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February 1, 2016 8:26pm

Governor Bevin’s Budget Proposal Sparks a Flurry of Activity in the Legislature

The fourth week of the 2016 General Assembly was consumed by Governor Bevin’s release of his budget and policy proposals in his first State of the Commonwealth & Budget Address to a joint session of the General Assembly on Tuesday. Given the austere approach the Governor took in his budget proposal, one would have to say the state of the Commonwealth’s finances is shaky. Here are a few highlights from the Governor’s recommended budget.

– Budget cuts of 4.5% in the current fiscal year and 9% per year in FY 2017 & FY 2018 for most state government agencies. Several areas of government were exempted from the cuts, including: K-12 education, Medicaid, and Corrections. After removing these and other exempted agencies the net effect is a 2.5% cut to the entire budget.

– Public employee pension systems were the recipients of most of the savings garnered from the budget cuts, with nearly $1 billion going to the KY Teachers Retirement and KY Retirement Systems combined.

– Universities faced a double whammy of the aforementioned budget cuts, cuts plus the prospect of moving their state funding to an outcome-based funding formula.

– Outside of the universities, education and workforce development spending was significant. The K-12 education funding formula was exempt from cuts and received an additional $39 million to keep the SEEK formula balanced due to new enrollment growth. There was also a $100 million bond pool for advanced manufacturing training and the Governor earmarked lottery proceeds for a new scholarship focused on workforce development.

– The Governor also suspended prevailing wage laws for public projects in his budget proposal.

GLI appreciates the Governor’s focus on pensions in his budget proposal. We look forward to engaging with the House as they begin to consider the Governor’s proposal over the next several weeks.

GLI has a comprehensive legislative agenda for 2016.
Below is an update on some of the bills from the agenda:

Workforce Development– Rep. Larry Clark (D-Louisville) filed House Concurrent Resolution 97 this week. It joins Senate Concurrent Resolution 75 filed by Senate President Pro-Tem David Givens (R-Greensburg) last week. Both are focused on establishing a Task Force to study and develop recommendations concerning the benefits, investments, and funding of workforce education. GLI is supportive of the resolutions and efforts of Sen. Givens and Rep. Clark to bring clarity to how workforce training dollars are spent.

Felony ExpungementHouse Bill 40, filed by Louisville Representative Daryl Owens (D-Louisville), would allow for the expungement of some non-violent class D felonies while providing provisions that offering protection for employers. The bill would permit roughly 90,000 Kentuckians to better participate in the workforce. The bill awaits action in the Senate Judiciary committee.

Prevailing Wage – We mentioned above that Governor Bevin suspended prevailing wage laws in his budget proposal this week, but there is legislation pending on the subject as well. Senate Bill 9 sponsored by Sen. Wil Schroder (R-Wilder), would exempt school and university construction projects of $250,000 or more from the state’s prevailing wage laws.The bill awaits action in the House Labor & Industry committee. Senator McDaniel (R-Taylor Mill) also filed Senate Bill 94 that awaits action in the Senate State & Local Government committee. SB 94 would allow local governments to opt out of prevailing wage for public works. GLI supports the repeal of prevailing wage laws and sees these bills as good steps forward.

Distillery ModernizationSenate Bill 11, filed by Senator Schickel (R-Union), is an omnibus alcohol bill that allows distilleries to sell by the drink and will increase the potential volume of souvenir package sales. The bill awaits action in the House Licensing & Occupations committee. GLI supports placing the distilled spirits industry on equal footing with wineries and brewers in the Commonwealth.

Pensions – Sen. Joe Bowen’s (R-Owensboro) Senate Bill 2 that would make the pension systems more transparent and accountable passed out of the Senate State & Local Government committee this week. There was no action this week on Speaker Stumbo’s (D-Prestonsburg) House Bill 1, a proposal to shore up the KY Teachers Retirement system with $3.3 billion in bonding. HB 1 awaits action in the House Appropriations & Revenue committee and SB 2 will likely be voted on the Senate floor in the coming week. The state’s troubled public employee pension plans continue to be a leading issue for this session.

Education StandardsSenate Bill 1, an omnibus education reform proposal filed by Sen. Mike Wilson (R-Bowling Green), continues to be on the radar of education and business interests that are trying to understand its full impact. The bill sets up a process for reviewingthe state’s education standards and aligning them with the assessment and accountability system to produce more college and career ready graduates. The bill will likely be considered in the Senate Education committee this week.

