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The Kentucky General Assembly’s 2018 regular session ended last Friday, capping off a session in which lawmakers approved the state’s next two-year budget and numerous other measures that will affect people throughout the state.
State lawmakers put the finishing touches on the General Assembly’s 2018 session by overriding gubernatorial vetoes, most notably on the state budget and tax reform legislation, and passing bills right up to the session’s final hours.
By overriding the vetoes, lawmakers ensured that their preferred versions of the budget and tax measures become law.
The tax reform measure, House Bill 366, will increase state revenues which, in turn, allowed lawmakers to craft a state budget that avoids some, but not all, of the budget cuts that were contained in the governor’s original budget proposal.
Highlights of the tax plan – which is expected to generate nearly a half of billion dollars in additional revenue for the state over the next two fiscal years – include a cigarette tax increase of 50 cents per pack and an expansion of the state sales tax to some services, such as landscaping services, janitorial services, veterinarian services for small animals, fitness and recreational sports centers, commercial laundries, golf courses and country clubs, dry cleaning, pet grooming, weight loss centers and campgrounds.
The tax reform plan will allow the vast majority of working Kentuckians to see their income taxes go down. Most working Kentuckians currently have at least 5.8 percent of their pay go toward income taxes. But, starting this summer, that rate will go down to a flat 5 percent for everyone.
The corporate income tax rate will also go to a flat 5 percent.
Proponents of the tax plan say that it does what many say good tax policy should strive to do: broaden the tax base while lowering rates. They also note that the plan moves the state toward a consumption-based tax system. Critics of the plan say the tax changes disproportionately benefit the wealthiest Kentuckians.
As a result of the tax plan, budget cuts are less severe than some expected. The spending plan includes 6.25 percent baseline cuts for most state agencies, although some agencies are spared. Agencies that will avoid cuts include the Department of Veterans’ Affairs, Kentucky State Police, and local school-based Kentucky Family Resource and Youth Services Centers.
The budget fully funds the state’s main public pension systems at the levels recommended by actuarial analysis.
It also boosts base per-pupil funding for K-12 education to a record level of $4,000 per student in each fiscal year. It would also increase school transportation funding to $127.8 million in each year of the budget cycle.
The budget plan includes more than $60 million in new revenue to help implement newly approved adoption and foster care reforms, including more than $23 million for placement of foster children with relatives, and tens of millions of dollars to hire more social workers and increase social worker salaries.
In a separate action, lawmakers also overrode a gubernatorial veto to House Bill 362, a pension “phase in” bill for local governments. The legislation will allow city and county government to phase in increased contributions to their pension systems while allowing local governments to receive financing at zero percent interest when leaving the system.
Also last week, lawmakers sent a bill to the governor’s office aimed at reducing criminal gang activity. House Bill 169 will make gang recruitment a felony instead of misdemeanor for adults and make minors involved in such activity face felony charges in certain cases.
Most new laws – those that come from legislation that don’t contain emergency clauses or different specified effective dates – will go into effect in mid-July.
A partial list of bills approved this year by the General Assembly include measures on the following topics:
Abortion. House Bill 454 will prohibit a certain type of abortion procedure, known as a D & E, if a woman is more than 11 weeks pregnant. The legislation does not ban other types of abortion procedures. (Enforcement of this new law has been temporarily halted by a federal judge until motions challenging the measure are heard in June.)
Abstinence Education. Senate Bill 71 will require the inclusion of abstinence education in any human sexuality or sexually transmitted diseases curriculum in Kentucky high schools.
Bicycle safety. House Bill 33 will require drivers to keep vehicles at least three feet away from bicyclists during an attempt to pass. If that much space isn’t available, the driver must use “reasonable caution” when passing cyclists.
Breweries. House Bill 136 will increase what breweries can sell onsite to three cases and two kegs per customer. Another provision will allow breweries to sell one case per customer at fairs and festivals in wet jurisdictions.
Budget. House Bill 200 will guide state spending for the next two fiscal years. The plan fully funds the state’s main public pension systems at the levels recommended by actuarial analysis. It calls for 6.25 percent baseline cuts for most state agencies, although some agencies are spared. Agencies that will avoid cuts include the Department of Veterans’ Affairs, Kentucky State Police, and local school-based Kentucky Family Resource and Youth Services Centers. The budget plan will boost base per-pupil funding for K-12 education to a record level of $4,000 per student in each fiscal year. It also includes more than $60 million in new revenue to help implement proposed adoption and foster care reforms and tens of millions of dollars to hire more social workers.
