This past week began with three conference committee days and ended with two legislative days. Activity began slowly, gaining momentum as the week continued. There was a significant budget briefing on Tuesday that changed calculations on the budget. Wednesday was a full day of twelve legislative committee meetings, followed by another ten meetings on Thursday before the chambers gaveled into session for the last two ordinary legislative days. These were the 25thand 26thdays of this 30-day session and legislative activity was in high gear with dozens of bills moving in the respective chambers.

Looking ahead, the General Assembly will be in session on Monday and Tuesday, the 15th and 16th which are designated on the session calendar as concurrence days but can and will be used for the final passage of bills, as well as concurrence. After the 16th, the General Assembly will begin its veto recess before returning on the 29th and 30th for the two final days of the session and sine die adjournment.

Budget

The budget is complete though it has not yet been explained and adopted. The Free Conference Committee Report to HB 192 is available for viewing HERE. A few highlights:

– This appears to be primarily a continuation budget with most funding levels remaining relatively flat.

– It does make a large deposit into the Budget Reserve Trust Fund of $734 million as compared to $100 million in the Governor’s budget.

– Additional education funding included in the Governor’s budget for SEEK, teacher raises and learning materials are not included in the FCCR. We expect this is in part due to the $3 billion in federal stimulus coming to schools directly.

– Federal stimulus monies are generally absent from this document, except for a few language provisions that authorize project spending but say it should be paid from federal stimulus dollars in lieu of state dollars. There is a provision in the FCCR that restricts spending of federal stimulus dollars by the Governor unless appropriated by the General Assembly.

In regards to the Federal Stimulus Dollars and the current budget, Tuesday’s briefing by Budget Director John Hicks on the $1.9 trillion American Rescue Plan Act sent the conferees scrambling on the impact these new federal monies would have on the budget. Hicks gave the committee an overview of the $2.4 billion Federal funds that Kentucky’s state government will receive and its potential uses for infrastructure projects, aid to individuals and businesses, and payment on the unemployment trust fund. This information clearly raised many opportunities for reallocation of budget plans and legislators pushed the administration for its spending recommendations which were expected by Friday.

However with the unveiling of the budget FCCR on Friday without much reference to the federal stimulus dollars, it is possible that legislative leaders are still considering how to incorporate these federal dollars into the budget and we may see a separate bill addressing their use. Timing is of critical importance given that the General Assembly must pass a budget by no later than midnight on Tuesday in order to preserve the ability to override any gubernatorial vetoes.

Key Bills and Issues

As the 2021 Session nears its conclusion, there was action on a great many important bills and issues with much work still left to do to bring some to a final conclusion:

Infrastructure Funding– Chatter remains high that increased infrastructure funding may be addressed this session. The budget conference committee specifically addressed this issue publicly by reducing the amount of Road Fund dollars included in the KY State Police budget by roughly $50 million dollars. While the Transportation Budget, HB 193, has not been released yet, legislative leaders indicated that the additional $50 million will go directly to the state construction account. It remains to be seen if the legislature will consider provisions included in HB 561, that sets a fee on electric vehicles, raises the gas tax, modernizes the road-aid formula, and establishes a multimodal fund.

Broadband– Rep. Reed’s HB 320 providing $250 M for broadband service to unserved or underserved households and businesses and allowing electric distribution cooperatives to capitalize broadband affiliates remains in Senate A&R with two readings.

COVID Liability Relief– The business, healthcare, and education communities continue to support COVID specific liability relief. Since the early days of the session, the chambers have disagreed on how to provide protection.SB 5, the Senates version, has been the bill to move in the process and it is now in the House Judiciary Committee.

Unemployment Insurance and Taxation– Sen. Givens’ SB 7 to permit waiver of unemployment insurance overpayments and to establish a program integrity fund has been signed by the Governor. Representative Webber’s HB 413 to control employer tax rates and surcharges has two readings and is scheduled to be heard in the Senate Committee on Monday. HB 278 which will conform Kentucky’s tax laws with federal law to allow deductions paid with proceeds from a forgiven Paycheck Protection Program loan reached final passage and is headed to the Governors desk.

School Choice Tax Credits–HB 563 emerged from House A&R on Thursday and was voted on in the House that evening. After lengthy debate and consideration of numerous amendments, the bill was passed with an amendment to fund all day kindergarten and to allow these grants to be used for private school tuition and fees in counties with a population of over 150,000. The bill now heads to the Senate, where it has been given a reading and 3 floor amendments have been filed.

Immunizations–SB 8 exceptions to state issued mandatory immunizations sponsored by since Wilson has passed the House and is headed back to the Senate for concurrence vote.

Social Justice Reform–SB 10, to create a Commission on race relations and passed the House and is back in the Senate for concurrence. HB 587 and HB 588 creating an economic opportunity zone in West Louisville by means of a tax increment financing plan are in House A&R with two floor readings.

Criminal Justice Reforms and Policing– Senator Stivers’ SB 4, no-knock warrant reforms is posted for House passage. SB 84 (Sen. Adams) dignity for female prisoners has been delivered to the Governor, SB 211,on police powers during protests and riots, was the subject of a lengthy debate before passing the Senate but has no readings in the House meaning it is unlikely to be veto-proof. HB 126, to increase the felony theft threshold, remains in Senate Rules and HB 497, re-entry assistance for formerly incarcerated persons, is on the agenda for Senate Judiciary on the 15th.

Health Care Issues– Many bills impacting health care and health insurance are pending in the General Assembly. Some of these bills are: HB 95, insulin copays, may be headed for a conference committee as the House has refused concurrence in Senate amendments; HB 438;Medicaid provider credentialing and HB 48, pharmacist reimbursement have been delivered to the Governor. HB 140Telehealth expansion awaits concurrence action in the House; and SB 44 and SB 45 dealing with the application of third party payments passed the House this week with amendments and need Senate concurrence.

Veto Overrides

The legislature overrode two vetoes by the Governor this week. SB 3, a reorganization bill that moved many functions and administrative agencies that are now under the purview of the Governor to the Secretary of Agriculture, and HB 6, which strengths the investigative powers of the legislatures Program Review Committee, became the 7th and 8th bills vetoed but overridden. This brings the total for this session to eight bills with vetoes overridden, a total that is likely to grow before sine die adjournment.