 366, included $234 million in FY 2019 and $244 million in FY 2020 in new revenue that was used to restore some of the cuts described above. Some notable provisions: 
- The bill includes a fifty cent cigarette tax increase
- Imposes the sales tax to some services, including the following:  landscaping services, janitorial services, pet grooming, small animal vet services, fitness and recreational centers, industrial laundry services, golf courses and country clubs, dry cleaning services, pet grooming, linen supply, diet and weight reduction centers, overnight trailer campgrounds, bowling centers, limousine services and extended warranties. Also included is the labor and services associated with the repair and replacement of parts for tangible personal property. The pollution control equipment sales tax exemption is eliminated.
- Corporate and individual income tax is reduced to 5%. 
- On business taxes, the bill establishes a tax credit for the local inventory tax and applies a single-factor apportionment formula with market-based sourcing. 

In other action, the legislature took action on several legislative priorities:

- SB 5 - Related to transparency for Medicaid PBM's
- HB 1 - Changes to adoption and kinship care programs
- HB 3 - Related to essential skills programming in local school districts 
- HB 400 - Related to direct shipment of spirits
- HB 362 - Allows for the phase-in of employer pension contributions for KERS and CERS.
- HB 203 - The Judicial Branch budget
- HB 204 - The Legislative Branch budget
HB 202 - The Road Plan

The General Assembly adjourned this evening until Friday, April 13 and indicated they plan to hold the session's final day on Saturday, April 14. When they return, they plan to take action on any remaining bills and consider overriding any gubernatorial vetoes that may be issued over the next 10 days. 

Bill Lists - April 2

From Government Strategies:

During the 2018 session of the General Assembly, you can view the following bill lists updated nightly.

Education Bill List

Energy-Environment Bill List

General Business Bill List

Health Care Bill List

Health Insurance Bill List

Insurance Bill List

Transportation Bill List

Road Plan receives final passage, goes to governor

For Immediate Release
April 2, 2018

Road Plan receives final passage, goes to governor

FRANKFORT—A two-year state Road Plan that would authorize over $2.4 billion for bridges, repaving and other highway needs throughout Kentucky over the next two fiscal years is on its way to the governor's desk after receiving passage in the Kentucky House.

House Budget Review Subcommittee on Transportation Chair Rep. Sal Santoro, R-Florence, said before a House vote on House Bill 202 last month that the measure would invest nearly $1 billion in bridge and road work while bolstering economic development.

"This legislator knows our rural roads and our people in our rural communities need help, and we're going to take care of them," Santoro said.

Senate Appropriations and Revenue Committee Chair Christian McDaniel, R-Taylor Mill, praised the legislation when it was amended and unanimously passed in the Senate on March 22.

"This is a road plan that is balanced," McDaniel said. "We have seen a lot that are not in the past. It takes an exceptional amount of discipline to put forward a plan like that. And frankly, in many ways, an exceptional amount of courage."

Also on its way to the governor is House Joint Resolution 74, which contains projects in the last four years, or "out years," of the state's six-year Road Plan. Projects in the out years of the plan are prioritized but not yet funded. HJR 74 was amended and passed unanimously by the Senate last month.

HB 202 and HJR 74 received final passage in the House today by votes of 76-14 and 75-15 respectively.


Wednesday, March 28, 2018

State lawmakers adjust 2018 session calendar

For Immediate Release
March 27, 2018

State lawmakers adjust 2018 session calendar
Senate and House will next convene on Thursday

FRANKFORT -- Lawmakers have decided to convene the Senate and House on Thursday, March 29, instead of Wednesday, March 28, as originally planned.

Lawmakers serving on a free conference committee are expected to continue state budget negotiations tomorrow.

The updated 2018 General Assembly calendar can be viewed here: