March Madness: Budget Edition

Five things you need to know about This Week in Frankfort:

  1. Democrats Retain Majority in House – Democrats went into Tuesday controlling the House 50-46 with four open seats that could have changed the balance of power in the House. Voters went to the polls Tuesday in special elections to fill those four vacant House seats and Democrat candidates won three of those four elections, giving the Democrats a 53-47 majority in the State House. Read our analysis.
  2. House Budget – Timing – We are expecting the House to pass their version of the budget on Tuesday, assuming that the special elections are certified Tuesday morning so that the new House members can be seated Tuesday afternoon. The House Democrats need those new members seated, so that they have enough votes to pass the budget. Tuesday will be the 47th legislative day, leaving only 11 legislative days for the Senate to review and pass their version of the budget, for House and Senate leaders to convene a budget conference committee, and get final passage on or before March 29 so that it can go to the Governor to consider any vetoes.
  3. House Budget – Content – There are more questions than answers at this point, outside of a few comments made by Speaker Stumbo this week. We are expecting the cuts Governor Bevin proposed to K-12 and Postsecondary education to be mitigated significantly. However, the other cuts to state agencies proposed by Governor Bevin are likely to remain.
  4. GLI’s Top Priority Passes House – GLI’s number one legislative priority is passage of legislation allowing for the Local Investments for Transformation, liftkentucky.com. House Bill 2, a constitutional amendment allowing for LIFT, and House Bill 374 the enabling legislation, both passed the House this week. The bills now head to the Senate for consideration. A big thanks to the House of Representatives, particularly Speaker Stumbo, Minority Leader Hoover, and Rep. Tommy Thompson.
  5. Returning Pharmacy Jobs to Kentucky – Several years ago, outdated pharmacy regulations prevented pharmaceutical distributor Medco from locating in Kentucky. House Bill 527, filed by Rep. Tom Burch and co-sponsored by Rep. Jerry Miller, would for limited distribution mail order pharmacies to operate in the Commonwealth. It has passed out of committee and is on the House Consent Calendar. GLI has played a critical leadership role in promoting this legislation because it would allow one of GLI’s members to create a pharmacy hub in Louisville. We appreciate the bi-partisan leadership demonstrated by Reps. Burch and Miller.

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

Key Bills Moving Forward This Week

Felony Expungement – This is a critical workforce issue for GLI.

  • House Bill 40Senate Judiciary – Filed by Louisville Representative Daryl Owens, would allow for the expungement of some non-violent class D felonies. Requires a 5 year waiting period.
  • Senate Bill 298Senate Judiciary – Filed by Senate President Robert Stivers, is the Senate’s expungement bill. The bill exempts very specific felonies and requires a 10 year waiting period.

Franchises

  • Senate Bill 198Senate Floor – This legislation filed by Sen. Wil Schroder, would provide that neither a franchisee nor an employee of a franchisee shall be deemed to be an employee of the franchisor for purposes of wage and hour laws, occupational safety laws, unemployment laws, and workers comp laws. GLI supports this bill.

LIFT – These two bills deal directly with GLI’s top legislative priority:

  • House Bill 374Passed House, awaiting Senate action – The LIFT enabling legislation was filed by Rep. Tommy Thompson.
  • House Bill 2Passed House, awaiting Senate action – Filed by Speaker Stumbo and Minority Leader Hoover, the constitutional amendment would allow for a local option sales tax.

Justice Reform

  • House Bill 412House Floor – 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.

Pensions

  • Senate Bill 2House State Government – Sen. Bowen’s bill would make the pension systems more transparent and accountable.

Pharmacy Administration

  • House Bill 527Posted for Passage on House Consent Agenda – Filed by Rep. Tom Burch and co-sponsored by Rep. Jerry Miller, would amend Kentucky’s pharmacy law to allow restricted distribution pharmacies to perform administrative activities outside of a licensed pharmacy in the United States, while protecting patients’ interests by keeping activities related to the evaluation and implementation of drug orders, including dispensing activities, inside licensed pharmacies. GLI has been a driving force behind this legislation.

Workforce Development

Work Ready Kentucky

  • House Bill 626House Floor – The House Democrat’s Work Ready Kentucky Scholarship Program passed the House Appropriations & Revenue committee this week and it is poised to be voted off the House floor next week. The program would provide free tuition for graduating high school students attending the state’s community and technical colleges. The program is apparently not requiring new dollars, but is being funded out of other funds in Governor Bevin’s budget.

Key Bills

Business & Non-Profit Regulation

  • House Bill 367House Floor – Filed by Speaker Pro Tem Jody Richards, would make technical changes to modernize the current laws governing Kentucky’s nonprofit sector and would exempt veteran-owned businesses from paying certain filing fees to the Secretary of State.

Distillery Modernization – Two key bills of interest: GLI supports placing the distilled spirits industry on equal footing with wineries and breweries in the Commonwealth:

  • House Bill 433House Licensing & Occupations – Focuses specifically on clean-up of distilled spirits issues, was filed with 41 members of the House signing on as co-sponsors.
  • Senate Bill 11House Licensing & Occupations – Is an omnibus clean-up of various alcohol-related issues, including the distillery issues in HB 433. (Posted and poised for hearing this week)

Educational Reciprocity

  • Senate Bill 140Passed Senate, Awaiting House Action – Filed by Sen. Max Wise, would allow the Council on Postsecondary Education to enter into reciprocity agreements with institutions in other states to provide distance education to Kentucky residents. GLI is supportive of this bill.

