3 Things you need to know about this week in Frankfort: Budget, Politics & Timing

The Top 3 Things you need to know about this week in Frankfort:

  1. Budget – The focus remains on the budget. Various House and Senate committees continue to review Governor Bevin’s budget proposal and hear testimony from agencies and interest groups about the impact of his proposed budget. Based on public statements and comments during committee hearings, it appears that House Democrats want to try and find a way to walk back some of the Governor’s budget cuts, particularly in the areas of Pre-K to post-secondary education. How they would restore the funding while still balancing the budget is less clear. Some pension bonding may be in the mix.
  1. Politics – There seemed to be a growing political strain between the chambers and the parties within the chambers this week. Much of that is due to the special elections being held on March 8 to fill four open House seats. Control of the House lies in the balance as Republicans have a chance to force a 50-50 tie with Democrats if they win all four of the special elections. Therefore, it isn’t surprising that tensions are high in Frankfort.
  1. Timing – As the legislature wrapped up its eighth week and 36 of 60 legislative days on Friday, there was a sense that time was growing short. With some pretty intense politics centered around March 8, we aren’t expecting a significant amount of legislative activity on the session’s biggest issue, the budget, until everything shakes out after the special election. This means that a House version of the budget isn’t likely to emerge until the week of March 14.

Concerns on Pension Bonding

As the General Assembly continues to grapple with the state budget, one of the factors that is making the work more difficult is the significant shortfall in the KY Teacher’s pension plans. In order to meet these pension obligations the legislature is faced with putting significant dollars into shoring up these systems. In his budget proposal, the Governor opted to make significant budget cuts to fund pension shortfalls. The House may consider some form of pension bonding to free up dollars that can be used in lieu of proposed cuts.

GLI is concerned that this discussion focuses solely on the funding side of the equation. We continue to support a comprehensive review of the KY Teacher’s pension plans that would include costs and sustainability of the benefits. We have heard plenty of good points made on both sides of the pension bonding debate, but we believe the wrong question is being asked. Instead, we believe the question lawmakers should be asking is: What level of benefit is appropriate and what level of support is then necessary to fund that level of benefit? Until both sides of the equation are considered, we are skeptical of pension bonding for KTRS.

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

Key Bills

Distillery Modernization
There are two key bills of interest:
– House Bill 433 – House Licensing & Occupations Committee – Focuses specifically on clean-up of distilled spirits issues; it was filed with 41 members of the House signing on as co-sponsors.
– Senate Bill 11 – House Licensing & Occupations Committee – Is an omnibus clean-up of various alcohol-related issues, including the distillery issues in HB 433.
GLI supports placing the distilled spirits industry on equal footing with wineries and brewers in the Commonwealth. 

Education Standards
There are two keys bills of interest on education standards:
– Senate Bill 1 – House Education Committee – SB 1 is an omnibus education reform proposal that will set up a process for reviewing the state’s education standards and aligning them with the assessment and accountability system. GLI continues to listen to its education partners as to how SB 1 may impact the significant progress Kentucky is currently making in education. SB 1 passed the Senate last week by a vote of 25-12.
– Senate Bill 210 – Senate Education Committee – SB 210 would repeal and replace Kentucky’s current academic standards, which would be inefficient and a waste of dollars and time for our teachers. GLI is opposed to SB 210.

Encourage Computer Science in Schools
Senate Bill 107 – House Education Committee – Filed by Sen. Givens, it would encourage the development of more computer science programs in local schools. GLI is supportive of this legislation

Expanded Gaming
– Senate Bill 144 – Senate Veterans Committee – Sponsored by Sen. Morgan McGarvey, this is a constitutional amendment legalizing casino gaming and dedicating 90% of the proceeds to Kentucky’s public employee pensions. GLI took a leadership role in support of this bill.

Felony Expungement
– House Bill 40 – Senate Judiciary Committee – Filed by Rep. Daryl Owens, this would allow for the expungement of some non-violent class D felonies while providing provisions that offering protection for employers. This is a critical workforce issue for GLI.

Justice Reforms –
– House Bill 412 – House Judiciary Committee – would create a new category of misdemeanor as well as implement additional reforms that would streamline the redemption process for non-violent felons. GLI supports a smarter, more cost-effective approach to criminal justice.

KEES for Dual Credit
– Senate Bill 127 – Senate Appropriations & Revenue Committee – This legislation would allow Kentucky students to use their KEES scholarships for dual credit courses while they are still in high school. GLI is supportive of this legislation.

Kentucky Economic Development Partnership
– House Bill 216 – Senate Economic Development Committee – Sponsored by Rep. Mike Denham, this would add the chairperson of the Commission on Small Business Advocacy and a representative from the NFIB/Kentucky to the Kentucky Economic Development Partnership. GLI is supportive of this legislation.

Kentucky Preference in Procurement
– House Bill 227 – House State Government Committee – Filed by Rep. Jeff Donohue, this would give a preference in state procurement to products made in Kentucky regardless of cost or availability.

Landlord Liability
– Senate Bill 68  – House Judiciary Committee – Sponsored by Sen. Alvarado, this would correct a 2012 KY Supreme Court ruling that made a landlord strictly liable for the actions of a tenant’s dog. GLI will be pushing for consideration of this bill.

Lawn Service Workers Comp Exemption
– House Bill 56 – House Floor – Sponsored, by Rep. Myron Dossett, the bill adds lawn services to the list of exemptions from workers’ compensation on a private home if the contract is for no more than 20 days. GLI believes this would be a positive change.

