Lawmakers were finally able to put aside their differences and pass a budget on Friday, the final day of Kentucky’s legislative session.
For weeks, legislators had been locked in a debate unable to decide how to spend about $21 billion over the next two years. At the core of the debate was Kentucky’s underfunded pension system, which is considered to be one of the worst in the nation.
Gov. Matt Bevin and the Republican Senate believed sharp budget cuts were necessary to cover the shortfall while the Democratic House remained adamant that the recommended budget cuts were too drastic.
Speaker of the House Greg Stumbo said during a press conference that he believed both parties would be happy with the outcome.
“It is an adequate and effective blend, I believe, of the priorities contained in both the governor’s recommendation, the House budget and the Senate budget,” Stumbo said.
Under the new budget, $1.28 billion will be placed in the pension fund. In addition to adding money to the pension system, the budget will place $175 million in a reserve fund, and $125 million will be placed in a permanent fund.
Senate President Robert Stivers said he approves of how the budget turned out.
“We have a strong contribution to the pension systems, a healthy budget reserve trust fund, and it sets forth the priorities of both chambers and with some input from the executive branch as to the priorities that we see going forward in the next two years,” Stivers said.
During the weeks of discussion over the budget, lawmakers were torn when it came to cutting funding for higher education.
In Bevin’s original budget plan, he cut funding for higher education by 4.5 percent for the current fiscal year and by an additional 9 percent during the next two years. Many other agencies also received the same budget cuts; however, the House most heavily protested the cuts to post-secondary education.
Under the compromise, higher education will only receive 4.5 percent cuts during the next two years. Performance-based funding, which was another sticking point the House initially rejected, was also restored.
Other parts of the budget include $25 million in funding for the House’s Work Ready Program, a scholarship program that will allow new high school graduates who attend a technical or community college to receive free tuition. As part of the compromise, these students must now maintain a 2.5 GPA and take at least 15 hours of classes per semester.
The budget also includes equity funding for both WKU and Northern Kentucky University.
“I would characterize this session as a success just because we found middle ground,” Stumbo said.
Not addressed by the budget were the 4.5 percent cuts for this fiscal year, which Bevin passed through executive order. Kentucky Attorney General Andy Beshear has filed a suit against Bevin claiming the executive order is illegal under Kentucky’s Constitution.
In a statement, Bevin said he was pleased lawmakers were able to reach a compromise before the end of the legislative session.
“Everyone came together bringing different viewpoints to the table,” Bevin said. “The result is that we have a budget that is going to put Kentucky on solid financial footing.”
Bevin also praised lawmakers for choosing to put a large amount of the money into the state pension system.
“[The budget] is conservative, focuses on important current priorities and also saves for the future,” Bevin said.
Because legislators waited until the last day of the session to pass a budget, they will be unable to override any of Bevin’s line-item vetoes.