2016 Legislative Update…Sine Die

2016 Legislative Update…Sine Die

The Kentucky General Assembly adjourned the 2016 Regular Session shortly before midnight on Friday, April 15. Before adjourning the 60th and final legislative day, the General Assembly brought several issues to final conclusion, but most importantly, gave final passage to the state’s next biennial budget, HB 303, and highway construction plan, HB 129 and HJR 160. The budget highlights include:

  • More than $1 billion dollars to shore up underfunded public employee pensions, including nearly $500 million that will be in the newly created permanent fund.
  • Most of the Governor’s budget cuts of 4.5% in the current year and 9% in each of the next two fiscal years for most agencies with exceptions for Medicaid and K-12 funding. The final agreement limited cuts to universities at 4.5% each year of the biennium and constitutional officers received more narrow cuts as well.
  • Several workforce development initiatives: $100 million bond pool for workforce development projects; Work Ready scholarships for discounted KCTCS tuition; and performance funding for universities.

Other bills that go along with the budget bill and were part of the negotiated agreement include:

  • HB 80 – Stripped of original provisions, but now contains the compromise biennial revenue bill, formerly HB 423, which had been vetoed by Governor Bevin
  • HB 238 – Contains the statutory language creating the permanent fund for pension funding
  • HB 626 – The Work Ready Scholarship bill that also contains language on performance funding for universities and the criteria for the $100 million workforce development bond pool
  • HB 10 – A supplemental appropriations bill to correct some errors in the budget bill, particularly errors relevant to the levels of funding in the various lottery scholarships

Top Issues for KAM

Now that the 2016 General Assembly session is in the books, it’s time to review issues of interest to Kentucky manufacturers. KAM’s focus for this session was to make strides toward addressing workforce development and infrastructure needs and to preserve Kentucky’s current business environment relative to energy, health care, workers’ compensation, and taxation. In those terms, we can call the 2016 Session a success.

Workforce Development

Through the passage of the state budget, HB 303, and two associated bills, HB 626 and HB 10, several key workforce development initiatives were addressed that KAM supported.

  • Bond Pool – The budget provided for $100 million in bonding for workforce development projects and provisions in HB 626 provided details as to how projects will qualify for the funds.
  • Work Ready Scholarships – Provisions in the state budget and HB 10 provided for $26 million for a scholarship that will provide for nearly free tuition to KCTCS colleges. HB 626 sets up the mechanics of the scholarships.
  • Dual Credit Scholarships – The budget and HB 10 provided for $15 million in scholarships for high school students to use towards college courses while they are still in high school.
  • Performance Funding – Provisions in the state budget and HB 626 set forth 5% of university funding to be subject to award based on performance metrics beginning in 2018.

Infrastructure

Through the passage of the state’s highway construction plan, HB 129 and HJR 160, and HB 309, dealing with public private partnerships, the General Assembly invested in needed infrastructure that will help manufacturers get needed supplies and in turn get their products to market.

  • Road Plan – The General Assembly invested nearly $3.6 billion of state and federal funds to repair and build Kentucky roadways.
  • P3s – HB 309 creates a framework for how state and local governments can partner with private industry for infrastructure projects. KAM was very supportive of P3s and HB 309.

Competitiveness

KAM’s Government Affairs Team spends much of its time during the legislative session preserving the business climate that Kentucky manufacturers enjoy today. Here are a few bills of interest that we reported on during this session:

  • House Bill 449, which created a Jefferson County specific regulatory program for “waste-to-energy” facilities. The bill was prompted by a project proposed in Jefferson County, which would take facility waste and convert it to retail electricity. The bill requires, among other things, substantial setbacks for waste-to-energy facilities from schools and residential areas, which could be problematic. The bill did not pass.
  • KAM closely watched House Bill 2, a constitutional amendment allowing for a local option sales tax, and House Bill 374, the enabling legislation implementing the tax. KAM had been concerned that the language of these bills could lead to increased energy costs, particularly for our smaller manufacturers. KAM became officially neutral on these bills due to an amendment that would have exempted the local sales tax from the cost of industrial and commercial energy.

These bills did not pass:

Energy is a key issue for KAM. The good news is that no legislation moved that would negatively impact manufacturers by either adding to our costs or destroying the regulatory environment that would lead to unnecessary uncertainty in power markets. Here is an example of the bills we followed this session:

  • HB 339 & SB 190 Mandates renewable energy usage and energy efficiency programs
  • SB 26 & HB 440 Prevent reversing the flow or substance carried in a pipeline
  • HB 240 & HB 551 Increases fees for pipeline safety
  • SB 89 & HB 103 Removal of moratorium on nuclear energy
  • HB 461 Carbon emission allowances for coal-fired electric generating units

All in all, it was a pretty good session for KAM. We thank the Governor and our friends in the House and Senate for their support of manufacturing and the Kentuckians it employs!

This will serve as our Session Wrap-up; we will NOT be scheduling a KAM Conversation this Thursday. We appreciate your participation in those calls during the 2016 Session of the General Assembly.

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