LIFT
Two bills deal directly with GLI’s top legislative priority:
– House Bill 374 – House Local Government Committee – The LIFT enabling legislation was filed by Rep. Tommy Thompson.
– House Bill 2 – House Elections Committee – The constitutional amendment allowing for a local option sales tax was filed by Speaker Stumbo and Minority Leader Hoover.

Limited Liability Entity Tax
– House Bill 292 – House Appropriations & Revenue Committee – Sponsored by Rep. Yonts, this would expand the definition of “cost of goods sold” under the LLET to include any costs allowed by the Internal Revenue Code. GLI is a proponent of this bill.

Medical Review Panels
– Senate Bill 6 – Senate Floor – Sponsored by Sen. Ralph Alvarado, the bill creates a system of medical review panels to address the escalating costs directly attributed to Kentucky’s uncontrolled medical liability climate. GLI supports this legislation.

Pensions
There are several bills of interest:
– Senate Bill 2 – House State Government Committee – Sen. Bowen’s bill would make the pension systems more transparent and accountable
– House Bill 1 – House Appropriations & Revenue Committee – Speaker Stumbo’s bill is a proposal to shore up the KY Teachers Retirement system with $3.3 billion in bonding.
– House Bill 271 – House State Government – Rep. Jerry Miller’s bill requires benefit information to be disclosed by the retirement systems.
– Senate Bill 45 – House State Government Committee – Sen. McDaniel’s bill requires disclosure of information related to pensions of current and former members of the legislature.
– House Bill 238 – Senate State & Local Government Committee – Rep. Yonts’ bill requires the Public Pension Oversight Board to hire their own actuary to do an actuarial audit of the state-administered retirement systems at least every 10 years and review the retirement system’s budget requests every two years.

Prevailing Wage
– Senate Bill 9 – Voted down in House Labor & Industry Committee – Sponsored by Sen. Schroder, would exempt public construction projects of $250,000 or more from the state’s prevailing wage laws.
– Senate Bill 94 – Senate State & Local Government Committee – Sen. McDaniel’s bill would allow local governments to opt out of prevailing wage for public works.

GLI supports the repeal of prevailing wage laws.

Public Benefit Corporations
– House Bill 50 – Senate Judiciary Committee – Sponsored by Rep. Flood, the bill permits public benefit corporations, 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. Thirty-one other states have legalized this type of corporation and it is time Kentucky did the same. GLI is supportive of this legislation.

Public-Private Partnerships
– House Bill 309 – Senate Economic Development, Tourism, & Labor Committee – Sponsored by Rep. Leslie Combs, it would allow for P3s as a critical tool for the Commonwealth accomplishing economic development projects in cooperation with private industry. GLI supports allowing for P3s in Kentucky.

Right To Work
– Senate Bill 3 – Senate Economic Development Committee – Filed by Senate President Robert Stivers, SB 3 is this session’s Right to Work bill. GLI supports this legislation as it is one of our top priorities.

Road Aid Modernization
– House Bill 69House Appropriations & Revenue Committee – Sponsored by Rep. Simpson, this bill reformulates the road fund revenue sharing to a formula of thirds based on population, road mileage, and land area. GLI supports a more equitable share of road funds for urban areas.

School Leadership
– House Bill 184 – Senate Education Committee – Sponsored by Louisville Delegation Chair Jeff Donohue, this bill would give superintendents more flexibility in selection of principals within school districts. This is one of the key education issues for Louisville and JCPS for the 2016 Session and GLI is highly supportive of this legislation.

Smoke-Free Legislation
– House Bill 351 – House Health & Welfare Committee – Filed by Rep. Susan Westrom, this would prohibit smoking in indoor public places. GLI is a proponent.

Tax Reform 
– House Bill 342 – House Appropriations & Revenue Committee – Rep. Jim Wayne filed this omnibus tax reform proposal that relies on many of the recommendations from former Governor Beshear’s tax reform task force. The bill creates a burden for many industries by placing a personal property tax on manufacturing equipment, retail inventory, and raw materials, including distilled spirits.  Businesses operating in other states could be taxed by Kentucky if they are not taxed by the other state, which could create a competitive disadvantage for Kentucky.  GLI is supportive of comprehensive tax reform that is consumption-based and pro-business.  Learn more about our tax reform recommendations here.
House Bill 247 – House Appropriations & Revenue Committee – Sponsored by Rep. Watkins, this bill increases the cigarette tax. GLI believes this would be a positive step to raise revenue for the Commonwealth.

Workers Comp Subrogation
– House Bill 200 – House Labor & Industry Committee – Would clean up statutes related to workers compensation insurance subrogation in favor of employers. GLI believes this bill would be a positive change.

Workers Compensation Temporary Total Disability 
– Senate Bill 151 (Sen. West) & House Bill 311 (Rep. Rowland), both in the House Labor & Industry Committee – 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 supports this legislation.

Workforce Development
There are two resolutions of interest:
– Senate Concurrent Resolution 75 – Senate Floor – Filed by Senate President Pro-Tem David Givens
– House Concurrent Resolution 97 – Senate Education Committee – Filed by Rep. Larry Clark
Both would establish a Kentucky Workforce Oversight Task Force with the purpose of developing recommendations on workforce development and education to be delivered at the end of this year. GLI is supportive of the resolutions and efforts of Sen. Givens and Rep. Clark to bring clarity to how workforce training dollars are spent.

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