Legislative Update - April 6, 2018
After a productive 58th day of the 2018 Legislative Session that saw the passing of several significant bills to benefit the Commonwealth, we have now entered a 10-day “veto recess” where Governor Matt Bevin will have the opportunity to sign and veto bills passed by the Kentucky General Assembly. The most significant measures to pass on Monday, April 2, were a budget and a revenue bill that will dictate how our state collects and appropriates funding for the next two years.
Some of the budget highlights included historical funding levels for state education, including record-high SEEK per-pupil funding, in addition to funding SEEK transportation at historic levels. We fully funded the Department of Veterans Affairs and the State Police and shored up our state’s pension systems, including the Teachers’ Retirement System, by fully funding them. This bill also ensures that retired teachers will see no health care premium increases or coverage decreases. Lastly, there are raises for our social workers who are on the front lines of taking care of our state’s most vulnerable populations.
Kentucky’s ailing pension systems have commanded significant funding increases in recent years and in order to honor our commitment to our retirement systems, we needed to come up with some added revenue to protect other vital government entities from funding reductions. Our approach decreased Kentucky’s tax income rate while broadening the tax base, a shift to a more consumption-based tax system which relies more on spending habits. This allows Kentuckians to keep more of their hard-earned income.
People have expressed concern to me that HB 366, the state’s revenue bill that also includes tax reform, raises the income tax on Kentucky’s most vulnerable. This is simply not the case. This proposal creates a flat income tax of five percent. If you make less than 133 percent of the poverty level (roughly around $18,000 or less) you are exempt from paying income taxes. If you make between $18,000-$75,000, your tax income tax rate will be lowered from 5.8 percent to five percent, keeping more money in the pockets of hard-working Kentuckians.
These are just a few of the biennium budget highlights, but ultimately our focus remained on fully funding education, providing for our public protectors, and ensuring our pension systems are fully funded. In our budget bill, we dedicated approximately $3.3 billion in funding, nearly 14 percent of the total budget, to help fund these ailing pension systems. We made a promise to our state employees, and these two bills help us keep that promise.
In addition to passing the Commonwealth’s budget and revenue bills, we passed a number of other measures this week. House Bill 1 is a comprehensive overhaul of Kentucky’s foster care and adoption system. More than 8,600 Kentucky children are now in foster care and awaiting permanent homes, and the need for such reform has been obvious for a long time. House Bill 1 includes major provisions that would expand the definition of blood relative for child placement.
We also passed HB 400 this week, which is a tourism- and economic development-driven bill that allows the direct shipment of alcoholic beverages. House Bill 400 allows visitors at bourbon distilleries to ship limited amounts of spirits home as well as join “bourbon of the month” clubs. House Bill 400 would also permit vineyards to ship specific amounts of wine out of state. The shippers of the spirits, according to HB 400, are required to verify the delivery is made to someone at least 21 years old living in a “wet” area. This bill will help many small, local businesses remain competitive on a national level.
Senate Bill 5 was also given final passage this week. This bill levels the playing field for small-town, locally-owned pharmacies. Senate Bill 5, as amended by the House, would make the Kentucky Department for Medicaid Services in charge of setting the reimbursement rates for a pharmacist. The rate is currently set by pharmacy-benefit managers (PBMs) hired by the state’s Medicaid managed-care organizations (MCOs). Kentucky Medicaid spends $1.7 billion annually on prescriptions and SB 5 would help authorities track that money and determine whether locally-owned pharmacies were being reimbursed fairly.
There are only two days left in the 2018 Regular Session. We will reconvene for those final two days on Friday, April 13, and Saturday, April 14. Kentucky’s constitution requires the General Assembly to be adjourned by April 15, and since April 15 is a Sunday and we cannot constitutionally meet that day, we must finish the state’s business by midnight on April 14. It has been an honor to represent you and our district in Frankfort, and I thank you for engaging in the legislative process.