With billions of taxpayer dollars budgeted to state programs, agencies, and cabinets, accountability is one of the most important functions of our budget committees. This week members heard updates on how the money we allocated in HB 1 is being spent in order to determine what we need to adjust when we come back into session in January. While we received some good news, we also heard some things that concerned us. I hope you will take a few moments to read this week’s update and let me know if you have any questions or would like further information.
Expanding Broadband to the Last Mile: $300 million budgeted in 2021
High speed internet access is growing more and more important to our daily lives and I am committed to working with other legislators to ensure every rural community has access. After all, broadband is important to the economy, healthcare, education, and overall quality of life. Over the past several years, the legislature has created a special fund to help deliver broadband to what some refer to as “the last house at the end of the last mile of rural road.” I am reminded of how electricity was delivered to rural communities by cooperatives and public/private partnerships a century ago. It takes a commitment and it takes a strategy to ensure we get the most out of every dollar. Last year, we committed $300 million to the Broadband Deployment Fund. Very little of the money has been spent, so this session the legislature approved a bill that creates an office dedicated to making sure the expansion happens. Committee members heard an update on efforts to speed it up, including the first round of $89 million distributed to broadband providers to get projects moving. This grant money did include projects in both Anderson and Spencer County to meet the needs of unserved and underserved areas.
Replacing and Upgrading Antiquated Water and Wastewater Infrastructure: $250 million
It has been decades since our state has made a significant investment in our water and wastewater infrastructure and it shows. While we can still access clean water with the turn of a faucet handle, many cannot and we are far too dependent on aging water and wastewater lines. Last year, we committed $250 million to help local communities replace and upgrade that infrastructure. The program has proved successful, with projects in the works across the Commonwealth. Because of the progress we are seeing, we invested another $250 million in this year’s budget. According to the state’s budget director, the administration is preparing for round two of funding to be awarded based on applications from local governments.
State Employee Raises: 8% raises as of July 1, 2022
Not all news was good news. As I have shared in the past, the budget we passed earlier this year also included an 8% raise for state workers, but required the Personnel Cabinet to perform a study to determine if the state’s pay scale and classification system are appropriate for today’s market. It has been more than 20 years since state employees received a pay raise as required by state law. While it has been a priority for us over the past several years, we had limited funds and we had to deal with the public pension liability first. This year’s pay increase is the next step in a strategy to rebuild the state’s public workforce to effectively and efficiently deliver necessary services to Kentuckians. The first step is to receive a detailed compensation and classification plan from the Personnel Cabinet, something we have been waiting for more than a year to receive. Because the cabinet failed to meet earlier commitments to submit a plan, the budget also included a July 7 deadline and a $2 million penalty for every month it is late. Members of the Budget Review Sub-Committee on General Government, Finance, Personnel, and Public Retirement met to discuss the plan this week, and instead the cabinet’s representatives gave members an eight page summary for a 45 page document that contained no data, nor any information about how Kentucky stacks up against other state governments, public or private employers. It was disappointing and frustrating as we are looking for this information to determine what can be done going forward.
IJC on Agriculture
Members heard from the Department of Agriculture about the ongoing shortage in large animal veterinarians. This specific type of veterinarian focuses on dairy, beef, horses, swine, goats, sheep, and other larger animals and livestock and play a major role in our agricultural industry. As of the committee meeting, there were only 54 veterinarians in Kentucky with a practice dedicated entirely to food safety. Clearly this is an area that both the state and private industry need to work on, beginning with making education more available. Currently there are no veterinary medicine schools located in the Commonwealth, so the state participates in the Kentucky Veterinary Contract Spaces Program to provide Kentucky residents with access to veterinary schools at Auburn University and Tuskegee University. Lawmakers heard that part of the solution is to expand the number of slots reserved through this program, but that may not be as easy as it seems because there are simply not enough veterinary schools in the country. The committee also heard that the business model used in veterinary medicine has changed dramatically and there are opportunities to make the licensing and regulatory oversight less burdensome. There was positive news, as the Department is working to recruit veterinary students from other states to practice in our state. The committee also heard from the Kentucky Cattleman’s Association about meat processing challenges. During the pandemic the state experienced meat shortages that tracked back to a lack of access to meat processors. This is still an ongoing problem, but members also discussed concerns that larger meat processors have a monopoly on the processing market, making it more difficult for smaller cattle, swine, and other livestock farmers to get their product to market. While this is primarily a federal issue, members are looking into what could be done at the state level.
IJC on Transportation
Members discussed making Kentucky a logistical hub by increasing access to charging stations and other infrastructure necessary for electric vehicles. Members also discussed reformulated gasoline (RFG) requirements levied on Kentucky by the Environmental Protection Agency. Those testifying say they are in the process of eliminating the RFG requirements, but that a new designation must first be attained in order to stop RFG requirements in the Louisville area. This is a frustrating issue, particularly if you live in Jefferson County or the portions of Oldham and Bullitt County that also must sell RFG. People in those areas are paying between 16 and 32 cents more per gallon than neighboring counties, which adds up quickly.
IJC on Appropriations and Revenue
The committee met this week to discuss gas prices, as well as receive an update on the more than half a billion dollars we have allocated to expand broadband internet deployment and update water and wastewater infrastructure. The governor’s administration suspended a two-cent increase in the gas tax triggered by a decade-old state law for six months. While it sounds good, when you do the math you have to question if it saves Kentuckians enough today to make what we will have to pay later worth it. Due to the freeze, the road fund will lose $35 million by January 2023, which leaves a big gap in our efforts to maintain roads and bridges. On the other hand, the average Kentuckian will save only 94 cents per month with the freeze in place.
BR Subcommittee on Education
Lawmakers received an update on student loan servicing and how public universities are working to maintain their facilities. The Kentucky Higher Education Assistance Authority (KHEAA) kicked off the meeting by sharing that the extended student loan payment pause by the Biden administration and increase in loans transferred to a large national servicer, KHEAA’s revenues have been negatively impacted this fiscal year. These changes by the Federal Government will result in additional costs of $6 Million each of the next two years to Kentucky taxpayers.
If you are interested in keeping up with legislative committees, work groups, and task forces, the meetings are open to the public with materials available at legislature.ky.gov. While lawmakers must be physically present to participate in the meeting, members of the public may attend in person or watch meetings live on YouTube@KY LRC Committee Meetings or Kentucky Educational Television at ket.org/legislature. In the meantime, I can be reached through the toll-free message line in Frankfort at 1-800-372-7181 or on my mobile at (502)639-7079. Feel free to contact me via email at James.Tipton@lrc.ky.gov.