Kentucky Political News Headlines

Tuesday, May 26, 2020

Budget Update - CFG Meeting



Budget Update - CFG Meeting

The Consensus Forecasting Group (CFG) met this afternoon to revise the official revenue estimate for Fiscal Year (FY) 2020. The group of nonpartisan economists were asked to revise the estimates in today's special meeting due to the impact the COVID-19 pandemic is having on state revenues. It is highly unusual for the CFG to meet outside of what state law requires and the group can only provide revised official estimates at the request of the Legislative Research Commission or the Office of the State Budget Director.

The CFG members were presented with two scenarios - control and pessimistic models. Both the control and pessimistic forecasts assume that the pandemic peaks in the fourth quarter of FY20 and also assumes an identical fiscal and monetary policy response. 

After several hours of discussion and debate, the CFG chose to adopt the pessimistic forecasts for both the General Fund and Road Fund. Under these revisions, the General Fund is estimated to be 4% below the official enacted budget, while the Road Fund shortfall will be 10.4% based on today's actions. 
The 4% shortfall in the General Fund reflects a decrease of $456.7 Million and the 10.4% shortfall in the Road Fund reflects $161.8 Million less than expected.

Kentucky law allows the Governor to implement budget reduction orders for shortfalls less than 5%. For shortfalls over that, legislative action is required. With these new official estimates, the Governor will be able to adjust spending in the General Fund. It has been reported that state agencies have already been asked to provide information on the impacts of a 12.5% cut to close out the fiscal year June 30. The Road Fund, however, will require legislative action which could trigger a special session. We will update you as additional information is made available.

Documents from today's meeting can be accessed HERE.

Today's actions only impact the remaining days of FY 20, which will end on June 30th. It is likely that revisions to FY 21 will also be needed, but at this time that request has not been issued. 

2020 Election Preview


2020 Election Preview

Legislative elections take place this year, with all 100 House seats and half (19) of Senate seats up for re-election in November. The COVID-19 pandemic has required many changes, including how and when Kentuckians will cast their vote in the primary election. Originally scheduled for May 19, the primary election will now be held on June 23. Given the primary is just over a month away we wanted to provide a preview of the races and some additional dynamics impacting them. We have prepared this multi-tabbed spreadsheet, which is also attached, based on records from the Secretary of State's office as of May 13, which provides a listing of the candidate filings for the primary and general elections.  

Senate 
- The Senate is controlled by GOP 28-9 with 1 vacancy (Sen. Harris) heading into this election cycle.
- The Senate spreadsheet shows that of 19 Senate seats up for election in November, 5 are uncontested (3 Dem & 2 GOP). Of the remaining 14 contested seats they are currently controlled (4 Dem & 10 GOP). 
- 3 GOP incumbents face Libertarian party candidates (Meredith, Westerfield, and West) and Sen. Reggie Thomas (D-Fayette) faces a write-in candidate.  
- Looking at the Senate primary races, 6 seats will have contested primaries. In 2 of those races the winner will hold the seat, because there is no challenger in the general election.
- Two incumbents have primary challengers, Sen. Albert Robinson (R-Laurel) and Sen. Rick Girdler (R-Pulaski). In Sen. Girdler's race, the winner takes all as there is no general election challenger. 
- There is one special election being held on primary day to replace Sen. Ernie Harris (R-Oldham) who retired on April 15. The winner of the special election will serve Harris' unexpired term, until 2022. Democrats nominated Kathy Berg, a physician who Sen. Harris beat in November 2018. Republicans nominated Bill Ferko, an executive and local GOP activist. The winner of the June 23 special election will take the seat, which has been held by Republicans for more than 20 years.   

House 
- The House is controlled by GOP 62-38 heading into this election cycle.
- The House spreadsheet shows 100 House seats are up for election in November, 23 are uncontested (11 Dem & 12 GOP). Of the remaining 77 contested seats they are currently controlled (27 Dem & 50 GOP).
- Looking at the House primary races, 28 seats will have contested primaries with two of the seats having contested primaries for both parties bringing the total number of House primary races to 30. In 12 of those races the winner will hold the seat, because there is no challenger in the general election.
- 11 Incumbents have primary challengers: 3 Democrats - Miller, Burch, Kulkarni & 8 GOP - Rudy, Webber, McCoy, Upchurch, Osborne, Brenda, Yates, & R. Huff. 8 of these primary races featuring incumbents will be winner take all elections as there are no general election challengers.
- 9 of the 11 GOP incumbents with a primary challenger serve in Leadership or as a Committee Chair, including Speaker Osborne, Majority Floor Leader Rudy, and Majority Whip McCoy. 

