Kentucky Political News Headlines

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.