The Bible tells us that “where your treasure is, there will your heart be also.”
Those words, found in the book of Matthew, are important to keep in mind as we compare the one-year state government budget Governor Beshear proposed in January with the one the General Assembly sent to him on Monday of last week.
Governor Beshear took a cautious but caring approach, investing more in our schools, small businesses, non-profits, Kentucky State Police, social workers and those looking to go back to college to complete their associate’s degree or to obtain a training certificate. He set aside $100 million for the state’s budget reserves, which would take them to record levels, and $9 million to fully exclude military pensions from the state income tax.
Legislative leaders chose a different path. They did not set aside a single penny more for per-pupil funding or textbooks. There are no raises for school employees and state workers, and the more than $50 million the Kentucky Teachers Retirement System is requesting for its retiree health insurance fund was left out, too. That is troubling, because while that fund is healthy, this reduction undercuts the 2010 “Shared Responsibility” plan that has done exactly what state leaders and educators alike had hoped. Backtracking on needed state contributions is a major reason why our public retirement plans are facing such huge long-term liabilities.
Efforts to hire back 90 of the state’s career-center employees – those who handle unemployment insurance claims in our communities – were technically funded in the General Assembly’s budget, but only with one-time federal funds and no guarantee these employees’ salaries will be covered after this coming fiscal year.
Nearly $4 million in proposed spending for our commonwealth’s and county attorneys was removed from the governor’s request, but the Attorney General’s office is poised to receive millions of dollars for extra security and personnel.
It’s not that the money is unavailable. Instead, legislative leaders chose instead to more than double our budget reserves, adding well over a half-billion dollars more than Governor Beshear set aside for a “rainy day.”
I certainly understand the need to be conservative with state spending during these still-uncertain times, but the budget voted on last week goes too far. If the last year’s massive economic disruptions caused by COVID-19 and the devastating impact of this winter’s ice storm and flooding are not the textbook definition of a “rainy day” for Kentuckians, then I don’t know what is. They need our help now.
The two most symbolic examples of this stinginess weren’t found in the unnecessarily austere budget, but in two separate bills voted on during the last week and a half.
The first would have Kentucky take away federal SNAP food benefits from non-custodial parents who are delinquent in their child support.
No other state takes such a draconian approach. We all want child support payments to be provided on time, of course, but removing these benefits from those who are already struggling because of lost jobs or reduced work hours is cruel, has no impact on state funding, and will adversely affect thousands of households. Other children in these homes may go hungry as a result.
The other symbolic vote was in the House version of legislation setting aside $25 million in tax credits that, in a round-about way, would help cover tuition at private schools in our largest counties and other educational costs like tutoring for public-school students. An amendment to also have the state pay for all-day kindergarten, at a cost of $140 million a year, was included, even though everyone knew the Senate would not agree.
Not surprisingly, all-day kindergarten funding was not in the budget, but the $25 million to help even more students’ families pay for private school was.
And so was $75 million for film-tax credits, despite the fact that Kentucky found them prohibitively expensive a few years ago and many states are dropping them altogether. We also increased historic-preservation tax credits twenty-fold, from $5 million to $100 million, with $6 million of that scheduled to go to single private hotel in Louisville.
Another tax break – so new and broad that the legislature’s budget experts cannot even put a price tag on it – is on track to reward those who work at home for an out-of-state company. Each eligible household could earn up to $15,000 over the next five years or even more if they are first-time home buyers. This may or may not be a good idea, but since it was not even discussed in committee, it is difficult to know. Ironically, it could lead to some companies actually leaving the commonwealth to use our tax dollars to boost their employees’ paychecks.
All told, according the Kentucky Center for Economic Policy, the General Assembly could pass more than $600 million in tax breaks by the time its work is done at the end of this month. And yet we cannot set aside more money for our students and workers and so many other things.
The governor is even severely limited in spending more than $2 billion dollars coming to state government through the federal American Rescue Plan, a decision that will delay programs receiving this needed money. It’s worth noting that local governments here in the commonwealth will get nearly $2 billion more; elementary, secondary and postsecondary schools will split $2.15 billion; and $750 million will help pay for childcare costs. Billions of dollars are also arriving this month as part of the individual $1,400 stimulus checks many Americans are receiving.
All of this money will boost state revenues that have proven to be surprisingly resilient despite the pandemic. The state is seeing 5.6 percent growth two-thirds of the way through the fiscal year, which is four times higher than what the current budget is based on. We can expect even better news in the months ahead as the economy continues to re-open and these federal stimulus dollars are spent.
For now, all of these bills are still at least a step away from becoming law. A lot depends on which ones Governor Beshear vetoes and which ones the General Assembly may decide should still become law. We won’t know the full story until later in April, after all of the decisions are finalized.
I will cover what is ultimately approved in the next few weeks. While our work passing laws is nearing the end, I hope you will continue letting me know your views and concerns, because it makes a true difference in the votes I take.