Supreme Court
- Kentucky has one Supreme Court seat on the ballot this election cycle. It is currently held by Justice Sam Wright and the district is located in Eastern Kentucky.
- Justice Wright is running for re-election and has drawn two challengers. State Representative Chris Harris (D-Pikeville) is leaving the legislature to run for this seat. Judge Bob Conley from the northeastern part of the state has also filed to run.  
- This is a nonpartisan race, and since there are three candidates, the top two vote getters in the primary will advance to the general election in November.  

Additional Dynamics
Due to COVID-19, Governor Andy Beshear and Secretary of State Michael Adams by executive order have approved and are encouraging the use of mail-in ballots through an expanded absentee program. The State Board of Elections will mail a postcard to every voter informing them of their options. Voters will have to request an actual mail-in ballot. Counties will not staff normal polling precincts but will offer the option for in-person ballots both before and on Election Day at a smaller number of locations. 

It's not clear what impact all of these changes will have on voter turnout although when implemented in other states, there is some evidence of an increase in first-time voters and voters who do not usually participate in primary elections. The pandemic may have a significant impact on the primary election due to the lack of in-person fundraisers and the change in voting procedures. 

Tuesday, May 12, 2020

KY Budget Outlook


Budget Outlook


The conclusion of the 2020 legislative session would, under normal circumstances, be followed by the interim session beginning in June and running through November. During the interim, legislative committees meet jointly every month and discuss issues that are likely to be addressed during the next session of the General Assembly. Many questions remain regarding the upcoming interim session, as the state continues to deal with the COVID-19 pandemic. We expect, though, that the current budget crisis is likely to dominate conversations leading up to the 2021 Session.

The 2020 Kentucky General Assembly passed a one-year budget for this upcoming biennium, using pessimistic revenue estimates to form the spending plan for Fiscal Year 21. The second year of the biennium, Fiscal Year 22, will be considered and passed during the 2021 Session. Policymakers warned then that an economic downturn is inevitable and that even the pessimistic revenue estimates will be far greater than what's likely to be realized.

Since the session ended, the Office of the State Budget Director released the Quarterly Economic and Revenue Report for the third quarter of Fiscal Year 2020. General Fund revenue growth was 3.9 percent through the first three quarters, but a significant drop in state revenues is likely in the fourth quarter given the COVID-19 pandemic. This will likely be the first annual General Fund decline since 2010. 

FY 2020 Revenue Shortfall

The Quarterly Report includes two unofficial revenue projection scenarios based on the timing of various milestones related to COVID-19. 

General Fund
The report projects a revenue shortfall of $319 to $496 million which is a 3.8 to 4.7 percent revenue shortfall compared to the official estimate. Approximate breakdowns include roughly a $200 million shortfall in sales tax collections, a minimal shortfall in property taxes, and business taxes are projected to be short by $108 to $143 million in FY 20.

Road Fund
State officials expect a shortfall in the Road Fund as well, with revenues around $116 to $195 million less than what was previously estimated. This reflects a 7.5 to 12.5 percent shortfall compared to the official estimate. The motor fuels tax could be short approximately 8 to 13 percent based on the scenario adopted and the motor vehicle usage tax could see a shortfall of between 10 and 15 percent.

Legislative & Political Dynamics

Note that Kentucky law (KRS 48.130) requires legislative action for shortfalls over 5 percent. The Consensus Forecasting Group (CFG), a group of nonpartisan economists that is required by statute to forecast revenues, will be meeting in the coming weeks to discuss revising the official estimates in light of the COVID-19 pandemic. Any legislative activity needed will be based on official estimates by the CFG.

The General Assembly may want to be a part of the budget reduction action in order that their priorities can be reflected in what programs or projects might be cut in order to balance the budget. However, the Governor is only required to call them into session to deal with the budget shortfall if it is over 5 percent, as stated above. All eyes will be on the upcoming CFG meeting and the actual receipts coming out of the Office of the State Budget Director to see if the statutory requirement is triggered. 

The unknown or intangibles that are hard to predict include an infusion of federal funds or the consideration of new revenue to prop up the state's finances, if there is a lingering effect from the COVID-19 pandemic. Federal funding for state assistance seems more likely than a couple of weeks ago but is far from certain. New revenue through taxes could be a difficult sell while unemployment numbers continue to rise and many Kentuckians struggle financially. However, if the CFG forecasts show lasting effects from the pandemic it may be necessary to make either significant budget cuts in 2021 or look at new revenue. 

