Legislative Update – April 27, 2018

The dust has settled on my 16th Legislative Session as a Kentucky State Senator, and I am proud of our work passing significant legislation to move the Commonwealth forward. This Session was one of the more difficult and contentious I have experienced, but we did our constitutional duty of passing a two-year state budget that is balanced and prioritizes funding for education, public protection, and for Kentucky’s most vulnerable citizens.

Our budget not only included a record of $4,000 in per-pupil funding for the SEEK formula, but it also fully funded our state’s ailing pension systems for the second consecutive budget cycle. Underfunding of these systems by past administrations played a significant role in the pension crisis but, through our budget, we can honestly say that we are committed to fully funding these systems now and in the future.

We also passed a pension reform package that will also help address the unfunded liability in these systems. While this bill drew the attention of many as a highly debated issue, I firmly believe we reached a compromise that is fair and that will better our Commonwealth moving forward. No pension changes were made for current retirees. Limited changes were made to current teachers.

The major change implemented in the pension reform bill was for future teachers. Beginning in 2019, newly-hired teachers will be placed into a hybrid cash balance plan, the same plan currently in place for all other new hires in the Kentucky Retirement System. The only difference is that the teachers’ plan will be managed by the current Kentucky Teachers Retirement System (KTRS).

A Jefferson County Teachers Association study, commissioned by the Kentucky Public Pension Coalition and the Kentucky Retired Teachers Association, indicates that if KTRS averages anything close to the system’s projected 7.5 percent rate of return for the next 30 years, the cash balance retirement benefit would actually be better than our current Defined Benefit pension benefit for a 30-year employee. These changes will lower Kentucky’s exposure over time to investment performance and longevity risk, and are also seen as credit-positive for the Commonwealth according to Moody’s Investors Service.

In addition to the budget, we took a positive step in reforming our tax structure to make Kentucky more competitive and more business-friendly. Since passing our tax reform package, the nonpartisan Tax Foundation has boosted Kentucky from 33rd to 18th in the organization’s State Business Climate Index. By reducing the state income tax rate for all Kentuckians, we now have the 10th lowest state income tax rate in the country.
While the budget, pension reform, and tax reform bills dominated much of the conversation in the Session’s closing days, there were many other bills that passed which will do great things for Kentucky.

We passed House Bill (HB) 1, which streamlines the family court system and reduces delays in adoption and foster care, giving foster parents more rights and eliminating barriers to adoption. House Bill 400 also passed, which updates Kentucky’s overly restrictive alcohol laws. HB 400 allows distilleries and farm wineries to ship directly to visitors who order their products or subscribe to a club program sponsored by the distillery or winery.

Senate Bill (SB) 3 passed, which will allow Kentuckians to vote to create a new section of the state Constitution to provide rights for crime victims. Known as Marsy’s Law, it would give victims rights equal to the accused, including the right to be notified of court proceedings, to attend all proceedings, to be heard at plea or sentencing hearings, to obtain reasonable protection from the accused, and to be guaranteed a meaningful role in the criminal justice system.

Another significant measure passed was SB 5, which will require more accountability from the outside companies that run about 70 percent of Kentucky’s Medicaid program, including about $1.7 billion a year in pharmacy benefits. It also would give the state more power to set Medicaid payments for pharmacists and increase them if warranted.

There were plenty of other bills not mentioned that passed into law, and I would encourage you to go online to our legislative website to see the full list: http://www.lrc.ky.gov/record/18RS/law.htm

The productivity and accomplishments of the 2018 Session were built off the successes of 2017. Last year we saw record private investment into our Commonwealth, which means more jobs and more opportunities. Recent reports show that the state unemployment rate has reached a 42-year low of four percent, down from 5.2 percent last year. While this Session was difficult and, even frustrating at times, we continue to tell the world that Kentucky is open for business. I appreciate you giving me the opportunity to serve you in Frankfort.

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