As Session Nears End, Budget Agreement Eludes Kentucky Lawmakers

Differences over funding for state pensions and higher education continued to percolate in Frankfort on Tuesday, as House Democrats in Kentucky’s Legislature offered up a fresh proposal meant to move stalled budget talks forward and Senate Republicans responded with a counter offer. But, by early evening, agreement on a final state spending plan remained elusive.

Gov. Matt Bevin, meanwhile, appeared at a morning press conference, where he directed blame for the budget delays toward House Speaker Greg Stumbo, and warned of grave consequences for state residents if the logjam persists. Stumbo shot back, knocking Bevin for his Facebook posts about the budget.

And, so it went, on the 58th day of Kentucky’s 2016 regular legislative session.

The session is scheduled to end on April 12. With that deadline about two weeks away, budget negotiators in the state’s Democratic-controlled House and Republican-controlled Senate have failed to reach a compromise on a state spending plan for the 2016-2018 budget cycle.

“This is the time in the budget process when negotiations occur,” Bevin said at the morning news conference, where he was joined by top Republican lawmakers. Referring to his plan, and the Senate Republicans’ proposals, he added: “There is nothing within our budgets that is not able to be put on the table. Nothing. There is no number that is not willing to be negotiated.”

With that said, the standoff over budget numbers continued to play out as the day wore on.

Bevin, a first-term Republican who took office last December, proposed 9 percent funding cuts for Kentucky’s public universities—as well as a broad range of other areas across state government—when he unveiled his budget plan in late January.

One of the governor’s top priorities is pumping money toward the state’s struggling pension systems, which are among the worst-funded in the nation.

The House and Senate have both passed budget bills, and negotiators from each chamber have been in conference discussions, attempting to reach a final agreement.

House Democrats, in the plan they rolled-out Tuesday, maintained calls to avoid cuts to education funding, at a cost of about $304 million. They also supported putting $250 million in the so-called “permanent fund,” a pool of money meant to help cover pension costs. And they backed lowering pension contribution levels, from what they’d initially proposed, to amounts that mirrored those in Bevin’s spending plan. The proposal aims to leave roughly $301 million in the state’s budget reserve trust fund, sometimes referred to as a “rainy day,” fund.

“We think that this is a reasonable compromise,” state Rep. Rick Rand, a Democrat who co-chairs the Legislature’s Joint Committee on Appropriations and Revenue, said during Tuesday’s budget conference, after explaining the new proposal.

Later in the afternoon, The Courier-Journal reported that House lawmakers rejected a Senate counter offer because it kept the 9 percent cuts in place for state universities.

Like their updated proposal, the plan House Democrats initially advanced would have restored higher education funding Bevin proposed slashing. But it did not include $500 million the governor wanted to put in the permanent fund. The Senate has proposed providing about $250 million of that money—an amount that lines up with the new House Democrat plan.

In their previous proposals, the governor, the House and the Senate have included different sums of money over the fiscal biennium for pension contributions.

According to an analysis of the proposals by the Kentucky Center for Economic Policy, contributions in the governor’s plan totalled about $688 million for the Kentucky Teachers' Retirement System and around $157 million for the Kentucky Employees’ Retirement System.

Prior to Tuesday, the House supported contributions to those two funds that were about $1.03 billion and $89 million, respectively. The Senate plan included the biggest overall contributions, with $913 million for the teachers’ fund, and $282 million for the employees’ system.

Unfunded liabilities for the two plans were ballparked last year around $34 billion.

A spokesman for the Senate GOP did not return phone and email requests for comment on the budget talks Tuesday. But, according to the Lexington Herald-Leader, the Senate Republican’s counteroffer would reduce the pension contributions in their earlier plan by $75 million and, by Tuesday afternoon, both chambers seemed ready to forgo K-12 education funding cuts.

During the morning news conference, Bevin made ominous remarks about where the budget talks could lead if lawmakers don’t compromise, and implied that it would be Stumbo’s fault if they went that direction. “There will be tremendous pain inflicted upon the people of Kentucky if the speaker does not sit down and come up with a budget. It is up to him,” the governor said. “If the pain is inflicted, it will be because the speaker is unwilling to negotiate in good faith.”

A spokesman for Stumbo did not immediately return a phone call or an email seeking comment on Tuesday. But after the press conference where the governor spoke, it was widely reported that the speaker hit back at Bevin with remarks along the lines of: "If he quit doing silly videos, picked up the phone and called it might be more effective." That seemed to be a reference to Facebook videos Bevin has posted in which he has discussed budget issues.

The governor’s original spending proposal included about $70.4 billion in total appropriations over the course of the 2016-2018 budget biennium. Of that money, about $21.7 billion would fall within the state’s general fund, which is its main budget account.

Because of the delays forging a budget deal, Senate President Robert Stivers indicated that lawmakers would not have time during the Legislative session to override vetoes by Bevin of parts, or all, of any state spending plan that eventually lands on the governor’s desk.

Bevin refused to pledge on Monday to not use his veto power with the budget legislation.

At the news conference, Stivers expressed opposition to extending the session. “I will not budge on the 12th,” he said. “We’ve known it for months that this date is the date of adjournment.”