State budget impacts on counties

On Wednesday, April 1, the General Assembly passed the final versions of the branch budget bills,  Transportation Cabinet budget, the biennial highway construction plan and state revenue companion bill. While all were vetoed by Governor Beshear, legislators ultimately voted to override all but the Judicial branch budget vetoes, keeping the remainder of the bills intact as originally passed. Due to the COVID-19 outbreak, legislators passed one-year budgets, rather than the traditional biennial budgets, given the assumption that revenues will be much lower than expected for the first fiscal year, and in the hopes that revenue projections for FY 22 will have improved by the time they return in January to craft the FY22 spending plan. Below are the highlights that will have an impact on counties.

Unless otherwise noted, bills become effective July 1, 2020. 

Executive Branch Budget HB 352

County Audits

• Provides $2 million of General Fund in FY21 expressly intended for the county portion of audit costs to return to the statutory cap of 50 percent, instead of the 75 percent counties are currently required to pay. The statutory cap was notwithstood in the 2018 session. 

Corrections

• Allocates $860,000 in FY21 to provide $20,000 annually to all counties with a life safety or closed jail. The lower amount in the FY21 budget reflects a closed jail county opening a full-service facility, rendering them ineligible for the stipend.
• Allocates $1.6 million in FY21 for jail catastrophic medical services.
• Allocates $2,400 to jailers’ annual expense allowance.
• Includes language expressing the intent of the General Assembly to incentivize county jails to provide evidence-based programming for state inmates.
• Restores the distribution formula for the Local Corrections Assistance Fund to support county jail operations to include an equal share of a portion of the funds to each county.
• Includes language requiring the Department of Corrections to continuously monitor bed use within various facilities and to provide a quarterly report of the average occupancy rates for each facility type (state prisons, county jails) to the Legislative Research Commission.
• Jail canteen accounts - Any compensation resulting from the disposal of real or personal property that was purchased with funds from a canteen account shall be returned to the canteen account from which the property was originally purchased. All proceeds shall be reported to the Interim Joint Committee on Appropriations and Revenue by Dec. 1 of each fiscal year.

Criminal Justice Training

• Amends language to identify a reduction in Kentucky Law Enforcement Foundation Program Fund appropriation of $9.6 million in FY21.
• Removes language authorizing a $600 increase in the KLEFPF training incentive and expansion language to maintain the statutory $4,000 incentive and reduces Restricted Funds by $7.4 million in FY21 to conform.

Commonwealth's Attorneys

• Removes $3 million of General Fund for additional positions 
• No salary increment in FY21.
• Restores language from the 2018-20 budget bill identifying $387,700 in General Fund in FY21 for the Rocket Docket Program to the commonwealth's attorneys

County Attorneys

• Removes $840,000 in additional operating funding for county attorneys in FY21.
• No salary increment in FY21.
• Restores language from the 2018-20 budget bill identifying $549,800 General Fund in FY21 for the Rocket Docket Program to county attorneys
• Allocates $4800 for annual expense allowance 

Property Valuation Administrators

• Adds language to specify that PVAs shall get no increment
• Allocates $2400 for annual expense allowance

Sheriffs

• Court security officers’ compensation remains at $9 per hour.
• Allocates $2400 for annual expense allowance 

Coal Severance

• Coal severance dollars will be dispensed 70 percent into the Local Government Economic Development Fund and 30 percent into the Local Government Economic Assistance Fund (LGEAF). The decrease of $2,851,900 reported in the LGEAF was allocated to the LGEDF.  

Department for Local Government

• Restores language to direct General Fund support of $1.9 million in FY21 for the Joint Funding Administration Program to support Area Development Districts.
• Restores language outlining a formula for allocating Area Development District funding.

Public Health

• Reduces $16.5 million in General Fund for retirement assistance in FY21 to the Local and District Health Departments to reflect the lower employer contribution rate. Health departments were scheduled to pay a rate of 93.01 percent. This does not negatively impact health departments. 
• Includes language that requires Local and District Health Departments to retain 90 percent of the fees collected for foundational services to help cover the costs of operations, services and KERS employer contributions. 

Libraries and Archives - Direct Local Aid

• Removes $2.5 million in General Fund for Per Capita Grants for FY21
• Adds language to identify $4.3 million in FY 21 for the Public Libraries Facilities Construction Fund.

Senate Bill 249 - Emergency Clause: bill became law upon signature of Governor on April 8, 2020.

CERS Rates

• The CERS employer contribution rate will be frozen at current FY20 levels (non-hazardous at 24.06 percent and hazardous at 39.58 percent).

Quasi Pension Rates for KERS

• Freezes pension contribution rates for health departments and other quasi’s such as universities for another year at the FY20 level of 49.47 percent (instead of an increase to 93.01 percent).  
• Extends for one year the irrevocable decision by quasi’s to either exit KERS and pay off their unfunded liability and offer an alternative retirement plan, or remain in KERS. 
• Resets the amortization of CERS pension liability back to 30 years. 

Revenue Bill HB 351 - Emergency Clause: bill became effective upon veto override April 15, 2020.

• Lengthens the maximum allowable contract duration a county or city may enter into for ambulance service to up to four years. Currently limited to one year. 
• All ordinances published in a newspaper are required to include the following statement: "This advertisement was paid for by [insert county office name] using taxpayer dollars in the amount of $[insert the amount paid for the advertisement]."
• Waste Tire Trust Fund per-tire fee expanded: Beginning July 1, 2020, but prior to July 1, 2024, imposed upon a retailer at the rate of $2 for each new motor vehicle, trailer, or semi-trailer tire sold in Kentucky. The fee shall be subject to the Kentucky sales tax.
• Requires the Department of Revenue to have property tax information available online to the public

Transportation Bills HB 353 & 354 - Emergency Clause: bills became effective upon veto override April 15, 2020

• The Secretary of the Transportation Cabinet shall report by Sept. 30 of FY 21 to the Interim Joint Committee on Transportation any project included in the enacted Biennial Highway Construction Plan which has been delayed beyond the fiscal year for which the project was authorized.
• $500,000 in FY 2020-21 to improve public riverports within Kentucky. The Secretary of the Transportation Cabinet, in conjunction with the Kentucky Water Transportation Advisory Board, shall determine how the funds are distributed.
• Allocates each county Judge/Executive not serving in a consolidated local government an annual expense allowance of $2400.
• The Biennial Highway Construction Plan (HB354) can be found here. 

Judicial Branch Budget HB 356

• Reinstates Circuit Court Clerks annual expense allowance of $3600.
• Local Court Facility Compensation included.
• Allocates $3,000,000 maintenance pool for planned and unanticipated non-capital projects for local courthouses and judicial centers.
• When there is no debt on court facilities construction or renovation authorized prior to the 2000 legislative session, the use allowance was reduced from 4 percent to 2 percent, with the remaining 2 percent placed in a separate fund to be used for routine, ongoing, planned and unanticipated maintenance for these facilities.