By BRUCE SCHREINER – Associated Press
FRANKFORT, Ky. (AP) — Kentucky lawmakers wrapped up work on the state’s next two-year budget on Wednesday, approving big pay raises for state employees and increased education spending while setting aside significant amounts to offset planned personal income tax reductions.
The spending plan — the result of negotiations between leaders of the Republican-dominated legislature — passed the Senate and House with bipartisan support. The votes sent the state’s preeminent policy document to Democratic Gov. Andy Beshear.
The governor can veto the spending bill, but lawmakers retain their override power if they pass it before beginning their extended “veto period” break. They will meet in mid-April for wrap-up work before completing this year’s 60-day session.
In crafting the budget, Kentucky lawmakers had the luxury of huge revenue surpluses, fueled by the state’s strong economic recovery from the COVID-19 pandemic and the influx of federal aid to the pandemic. Republicans touted the budget measure’s spending on education, public pensions, infrastructure and the renovation of state parks.
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“This is a great budget that makes needed investments in the Commonwealth,” Republican Senator Phillip Wheeler said, adding the benefits would be spread across the state.
Democrats voting for the bill highlighted what was left out — mandatory salary increases for teachers and the governor’s proposal to fund universal pre-K for every 4-year-old in Kentucky. Senator Morgan McGarvey, the leading Democrat in the chamber, called it a “missed opportunity” to do more.
About $1 billion was not spent in the budget to offset expected reductions in the state’s personal income tax rate, now at 5%. The Legislature on Tuesday passed a measure to phase out Kentucky’s personal income tax. The first rate cut could come as early as Jan. 1, 2023, Senate Appropriations and Revenue Committee Chairman Chris McDaniel said. The tax rate could drop half a percentage point at a time if financial targets set in a formula are met.
McGarvey said the money could have been invested in education, including Universal Pre-K.
That prompted a quick response from Republican Senate Majority Leader Damon Thayer, who said, “Just because we have a surplus doesn’t mean we have to spend it all. We have to remember where that money comes from. It comes from taxpayers. »
Touting its pre-K fundraising plan for every 4-year-old, Beshear tweeted this week that “not only will this help our kids succeed, it will also help our families through child care.” The governor will likely make that an issue when he runs for a second term next year.
Beshear’s pre-K proposal never gained traction in the legislature. Republican Sen. Danny Carroll said Wednesday that the governor’s plan would “decimate” the child care industry in Kentucky.
Meanwhile, the budget voted on Wednesday pumps money into renovating state parks and the state fairgrounds. It provides public pension systems with additional liquidity to help repay unfunded liabilities. Lawmakers funded full-day kindergarten, responding to a request from school districts.
The budget would increase per-student funding under SEEK, the state’s main funding formula for K-12 schools. The amount would increase to $4,100 in the first fiscal year and $4,200 in the second. The current amount is $4,000.
Arguing for increased spending on education, McGarvey said, “In inflation-adjusted terms, we’re still spending less on education than before the 2008 recession.” Beshear proposed increasing the per-pupil amount to $4,300 in year one and $4,500 in year two.
Under the legislature’s spending plan, state employees would receive a salary increase of at least 8% in the first year of the two-year cycle. State police troopers and social workers are among those awaiting even larger pay increases. The bill sets aside enough money for a 12% salary increase in the second year. Specific increases for state workers in the second year would be based on a study by the Personnel Cabinet taking into account cost of living, duties and other variables.
Democratic Senator Reginald Thomas said pay increases should have been extended to teachers, noting that “we have the money” to do so. Wheeler responded that local school boards can choose to use their additional state funding to provide salary increases to teachers.
“We’ve given our districts maximum flexibility in rewarding our educators, and I hope they will,” Wheeler said.
The newly approved budget leaves about $1.75 billion in the state’s fiscal reserve trust fund — a cushion against any economic downturn.
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