We will continue to monitor the Commonwealth's budget situation and update you as more information becomes available. Please reach out if you have specific questions or concerns.

Thursday, April 16, 2020

KY Legislative Update - Updated w/ Bill Lists

**We are reissuing our update to make a couple of corrections and add in links to the updated bill lists.

Sine Die

The 2020 Regular Session of the Kentucky General Assembly came to a close this evening on the constitutionally mandated adjournment date of April 15. Each General Assembly session is unique, however this one was stranger than most with the onset of the COVID-19 pandemic forcing the legislature to shorten the session by seven legislative days, pushing aside many bills deemed too controversial given the crisis, and requiring the adoption of a one-year budget due to an expected drop in tax revenues.

On the session's final two days there was significant legislative action, including:

- Overriding all budget line items vetoed by the Governor in HB 351HB 352HB 353HB 354, and HB 356.
- Overriding five bills vetoed by the Governor, SB 2SB 5HB 150HB 195, and HB 336
- Passage of several COVID-19 matters: 
  • HR 135 that creates an Emergency Preparedness Task Force 
  • HB 387 that allows budget flexibility for the Governor to buy PPE  
- Several constitutional amendments were passed, including SB 15 Marsy's Law
SB 191 that would provide for employer sponsored substance use disorder programs was given final passage
- The Senate confirmed Governor Beshear's appointments to the Kentucky Board of Education, except for the Chair, and the Senate confirmed Sharon Clark as Insurance Commissioner.

Those bills passed the final two days of the session are subject to review by the Governor and potentially could be vetoed, without legislators having the ability to override.

In all, nearly a hundred bills were passed by the General Assembly this session. You can view updated bill lists at the links below.

Transportation Bill List

In the next few days we will be preparing an end of session report summarizing legislative activity of particular interest to you to aide in your compliance efforts.

Updated w/ Bill Lists -- KY Legislative Update - Sine Die


**We are reissuing our update to make a couple of corrections and add in links to the updated bill lists.

Sine Die

The 2020 Regular Session of the Kentucky General Assembly came to a close this evening on the constitutionally mandated adjournment date of April 15. Each General Assembly session is unique, however this one was stranger than most with the onset of the COVID-19 pandemic forcing the legislature to shorten the session by seven legislative days, pushing aside many bills deemed too controversial given the crisis, and requiring the adoption of a one-year budget due to an expected drop in tax revenues.

On the session's final two days there was significant legislative action, including:

- Overriding all budget line items vetoed by the Governor in HB 351HB 352HB 353HB 354, and HB 356.
- Overriding five bills vetoed by the Governor, SB 2SB 5HB 150HB 195, and HB 336
- Passage of several COVID-19 matters: 
  • HR 135 that creates an Emergency Preparedness Task Force 
  • HB 387 that allows budget flexibility for the Governor to buy PPE  
- Several constitutional amendments were passed, including SB 15 Marsy's Law
SB 191 that would provide for employer sponsored substance use disorder programs was given final passage
- The Senate confirmed Governor Beshear's appointments to the Kentucky Board of Education, except for the Chair, and the Senate confirmed Sharon Clark as Insurance Commissioner.

Those bills passed the final two days of the session are subject to review by the Governor and potentially could be vetoed, without legislators having the ability to override.

In all, nearly a hundred bills were passed by the General Assembly this session. You can view updated bill lists at the links below.

Transportation Bill List

In the next few days we will be preparing an end of session report summarizing legislative activity of particular interest to you to aide in your compliance efforts.

Wednesday, April 15, 2020

KY Legislative Update - Sine Die


Sine Die

The 2020 Regular Session of the Kentucky General Assembly came to a close this evening on the constitutionally mandated adjournment date of April 15. Each General Assembly session is unique, however this one was stranger than most with the onset of the COVID-19 pandemic forcing the legislature to shorten the session by seven legislative days, pushing aside many bills deemed too controversial given the crisis, and requiring the adoption of a one-year budget due to an expected drop in tax revenues.

On the session's final two days there was significant legislative action, including:

- Overriding all budget line items vetoed by the Governor in HB 351, HB 352, HB 353, HB 354, and HB 356.
- Overriding five bills vetoed by the Governor, SB 2, SB 5, HB 150, HB 195, and HB 336
- Passage of several COVID-19 matters: 
  • HR 135 that creates an Emergency Preparedness Task Force 
  • HB 387 that allows budget flexibility for the Governor to buy PPE  
- Several constitutional amendments were passed, including SB 15 Marsy's Law
- SB 191 that would provide for employer sponsored substance use disorder programs was given final passage
- The Senate confirmed Governor Beshear's appointments to the Kentucky Board of Education.

