Budget Talks Deadlock | Final Legislative Day April 12
On the 59th day of the 60-day session, negotiations between House and Senate leaders ended without an agreement on the state's next two-year, executive branch budget (HB 303). The good news is that both House Democrats and Senate Republicans recognize the urgency for addressing Kentucky's looming unfunded liability for the state pension plans. However, the basic differences in the proposals have kept legislators from reaching a compromise during the conference committee process. Overall, Senate Republicans have a more conservative, structurally balanced spending plan that includes cuts to most state agencies in order to make larger contributions to the state's financially troubled pension funds. On the other hand, the House Democrats' proposal relies on the use of one-time, non-reoccurring money in order to avoid cuts to important policy areas like higher education.
The major sticking points are: 1) the amount of funding - beyond actuarial required contributions - to contribute to pension funds; and 2) restoration of cuts to higher education. During negotiations, it seemed both sides were ready to compromise on restoring funding to K-12 programs and in providing some level of funding for the Governor's proposed "permanent fund" to address future pension issues.
Senate leaders supported the Governor's proposed 9 percent cuts to higher education, but leadership offered a counter proposal to House leaders that lessened the cuts to 4.5 percent over the biennium. House leaders rejected this proposal. After the breakdown in budget talks, the Governor enacted an Executive Order calling for immediate 4.5 percent cuts to the state's public universities and community and technical colleges for the current year. Attorney General Andy Beshear held a press conference following this action challenging the Governor's authority to impose current year cuts and threatening a lawsuit if the Governor doesn't rescind the order by this Friday.
Although many Capitol observers predict the session may end without a budget, the reality is that it isn't over until it's over. Budget negotiations are expected to continue informally over the veto recess period. Lawmakers will return on Tuesday, April 12, for the final legislative day of the session.