Protesters gather on the Capitol steps in Frankfort. | Photo by Olivia Krauth

By Daniel Desrochers, Jack Brammer and Linda Blackford
Lexington Herald-Leader

As the clock ticked on the final day of the 2018 legislative session Saturday, lawmakers scrambled to put the finishing touches on a contentious legislative session.

Gov. Matt Bevin

The day started on the heels of another controversy, this time over Governor Matt Bevin saying he guaranteed a child was sexually assaulted because teachers rallied in Frankfort Friday, as lawmakers attempted to sweep up the remains of a controversial session.

Numerous lawmakers spoke out against the governor’s comments on Twitter and in an unusual move, 25-30 Republican lawmakers signed on to a resolution condemning Bevin’s comments. House Democrats also passed a resolution of their own, and both passed on a voice vote without floor speeches.

After around a day of silence on the issue, House Speaker Pro Tempore David Osborne, R-Prospect, declined to say how he felt about the comments, but said several members wanted to add their names to the resolutions.

“I think it’s unfortunate that some statements that have been made will overshadow some of the work we’ve done this session,” Osborne said.

Most of those accomplishments, like pension reform, adoption reform, the tax bill and education funding, passed before the final legislative day leaving Saturday to tie up the loose ends of the session.

After voting to allow charter schools in Kentucky in 2017, the General Assembly decided this year not to provide a funding mechanism for those same schools, saying public schools were the priority.

“We have to fund traditional public education first,” said Rep. Steven Rudy, R-Paducah. “Should there be a big windfall, we would probably look at it again.”

The legislature also decided not to revisit a provision that taxed any pension over $31,100, instead of the $41,100 that is currently exempted. The average teacher pension in Kentucky is $37,000, which means it’s likely that many retired teachers will see an increase to their taxes next year.

They also effectively killed House Bill 227, which would have made it less financially attractive for homeowners to install solar panels.

After overriding Bevin’s veto of their last-minute tax reform and budget package Friday, the legislature used Saturday to clean up some elements of those bills.

Saturday morning, the Senate unveiled two “cleanup bills” — HB 265 and HB 487 — that Sen. Chris McDaniel said would raise $395.8 million over the two-year budget.

Among the changes, the Senate decided to include around $7 million in funding for coal county schools, restoration of the Angel Investor Tax credit after a two-year pause to encourage investment in startup companies and the elimination of language that would have given pass through companies a 20 percent deduction on their taxes.

McDaniel said the bill balanced spending and wouldn’t cost the state more than the tax and budget bills the governor vetoed and the House and Senate voted to override on Thursday.

The changes to the tax bill cost the state around $83 million more than the original revenue bill, but McDaniel said the original budget had enough money set aside to withstand the loss in revenue.

The bill passed both chambers Saturday, leaving the governor the ability to veto any changes, but McDaniel implied Bevin was on board with the bill.

“A lot of the changes were recommended by the governor,” he said.

The cleanup bill restored a manufacturing tax credit used by Toyota, Ford and GE Appliances, which McDaniel said does not cost the state. The bill also restored funding for the Angel Investor Tax Credit, a popular program among wealthy Kentuckians that provides them with a tax credit if they invest in specific startup businesses. The bill briefly pauses the program before restoring funding with a $3 million cap on investments.

Because the changes did not include a fiscal analysis, it’s unclear which provisions will save or cost the state money and how much. McDaniel did provide some details. For example, he said that by removing the tax deduction for pass-through companies the state will save around $45 million.

That increase in revenue is offset by a number of revenue-decreasing measures, including the addition of $7 million to schools affected by the decrease in coal severance taxes.

The $7 million is divided among 31 coal community school districts, with funds ranging from $100 in Carter County to $1.1 million in Pike County, based on how much the districts have lost in coal severance funds.

The House also offered a cleanup bill of its own – SB 200 – to continue to fund the Kentucky Wired project to expand broadband across the state in order to meet the terms of the contract and avoid a downgrading of Kentucky’s financial ratings.

Several committee members said they were angry about the initial contract, which funds the project through 2020, but still committed to vote for the funding out of the fear that breaking the contract would end up costing to the state more money.



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