Those bills passed the final two days of the session are subject to review by the Governor and potentially could be vetoed, without legislators having the ability to override.

In all, nearly a hundred bills were passed by the General Assembly this session. In the next few days we will be preparing an end of session report summarizing legislative activity of particular interest to you, which will contain a list of those bills that passed to aide in your compliance efforts.


Legislative Update & Bill Lists - April 14, 2020

From Government Strategies:

The General Assembly met until late yesterday evening and before adjourning they had: 

- Acted to override five bills vetoed by the Governor, SB 2, SB 5, HB 150, HB 195, and HB 336.
- Deliver another 11 bills to the Governor/Secretary of State
- Take floor action on another half dozen bills that will need some additional concurrence today.

The legislature will meet today for the final day of the 2020 Regular Session and we expect them to consider:

- The Governor's vetoes of the budget and revenue bills
- COVID-19 relief/recovery bill
- Possibly a dozen other bills still awaiting final legislative action.


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

Wednesday, April 1, 2020

Bill Lists - April 1, 2020

From Government Strategies:

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

KY Legislative Update -- Day 51


Day 51 -- As Expected

The Kentucky General Assembly convened today for the purposes of finalizing action on the "budget" and the various affiliated bills. As was expected they did just that taking action on the bills below and only these bills, all of which are budget related:

HB 352 - The $11 billion Executive Branch budget for the Commonwealth, as was previously announced the Conference Committee, and now enacted version of HB 352, is a one year only budget appropriating monies solely for FY 2021. (FCCR/Enacted)
HB 351 - The statutorily mandated "revenue" bill that is required to pass alongside the budget to provide funding for HB 352. 
HB 353 - The Transportation Cabinet budget
HB 354 - The Biennial Highway Construction budget
HB 355 - The Legislative Branch budget
HB 356 - The Judicial Branch budget
HJR 66 - This is the document containing the projects for the four out years of the 6 year Road Plan.
SB 249 - A pension related bill that extended the freeze on local government and quasi-government entity employer contributions rates and extended other quasi-governmental entity pension reforms like opt-outs. This was necessary to pass as it impacted the funding in the budget.
HB 308 - This is the annual claims bill, that appropriates monies  to satisfy any claims against the state.

Social Distancing
In a first for the House, members were asked not to be present in Chambers and were allowed to vote via paper ballot, which they photographed and sent via text message to a designated member of House Leadership who recorded verbally the member's vote on the floor. Members were provided access to the budget documents electronically and the proceedings were live streamed, so that they could follow along in their legislative offices, homes, or even in their cars in the Capitol parking lot in a couple of instances. This was unique and spoke to the impact COVID-19 is having on the 2020 General Assembly session in more ways than just passing a 1-year budget, which hasn't been done in Regular Session in recent memory. The Senate did have their members spaced out and practiced social distancing, but did not adopt the remote voting procedures of the House.

Looking Ahead
With the budget behind them, legislative leaders now have to decide when they will return for the session's remaining days and whether they plan to address any gubernatorial vetoes and take action on the 20-30 bills that await action in the chambers at that time. When the House and Senate adjourned today for the veto recess they did so until April 13. This is a departure from the current legislative calendar that had legislators returning April 14 & 15 for the session's final two days. It is our understanding the legislature may use all three days April 13-15 for legislative action, but may cut that short if they can proceed quickly through the remaining bills.

As to their agenda when they return, legislative leaders made remarks on the floor and to members of the media that they intend to finish their business and preserve their right to override any vetoes when they return later this month.  

KY Legislature to Return


The General Assembly will return to Frankfort tomorrow for the 51st legislative day to take action on the branch budgets and accompanying bills. A quick update is provided below on what to expect tomorrow.

Executive Branch Budget Update
Today, the House and Senate Chairs of the HB 352 Conference Committee presented a summary of the budget compromise reached between the two chambers. The proposal only budgets for Fiscal Year 21, leaving Fiscal Year 22 to be considered during the 2021 legislative session in January. The FY 21 budget, based on $115 Million less in revenue than original proposals, does not include pay raises for teachers or state employees and does not provide an increase to the SEEK formula. The compromise does fully fund public employee pensions contributions, freezes pensions contribution rates for quasi-governmental entities, and allocates the Volkswagen Settlement funds. You can view the HB 352 FCCR summary HERE.

