FRANKFORT (AP) — Senate Republicans have approved a two-year budget that would slash spending across most of state government and use the money to bolster Kentucky’s struggling retirement systems, a proposal headed toward an election year battle with House Democrats.
The Republican-controlled Senate approved the $68 billion spending plan 27-2 after hours of debate Wednesday. Nine Democrats voted “pass,” meaning they did not vote for or against the bill.
The Democratic-controlled House is almost certain to reject the changes, clearing the way for what could be contentious budget negotiations just seven months before the November elections. Republicans need to pick up four seats to take control of the House, the last legislative chamber in the South still controlled by Democrats.
The Senate budget plan would cut most areas of state government by 9 percent over the next two years, with some exceptions including per pupil spending in K-12 education and Medicaid benefits. The cuts would include colleges and universities, public preschool and court appointed advocates for the neglected and abused children. It also eliminates $1 million for screenings for breast cancer and cervical cancer and $15 million in loans for repairs to the Kentucky School for the Blind.
“I believe these cuts adversely affect women, children and the disabled,” said Democratic Sen. Denise Harper-Angel of Louisville, who voted “pass.”
But Republicans said the cuts, while painful, are necessary to fix the state’s broken pension system. The budget pledges an additional $1.2 billion for the state’s two pension systems for public school teachers and state employees. Those systems are among the worst funded in the country with an estimated debt of more than $30 billion that, if allowed to grow unchecked, could cripple state services in the future.
Included is $250 million set aside in a “permanent fund,” money that can only be used for the pension system in the future pending a system-wide audit. Republican Gov. Matt Bevin has pushed for the fund, saying it would act as a backstop to the Kentucky Employees Retirement System, which has just 17 percent of the money it needs to pay out future benefits.
“It’s not something that we particularly wanted to do, it’s something we had to do,” said Republican Sen. Chris McDaniel, the Senate budget chairman, about the cuts to colleges and universities. “We have got to make our primary investment in getting these pension plans solvent.”
Bevin recommended $650 million in state spending cuts. House Democrats restored nearly half of them. The Senate put most of those back on Wednesday. But the impact of some cuts has been dulled. The Executive Branch Ethics Commission, the agency charged with holding Bevin’s administration accountable to state ethics laws, was cut 9 percent. But the Senate also proposed increasing lobbyist registration fees to $500 from $125. The ethics commission would keep that money, and McDaniel said it should be enough to compensate the agency for the cuts.
Colleges and universities were not protected. In addition to the cuts, the Senate proposal forbids the universities from borrowing money for projects without legislative approval. Republican lawmakers also noted that, in 2008, public colleges and universities earned $4.7 billion in revenue. Today, after years of similar state budget cuts, that number is $6.3 billion.
“As you can see with budget cuts from the state, even taking those cuts, they’ve done a terrific job in doing things to increase revenue,” said Republican Sen. Stephen West of Paris.
Democratic Sen. Reggie Thomas of Lexington said that money has come in the form of increased tuition.
“Those revenues have come on the backs of middle income students and low income students and their families,” Thomas said.
Lawmakers have until Wednesday to deliver a compromise to Republican Gov. Matt Bevin’s desk or they would lose the ability to override any potential vetoes. Lawmakers from both parties, while acknowledging the “painful” budget cuts, also noted the budget is certain to change.
“For those of you watching this, hold your phone calls,” Republican Sen. Tom Buford of Nicholasville said while explaining his “yes” vote. “We don’t even know what this budget is going to look like in a few days.”