Dyslexia. House Bill 187 will require the state Department of Education to make a “dyslexia toolkit” available to school districts to help them identify and instruct students who display characteristics of dyslexia.
Financial literacy. House Bill 132 will require Kentucky high school students to pass a financial literacy course before graduating.
Foster Care and Adoption. House Bill 1 intends to reform the state’s foster care and adoption system to ensure that a child’s time in foster care is limited and that children are returned to family whenever possible. It would expand the definition of blood relative for child placement and ensure that children in foster care are reunified with family or placed in another permanent home in a timely manner.
Gangs. House Bill 169 will establish penalties for criminal gang-related crimes, especially those involving gang recruitment. The legislation will make gang recruitment a felony instead of misdemeanor for adults and make minors involved in such activity face felony charges in certain cases.
Jail security. House Bill 92 will allow jail canteen profits to be used for the enhancement of jail safety and security.
Organ donation. House Bill 84 will require coroners or medical examiners to release identifying and other relevant information about a deceased person to Kentucky Organ Donor Affiliates if the person’s wish to be an organ donor is known and the body is suitable for medical transplant or therapy.
Pharmacies. Senate Bill 5 is aimed at ensuring that independent pharmacists are fairly reimbursed for filling prescriptions of Medicaid recipients. This measure will place 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 hired by the state’s Medicaid managed-care organizations.
Police cameras. House Bill 373 will exempt some police body camera footage from being publicly released. It will exempt the footage from certain situations being released if it shows the interior of private homes, medical facilities, women’s shelters and jails or shows a dead body, evidence of sexual assault, nude bodies and children.
Prescription medicines. Senate Bill 6 will require a pharmacist to provide information about the safe disposal of certain prescription medicines, such as opiates and amphetamines.
Price gouging. Senate Bill 160 will clarify laws aimed at preventing price gouging during emergencies. The bill specifies that fines could be imposed if a retailer suddenly increases the price of goods more than 10 percent when the governor declares a state of emergency.
Public pensions. Senate Bill 151 will make changes aimed at stabilizing public pension systems that face more than $40 billion in unfunded liabilities. Changes proposed by the pension reform legislation include placing future teachers in a hybrid “cash balance” plan rather than a traditional benefits plan and limiting the impact of accrued sick leave on retirement benefit calculations.
Revenge Photos. House Bill 71 will increase penalties for posting sexually explicit images online without the consent of the person depicted. The crime would be misdemeanor for the first offense and felony for subsequent offenses. Penalties would be even more severe if the images were posted for profit.
Road Plan. House Bill 202 will authorize over $2.4 billion for bridges, repaving and other highway needs throughout Kentucky over the next two fiscal years.
Tax reform. Tax reform provisions included in House Bill 366 will generate about $400 million in additional revenue over the next two years. The plan include a cigarette tax increase of 50 cents per pack and an expansion of the state sales tax to some services, such as landscaping, janitorial, laundry and small-animal veterinary services. It will also create a flat 5 percent tax for personal and corporate income taxes in Kentucky. The inventory tax would also be phased out over a four-year period. Under the plan, the only itemized deductions allowed would be for Social Security income, mortgage income and charitable giving. It would also disallow the deductions for such things as medical costs, taxes paid, interest expense on investments, and casualty and theft losses. It would also remove the $10 state personal income tax credit.
Teen marriage. Senate Bill 48 will prohibit anyone under the age of 17 from getting married. It would also require a district judge to approve the marriage of any 17-year-old. While current law states 16- and 17-year-olds can be married with parental consent, a district judge can approve the marriage of a child below the age of 16 if the girl is pregnant.
Terrorism. Senate Bill 57 will allow a person injured by an act of terrorism to file a claim for damages against the terrorist in state court.
(Background information for this article was provided by Robert Weber of Kentucky’s Legislative Research Commission)
Photograph is of House Speaker Pro Tem David Osborne, R-Prospect, applauding the end of the 2018 General Assembly session. (Photo courtesy LRC Public Information)