Schedule
Legislators return tomorrow and will gavel in for the final legislative day before their scheduled return on April 14th and 15th for veto override votes and possible consideration of other bills. Six legislative committees were scheduled to meet tomorrow morning, but four have since been cancelled. As of this update, only the Senate Appropriations and Revenue Committee and Senate Transportation Committee will meet and are expected to take up budget related bills. Both Chambers convene at Noon and appear poised to only consider budget bills, the revenue bill that is required to accompany the state budget, and the Road Plan.

We will update you following tomorrow's actions.

Friday, March 27, 2020

Bill Lists - March 26, 2020

From Government Strategies:

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

KY General Assembly Update - 50th Day

Day 50

The General Assembly reconvened today for the 50th legislative day of the 2020 Session and for the first time since recessing last Thursday under an amended calendar brought about by the COVID-19 crisis. When the legislature adjourned tonight they did so until next Wednesday, April 1.

The purpose of today's legislative action was primarily focused around providing the Governor some statutory relief to respond to the COVID-19 pandemic. That relief came in the form of SB 150, a bill originally dealing with out of network health insurance billings, but the House removed those provisions on March 19 and replaced them with the COVID-19 statutory relief. The Senate and the Governor had some additional ideas for statutory flexibility so the bill was pushed into a conference committee today to make those changes. The final version of SB 150 will be available later this evening, but does contains the following:

- Expands various Unemployment Insurance provisions to allow for independent contractor and small business owners to apply, to match them up to the federal government changes, and to provide flexibility to the Education & Workforce Cabinet to administer;
- Mirrors the state tax filing deadlines to the Federal tax deadlines, but also waives penalties and interest for delayed state tax filings. 
- Allows health care providers to utilize telehealth technologies to see patients and requires those visits to be reimbursed the same as a face to face visit.  
- Provides local governments flexibility in tax filings, in meeting and reporting requirements.
- Allows for the relaxation of open meeting and open records laws to delay response to requests and to allow government officials to appear via remote technologies. 
- The provisions in SB 150 are only to last as long as the State of Emergency lasts and the bill requires the Governor issue an end date of the State of Emergency.

There were other bills considered today either in a handful of special called committee meetings or on the floors of the chambers as concurrences or conference committee reports. Of note was final passage of: HB 2 (Human Trafficking), HB 415 (Direct shipping of alcohol), HB 150 (law restatements), and HB 484 (Public employee pension reorganization). Other legislative activity from today was aimed at preparing bills for action when the General Assembly returns next Wednesday. 

We expect next Wednesday to be a long day of legislative activity with the primary focus being passage of the budget bills including the Executive Branch Budget and the Transportation Budget. In addition, we are expecting the legislature to finalize action on a handful of bills they want to see passed this session that primarily are non-controversial. Just a reminder that bills will need to be passed by midnight on April 1 in order to preserve the legislature's ability to override any gubernatorial veto before constitutionally mandated adjournment on April 15.

Speaking of the budget, the Budget Conference Committee made up of House and Senate Leadership and the two A&R Chairs will continue its work tomorrow and likely through the weekend to finalize the budgets for action next Wednesday. The Conference Committee agreed yesterday to base the budget on the "pessimistic" estimates provided by the Consensus Forecast Group. This change means that they will have $115 Million less in FY 21 and $174 Million less in FY 22 than previously anticipated. The House and Senate agreed to remove teacher and state employee raises and increases in SEEK and higher education. Additional cuts and/or changes will be needed to budget to the revised revenue estimates and therefore we expect the final budget bill to look much different that what was previously passed in either chamber.

Friday, March 20, 2020

Recess/Schedule Change/Bill Lists - March 19, 2020

From Government Strategies:

Recess - The General Assembly, upon completing their business last evening, recessed until Thursday, March 26. The Conference Committee on the budget, HB 352, will begin on Monday and is expected to be televised. After meeting in session on March 26, the General Assembly is expected to recess again until April 1 when the final vote on the state budget will be held.

Bill Lists - During the General Assembly, you can view the following bill lists updated nightly.

Wednesday, March 18, 2020

Budget & Bill Lists - March 18, 2020

From Government Strategies:

Below are the nightly bill lists updated with the current legislative actions. We also wanted to share a link to the Senate Committee Substitute to HB 352, the Executive Branch budget, that was approved in the Senate A&R committee upon adjournment today.  This document highlights the Senate changes made to the Executive Branch budget. Of note is that the legislature has asked for an updated revenue estimate in light of the recent downturn in the economy due to Covid-19. The Senate version of the budget does not reflect the new estimate, but it is expected the budget that emerges from the Conference Committee next week will reflect the new estimate. 

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