Right To WorkSenate Bill 3, filed by Senate President Robert Stivers (R-Manchester), is this session’s Right to Work bill. The bill awaits action in the Senate Economic Development committee. The legislation would give workers a choice regarding joining a union and remove the requirement that employees pay union dues as a condition of employment. GLI supports this legislation as one of our top priorities.

Medical Review PanelsSenate Bill 6, sponsored by Senator Ralph Alvarado (R-Winchester), creates a system of medical review panels to address the escalating costs directly attributed to Kentucky’s uncontrolled medical liability climate. The bill passed out of the Senate Health & Welfare committee this week and will likely be considered by the full Senate in the coming week. GLI supports this legislation.

Public Benefit CorporationsHouse Bill 50, sponsored by Representative Kelly Flood (D-Lexington), was favorably considered in the House Judiciary committee this week and awaits action on the House floor. HB 50 permits public benefit corporations in Kentucky, which is a corporation that allows a company’s board of directors to take “public benefit” into account, in addition to shareholder benefit, when making decisions about the company. GLI is supportive of this legislation.

Road Aid ModernizationHouse Bill 69, introduced by Rep Arnold Simpson (D-Covington), reformulates the road fund revenue sharing to a formula of thirds based on population, road mileage, and land area. The bill provides a more equitable share to cities and urban areas, which GLI supports. The bill awaits action in the House Appropriations & Revenue committee.

School Leadership – One of the key education issues for Louisville and JCPS for the 2016 Session is to give superintendents more flexibility in selection of principals within school districts. Legislation to provide that authority, House Bill 184, sponsored by Louisville Delegation Chair Jeff Donohue (D-Louisville), is likely to be considered in House Education this week.

Limited Liability Entity Tax – Rep. Brent Yonts (D-Greenville) filed House Bill 292 this week to expand the definition of”cost of goods sold” under the LLET to include any costs allowed by the Internal Revenue Code. The bill awaits action in the House Appropriations & Revenue committee.

Property & Real Estate Development – House Bill 57 , sponsored by Rep. Dennis Keene (D-Wilder), would expand the definition of a mixed-use development project, streamlining the process for a TIF application, especially in regions with a consolidated local government. It was reported favorably upon its first reading and it awaiting a reading before the Rules Committee. Senator Ralph Alvarado (R-Winchester) filed Senate Bill 68 to correct a 2012 KY SupremeCourt ruling that made a landlord strictly liable for the actions of a tenant’s dog. The bill has passed the Senate and awaits action in the House Judiciary Committee and GLI will be pushing for its consideration.

Public-Private Partnerships – On Wednesday, Rep. Leslie Combs (D-Pikeville) filed House Bill 309 and Sen. West (R-Paris) filed SB 132, both of which would to allow for Public-Private Paternerships (P3s) in Kentucky. New provisions this session prohibit tolling on interstate highway projects between Kentucky and Ohio and mandating legislative approval for P3 agreements on such projects mirror the P3 legislation that passed the legislature in 2014 but was vetoed by Gov. Beshear.

Workers Compensation Temporary Total DisabilityHouse Bill 311 filed this week by Rep. Bart Rowland (R-Tompkinsville) would allow payments of temporary total disability benefits to be offset by wages paid to an employee by an employer for light duty or alternative duty work performed during a period of temporary total disability. GLI is pushing for passage of this legislation.


In Indianapolis, GLI has begun legislative efforts to achieve the initiatives outlined in our Legislative Agenda.

Bridge Tolling – In Senate Bills 228 and 229, Sen. Ron Grooms (R-Jeffersonville) has proposed a tax credit or tax deduction from Southern Indiana residents who incur sizeable non-reimbursed toll expenses crossing the new bridges. Both bills have been referred to the Senate Committee on Tax & Fiscal Policy and are awaiting action.

Sunday Alcohol SalesHouse Bill 1274, authored by Rep. Ed Clere (R-New Albany), which would allow the holder of an artisan distiller’s permit to sell liquor for carryout on Sunday, has passed through the Public Policy Committee. Other proposals to allow Sunday alcohol sales and legalize “Happy Hours” have faltered.

Transborder Groundwater AuthorityHouse Bill 1137, authored by Rep. Steven Stemler (D-Jeffersonville), proposes the establishment of an Indiana-Kentucky groundwater authority that would be tasked to study ownership rights in the groundwater resources shared by Indiana and Kentucky and to explore entering into an interstate compact with Kentucky concerning the use of the groundwater underlying southern Indiana and northern Kentucky. The bill received its first hearing before the Statutory Committee on Interstate and International Cooperation. Both GLI and 1si testified in favor.