FRANKFORT (AP) — Kentucky House Democrats used their reinforced majority to reject nearly half of Republican Gov. Matt Bevin’s budget cuts Tuesday while still managing to fully fund required contributions to the state’s struggling public pension systems without borrowing money.
The House Appropriations and Revenue committee approved a two-year state spending plan Tuesday, with the full House scheduled to vote on the plan Wednesday. Most Republicans on the committee voted “pass,” meaning they did not vote for or against the bill. Rep. Jim Stewart of Flat Lick was the only Republican to vote “yes.”
Bevin, the state’s second Republican governor in four decades, quickly declared the state was in a financial disaster less than two months after taking office and called for $650 million in spending cuts in his first budget proposal. The reductions included a 4.5 percent cut this year and 9 percent cuts in each of the next two years, with a lot of that money coming from the state’s public colleges and universities.
College presidents revolted, calling the cuts “draconian” and warning about massive tuition increases, program cuts and, in one instance, possible closure if the cuts were approved. Bevin did not relent, telling a crowd of community college supporters in the Capitol rotunda that “the cuts have to come from somewhere” and declaring as recently as last week he would not sign a budget that did not include the cuts.
But Democrats ran against Bevin’s budget cuts in a series of special elections last week, winning three of the four seats to give them a 53-47 majority in the House. It takes 51 votes to pass a budget. Tuesday, they rejected all of Bevin’s cuts to colleges and universities.
“For all the people who contacted me with tremendous anxiety about the possibility of losing college scholarships, of losing jobs, of losing funding for their educational programs, I hope there is a sigh of relief with this budget,” said Democratic state Rep. Terry Mills of Lebanon.
Yet the Democrats’ plan earned cautious praise from House Republicans because it gives more than $1 billion in extra money to the retirement plan for public school teachers and another $90 million to the retirement plan for state workers, all without borrowing money. Both systems are among the worst funded in the nation and have prompted downgrades in the state’s credit rating on certain bonds.
Although the extra money does not come close to fixing the state’s public pension debt, estimated at more than $30 billion, it is enough money to keep the debt from getting worse. Bevin’s proposal would have covered only about 60 percent of the money needed for the teachers’ retirement system. But it would have set aside $500 million in a “permanent fund” that could only be used for the retirement system in the future.
“We didn’t see really any reason to wait. The pension funds need the money now,” said Democratic state Rep. Rick Rand, chairman of the House budget committee.
In a news release, Bevin said he was glad to see Democrats “clearly got the message” Kentuckians are tired of borrowing money. But he criticized the House for rejecting the permanent fund “with little regard for the future.”
“Their proposed budget once again continues the bad habit of spending one-time funds for recurring expenses,” Bevin said.
House Republicans, meanwhile, had prepared a counter proposal. But they withdrew it.
“I have to say that it looks like something that the minority could probably live with,” said Republican state Rep. Steven Rudy, who led the Republican efforts.
The budget proposal also rejected spending cuts for all of the state constitutional officers, including the attorney general, secretary of state and treasurer. And it rejected cuts to the Executive Branch Ethics Commission, the watchdog state agency that oversees Bevin’s administration.
The budget also takes the money that would have been spent on kynect and gives it to the state’s two largest retirement systems. Kynect is the state run health benefit exchange where nearly 100,000 people have purchased private insurance plans with the help of a federal subsidy. Bevin is dismantling that system because he says it is too expensive.