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This was a critical week as we continued to hash out state budget details with the House in a conference committee after passing our versions of the budget bills.
There are many different opinions and philosophies on how to spend the money, raise revenue and support the important public services for Kentucky. The budget is the ultimate statement of priorities for the Commonwealth.
We approved our version of the Road Plan, which includes the Louisville bridges project, West Kentucky bridges project, Brent Spence Bridge project in Northern Kentucky, as well as other road projects. A separate bill that includes an operational budget for the Transportation Cabinet, as well as appropriations for statewide road and bridge projects found in the road plan bill, cleared the Senate Transportation Committee later that day and is expected to come before the full Senate soon.
Of particular interest to me is the funding of the Brent Spence Bridge project, which carries 5 percent of the national gross domestic product. The House and the governor propose tolling to pay for this bridge, and I strongly oppose this measure. Tolling would lead to diversion of traffic and congestion on the other bridges for daily commuters. It is an unfair approach for citizens of Kentucky.
We also cut the proposed gas tax increase included in a revenue measure sent to us by the House with their version of the budget. Other provisions of that bill, such as the sale of abandoned property, would still generate more than $20 million for the General Fund over the next biennium.
The main items we changed in the House’s executive budget bill were adjustments that reduced our borrowing, reduced the bonding and spends money more efficiently and wisely. We lowered the debt service ratio (that is the percent of current revenue we direct to paying debt payments) from 7.05 percent in the House to 6.26 percent. Also, we increased the budget reserve trust fund to $125 million. We also reduced the structural imbalance (the amount by which current spending is more than recurring revenue) from the proposed $231 million to $153 million.
Regarding the road plan, we removed the 1.5 cent gas tax increase that the House proposed.
Education is a key piece of our budget, and always high on the list of priorities. The House’s budget had appropriated $50 million in school technology bonds to fund devices for schools. This means that Kentucky would pay 10 years on equipment that had an average life of three to four years. We did not agree with this method, however, we know updated technology is essential for our students and classrooms. So, we found a better way to fund this initiative. We can provide the equipment, expand the bandwidth for classrooms and implement a statewide Information Technology Academy program with $6.6 million. This plan uses a federal E-rate program that will pay for 80 percent of the bandwidth investment, and also can be used for devices for classrooms.
Another big ticket item is healthcare. This year, as the Obamacare program was implemented, the state obligations to provide healthcare to uninsured people changed. Under our budget plan, no state funds can be used for Obamacare because the federal government is committed to its funding. If those commitments change, we can opt out of both the exchange and expanded Medicaid. We also redirected the funds of the Quality and Charity Care Trust for University of Louisville. Obamacare is the ultimate social net, and if it is working as proponents claim, the additional money is not necessary, and can be spent in another area of need.
Though we had differences of borrowing limits and indebtedness, there were several aspects of the House’s budget with which we concurred. We agreed to fully fund the actuarially required contribution of both the Kentucky Employee Retirement System and the Kentucky State Police Retirement System.
The budget bill is an all encompassing document that cannot be explained in a few paragraphs, but these are the high points. I do want to point out another major savings we wrote into the budget was to authorize $270 million in agency bonds as opposed to the House’s proposed $974 million.
(Senator Thayer represents the 17th Senate District, which includes southern Kenton County, as well as all of Grant and Scott counties. He is senate majority floor leader.)