FRANKFORT – The halls of the Capitol may be relatively quiet when July arrives, but the month plays a critical role when it comes to running state government. It marks the start of another fiscal year and, in even-numbered years, is when most new state laws take effect.
On Monday, budget officials announced we ended the 2016 fiscal year with a small surplus. Revenue growth was 3.7 percent, which was comfortably above the 3.2 percent growth that state economists had predicted last year. It also was far ahead of the one percent increase that the budget was based on when the General Assembly approved it in 2014.
There is both good news and bad behind this growth. On the positive side, people are buying and earning more, with sales and individual income tax numbers both posting increases of more than five percent last fiscal year. Those two categories make up almost three-fourths of our General Fund, which drives the overall state budget.
On the negative side, coal severance revenues are continuing their steep slide, which has been especially devastating for us. Coal severance went down to levels not seen in nearly 30 years, and monthly totals that topped $20 million five years ago dipped below $8 million in May. I’ve been working to return all of this money to the coal counties, instead of the current half we now get, because the need is there and these counties are where the revenue can best be used.
Nationwide, the 2016 fiscal year was a positive one for the states because it marked the first time that inflation-adjusted revenues topped the pre-recession peak set in 2008. It’s an important turning point, but most states are still cautious looking ahead.
Kentucky is more cautious than most, even with moderate growth expected during the next two years. We’re taking this step to better address the significant liabilities facing our public retirement systems for teachers and state employees.
To accomplish that, the budget the General Assembly approved in April cuts spending in broad areas of government by nine percent. Exempted programs include elementary and secondary education; Medicaid; veterans programs; and public-safety measures, while postsecondary education will see smaller cuts.
I have been proud to work on strengthening both retirement systems, and recently, I was honored to receive a letter of thanks from the Kentucky Teachers’ Retirement System Board of Trustees. Its members wrote that the board “appreciates your demonstrated commitment to keeping the state’s promise to teachers and to supporting an integral part of their pay.”
According to KTRS, there are about 560 people in Floyd County receiving payments from KTRS and another 820 in Pike County. Combined, their pension and medical benefits exceed $50 million. A strong retirement system will ensure these well-earned benefits are always secure, and I am committed to nothing less.
Beyond the budget, the General Assembly also adopted a host of other new laws earlier this year. Unless they have a specific enactment date or take effect immediately, Kentucky’s constitution calls for them to go on the books 90 days after the conclusion of the legislative session, which falls this week.
One of those laws brings public-private partnerships to Kentucky. Like it sounds, P3 is designed to make it easier for state and local governments to work with the private sector to build projects the government cannot realistically take on alone or to run services like a utility.
Another new law will crack down on repeat DUI offenders by doubling the look-back period from five years to 10. Because each successive DUI leads to additional penalties, this law should make it easier to take repeat offenders off the road and hopefully lead many to treatment.
Under another new law, the General Assembly is establishing a framework to reduce the estimated 3,100 rape kits that the state auditor’s office said last year had not been tested. This law will reduce that backlog and ultimately ensure that kits in the future will undergo forensic testing within 60 days.
In other criminal-justice matters, many Class D felons will have a chance to expunge their record, making it easier for them to apply for jobs or volunteer in school; and those possessing or trafficking in synthetic drugs will face much tougher penalties.
Some of the other bills the General Assembly approved this year will add emergency medical workers to the professions eligible for lump-sum death benefits from the state if they are killed in the line of duty; and establish a disabled veteran-owned business program, so the public will be more aware of their service and, in turn, hopefully be more likely to shop there.
We had what I thought was a successful legislative session this year, and I’m glad to see these laws and this budget now take effect. If you have any thoughts or questions about this work, please feel free to email me at Greg.Stumbo@lrc.ky.gov or leave a message for me or any legislator at 800-372-7181.
Rep. Greg Stumbo serves as speaker of the Kentucky House of Representatives.