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This Week in Frankfort, according to the LRC

March 19, 2010

Today wraps up another week in the 2010 session of the Kentucky General Assembly, and the Legislative Research Commission’s Public Information Office has another good wrap-up of the action.

When lawmakers return on Monday, they’ll be on day 52 of the 60-day session, with the budget still laying before them. So far, 19 bills have made their way to the governor for his signature – you can see what’s been passed so far here. The Senate is slated to have a vote on its version of the budget early next week, and the work of the conference committee on the spending plan will likely begin not long after.

Keep reading to see what else was on the table during the past week in Frankfort. The Senate’s work on the budget certainly dominated the news, but lawmakers also worked on potential changes to contributions by teachers to their health insurance benefits pool for retirees and looked at sending a portion of workers comp contributions back to small businesses.

This Week in Frankfort

The 2010 Kentucky General Assembly: Week 11

LRC PUBLIC INFORMATION

FRANKFORT – Saying little of its intent, the Senate this week pondered the House version of a two-year, $17.5 billion state budget, which now awaits action by the upper chamber, and made ready to write and reveal its own proposal.

This waiting-week’s message may have been boiled down simply, in a warning the Senate budget chairman gave his committee Tuesday during a briefing on the House bill:

‘There are some very difficult decisions to be made.’

The House-passed budget bridges an assumed $1.2 billion gap between expected revenues and spending through a number of agency spending cuts, expected federal stimulus money, and economies across state government – along with about $320 million in accelerated tax collections through a couple of changes in the business-tax code. One of those would suspend for two years the ability of business to carry forward past-year operating losses to offset current-year taxable income.

The business-tax portion of the bill has gained little or no traction in the Senate, one factor that prompted the budget chair’s warning.

Without those revenues, he said, there’s ‘a big hole to be filled,’ and further cuts in government spending beyond those envisioned by the House might be needed – with everything on the unpleasant table of shared sacrifice, including elementary and secondary education.

Proponents say the House proposals aren’t tax increases, just minor tweaks to bring in money more quickly to help meet the current unprecedented shortfall. But opponents counter that the changes would nonetheless require businesses to pay more taxes over the next two years than they otherwise would – during a recession when unemployment is high and the money could better be used for staying in business and maintaining or growing payrolls.

At this writing, it’s anticipated the Senate’s own budget plan will be finalized and start moving through the process early next week. Time now becomes a serious consideration. Only nine working days remain to pass a budget, just eight if lawmakers want to keep the option to override a veto or line-item veto by a governor who has expressed his own doubts about the plan in its current form.

Since the Senate budget bill will almost surely differ significantly from the House version, a House-Senate conference committee would have to meet and work out the differences. Historically, that has been a lengthy and difficult process. Lights burn late at the Capitol.

Meanwhile this week, a bill to protect health insurance benefits for retired teachers cleared its first legislative hurdle on Tuesday when it passed the House budget committee. By upping contributions into the health insurance fund from active teachers, retired teachers under age 65, school districts, universities and the state, HB 540 would shore up the ailing fund over the next six years.

Also, for several years now, the state has borrowed hundreds of millions of dollars from the teachers’ pension system to cover the cost of its retirees’ health insurance. But another bill, HB 531, would help the state repay that money with over $800 million in bonds while saving the state millions of dollars in interest.

Another money-saving bill – this geared mainly toward small business – passed the Senate this week. Senate Bill 214 would inject more than $60 million back into the economy through rebates of workers-comp insurance premiums to Kentucky businesses.

Kentucky Employers Mutual Insurance – usually known as KEMI – was created by the General Assembly in 1994 to sell affordable workers-compensation insurance to thousands of businesses statewide. KEMI has proven financially successful. It now has a surplus of more than $150 million. SB 214 would require 40 percent of that surplus to be issued as a dividend to policyholders, with additional rebates in future years if excessive surpluses continue.

Also this week, the Senate passed a slightly amended version of HB 1—a highly publicized piece of domestic-violence legislation that’s come to be known as ‘Amanda’s Bill. It was named for Amanda Ross, a Lexington woman shot and killed outside her apartment last year, allegedly by an estranged dating partner. Among other things, the bill would allow judges to order certain violators of domestic violence orders to wear GPS ankle bracelets that would track their movements. Senate changes in the bill must now be agreed to by the House, which passed the original bill early in the session.

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