Education Standards – Two keys bills of interest on education standards:

  • Senate Bill 1House Education – 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.
  • Senate Bill 210 & House Bill 553Senate & House Education – SB 210 & HB 553 would repeal and replace Kentucky’s current academic standards, which would be an inefficient use of dollars and time for our teachers. GLI is opposed to SB 210 & HB 553.

Encourage Computer Science in Schools

  • Senate Bill 107House Education – Would encourage the development of more computer science programs in local schools. GLI supports this legislation.

Expanded Gaming

  • Senate Bill 144Senate Veterans – Sponsored by Sen. Morgan McGarvey and Sen. Julie Raque Adams, 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 measure.

Historic Preservation Tax Credits

  • House Bill 424House Appropriations & Revenue – Filed by Co-Chairman Rick Rand, would raise the program cap for commercial projects below $3 million in qualified expenditures to $9 million and the per project cap to $900,000; establish a $1 million program cap for residential projects; and create a new incentive for “catalytic commercial projects” above $3 million in qualified expenditures.

KEES for Dual Credit

  • Senate Bill 127Senate Appropriations & Revenue – 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 SB 127.

Kentucky Preference in Procurement

  • House Bill 227House State Government – Filed by Rep. Jeff Donohue, would give a preference in state procurement to products made in Kentucky regardless of cost or availability. GLI is concerned this bill could lead to increased costs.

Kentucky Economic Development Partnership

  • House Bill 216Senate Economic Development – Filed by Rep. Mike Denham, 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 supports this measure.

Landlord Liability

  • Senate Bill 68House Judiciary – 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 its consideration.

Lawn Service Workers Comp Exemption

  • House Bill 56House Floor – Rep. Myron Dossett includes lawn services to the list of exemptions from workers’ compensation on a private home for not more than 20 days.

Limited Liability Entity Tax

  • House Bill 292House Appropriations & Revenue – Filed by Rep. Brent Yonts, 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.

Maternity Leave

  • House Bill 627House Labor & Industry – Filed by Rep. James Kay, would require employers with more than 50 employees to provide 6 weeks paid maternity leave for an employee. GLI opposes this legislation because it places an unnecessary mandate on employers.

Medical Review Panels

  • Senate Bill 6Senate Floor – Sponsored by Sen. Ralph Alvarado, 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 – Several bills of interest:

  • Senate Bill 2House State Government – Sen. Bowen’s bill would make the pension systems more transparent and accountable.
  • House Bill 1House Appropriations & Revenue – Speaker Stumbo’s proposal to shore up the KY Teachers Retirement system with $3.3 billion in bonding. (After passing committee this week it was recommitted to A&R, we expect this will play out in the budget)
  • House Bill 271House State Government – Rep. Jerry Miller’s bill requires benefit information to be disclosed by the retirement systems.
  • Senate Bill 45House State Government – Sen. McDaniel’s bill requires disclosure of information related to pensions of current and former members of the legislature.
  • House Bill 238Senate State & Local Government – 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.

Vacant & Abandoned Properties – GLI supports efforts by local governments and developers to return vacant and abandoned properties to productive use and the tax rolls. There are two bills of note:

  • Senate Bill 229Senate State & Local Government – Filed by Sens. Morgan McGarvey, Julie Raque Adams, and Denise Harper Angel, would expand the abilities of land bank authorities to hold, renovate, and lease vacant and abandoned properties if a satisfactory bid is not made at auction.
  • Senate Bill 230Senate Floor – Filed by Sens. Morgan McGarvey, Julie Raque Adams, and Dan Seum, would expand local government authority to make spot condemnations and more quickly return vacant, abandoned, and blighted properties to productive use.

Prevailing Wage – GLI supports the repeal of prevailing wage laws and sees these bills as good steps forward:

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

Public Benefit Corporations

  • House Bill 50Senate Judiciary – Sponsored by Rep. Flood and Rep. Jerry Miller, would permit 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. GLI has taken a leadership role in making PBCs possible in Kentucky.

Public-Private Partnerships (P3)

  • House Bill 309Senate 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 P3s in Kentucky.
  • Senate Bill 132 – Senate Economic Development – Sponsored by Sen. Max Wise, is the Senate companion bill to HB 309.

Radon Mitigation

  • House Bill 272Senate Licensing & Occupations – Filed by Rep. Tommy Thompson, would exempt residential building contractors installing vent pipes from radon mitigation certification requirements, making Kentucky contractors more competitive and efficient. GLI supports this legislation.

Right To Work – GLI supports this legislation as one of our top priorities.

  • Senate Bill 3Senate Economic Development – Filed by Senate President Robert Stivers, is this session’s Right to Work bill.

Road Aid Modernization

  • House Bill 69, House Appropriations & Revenue – 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.

Sick Leave

  • HB 617House Labor & Industry – Filed by Rep. Mary Lou Marzian, would require employers to provide earned paid sick leave to employees. GLI opposes this legislation because it places an unnecessary mandate on employers.

School Leadership

  • House Bill 184 Senate Education – Sponsored by Louisville Delegation Chair Jeff Donohue, is 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. GLI is a proponent of this legislation.

Smoke-Free Legislation

  • House Bill 351House Health & Welfare – Filed by Rep. Susan Westrom, would prohibit smoking in indoor public places. GLI is supportive.

Tax Reform Proposal

  • House Bill 342House Appropriations & Revenue – 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 247House Appropriations & Revenue – 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 Compensation Subrogation

  • House Bill 200House Labor & Industry – Filed by Rep. Bart Rowland, would clean up statutes related to workers compensation insurance subrogation in favor of employers. This would save employers money and make Kentucky more attractive for business.

Workers Compensation Temporary Total Disability – Two bills:

  • Senate Bill 151 & House Bill 311 both await action in House Labor & Industry – 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

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