Several major issues moved through the legislature this week. The House passed its version of the state budget, which relies on separate legislation that increases the cigarette tax and expands the sales tax to certain services. The Senate made significant positive changes to the pension reform legislation and signaled a willingness to work with all parties to develop a compromise that will begin to help ensure sustainability to the program. With only 14 legislative days remaining, the Senate will now have to work quickly through the budget in order to have time to work out the details before the session ends.

State Budget – HB 406 (Moberly) passed the House Wednesday by a vote of 84-14. The House version spends $800 million more than Gov. Beshear’s proposed budget. Most of the additional funding is designated for education: $303 million in university funding, $115 million for “Bucks for Brains,” $42 million to increase the per-pupil SEEK funding for elementary, middle and high schools and $33.1 million for the KEES scholarship program. An additional $130 million is provided for health and human service programs and $100 million for water and sewer infrastructure projects. The House budget relies on savings derived from not replacing certain jobs in state government, a restructuring of existing state debt and increased taxes on tobacco products and certain services. In a troubling development, the legislation also diverts money from the workers’ compensation trust fund to the state’s General Fund, leaving businesses around the Commonwealth vulnerable to higher workers’ compensation assessment on their premiums to pay for unfunded liabilities. The House also passed HB 407, the legislative budget, and HB 408, the judicial budget. The Chamber is closely analyzing this complex legislation and will report to members as we learn more details. Click here for a section-by-section summary of the House budget.

Taxes – HB 262 (Wayne) provides much of the additional revenue upon which the House budget is based. This legislation increases the per-pack excise tax on cigarettes by $0.25 to a total of $0.55 per pack and provides for a 13.75 percent tax on other tobacco products. It also extends the sales tax to the following services: commercial janitorial services including carpet, upholstery and window cleaning, charter air flight services if a pilot is provided including hot air balloon rides, armored car and security services. It also extends the tax to commercial linen services for all businesses other than hospitals and nursing homes. The tax bill passed the House by a narrow 50-45 vote. Although the Chamber is supportive of an increase in the cigarette tax as a matter of health policy, many members have expressed concerns about the additional service taxes included in this legislation.

The budget and tax bills now move to the Senate, where significant changes are expected. To voice your concerns about the spending or tax plan, call your legislators at 1-800-372-7181.

Pension Reform – HB 600 (Cherry) cleared the Senate 33-3 this week with several positive changes, a critical first step towards sustainability for the state’s public pension system. Like the House plan, the Senate ensures current employees will not have their pensions reduced; however, newly hired employees would have to work two years longer and adhere to a new "Rule of 87." New employees could retire with full benefits after 30 years of service, as long as their years and their age added up to 87 or when they are 65 years of age. Health benefits are offered at age 65 if the individual has 15 years of service or age 60 if the individual has 20 years of service. Those with enough years of service, but not old enough, would be able to buy their health insurance through the state at full cost until they meet the age requirement. HB 600 now moves back to the House for concurrence with the Senate changes. (Chamber Priority)

Health Care Transparency – HB 44 (Burch) cleared the Senate Health and Welfare Committee this week. This legislation would make permanent the Chamber’s effort to make health care cost and quality information available to consumers. HB 44 now moves to the full Senate for consideration. (Chamber Priority)

Economic Development – HB 718 (Pasley) would have made significant changes to the Economic Development Partnership Board by “packing” the board with several advocacy group members interested in promoting agendas other than promoting economic development and job growth. Fortunately, opposition from the Economic Development Cabinet and the business community helped stall the measure in committee. (Chamber Opposed)

Infrastructure Authority – HB 689 (Pasley) establishes the Kentucky Transportation Infrastructure Authority. This authority would evaluate transportation mega-projects by local governments and permit and regulate tolling to fund projects. This measure passed the House 84-13 this week. (Chamber Supports)

Kentucky Innovation Act – HB 759 (Tilley) updates the Kentucky Innovation Act of 2000 to more closely align the programs with current market and entrepreneurial conditions. This measure passed the House Economic Development Committee this week and awaits action in the House. (Chamber Supports)

Intellectual Property Bank – HB 467 (Pullin) establishes an Intellectual Property Bank within the Commerce Cabinet. The bank would serve as a source of unused patents and copyrights made available by companies to encourage entrepreneurial development. This measure passed the House this week. (Chamber Supports)

Abolishing Incentives – HB 748 (Wayne) would sunset the provisions of all economic development programs. This would negatively impact Kentucky’s ability to create and retain jobs. HB 750 (Wayne) would require the Department of Revenue to disclose tax information. This provision would prevent many companies from considering Kentucky as a possible business location.  Both bills have been posted for consideration.  Please contact your representative and tell him or her that you oppose HB 748 and HB 750. (Chamber Opposed)

School Safety – HB 91 (Cherry) intends to increase the safety and well-being of students. This legislation classifies student harassment, intimidation or bullying as a cause for suspension, expulsion or other appropriate disciplinary action. The bill passed the Senate with several significant changes this week and now returns to the House for concurrence with the Senate changes. (Chamber Supports)

Literacy Plan – SJR 166 (Westwood) directs the Kentucky Department of Education lead the development of a comprehensive statewide adolescent literacy plan. This measure passed the Senate Education Committee this week. (Chamber Supports)

Workforce Development – SB 32 (Westwood) would help develop career pathways for high school students.  This would be accomplished through rigorous academic, career and technical education courses. SB 32 passed the Senate 37-1 last week. (Chamber Supports)

Science and Math Achievement – SB 2 (Winters) is an important measure that will encourage students to take rigorous math and science classes.  The legislation will provide grants to pay for the cost of Advance Placement (AP) examinations, professional development for teachers and a new energy technology engineering career track for students. SB 2, a key priority of the Chamber, awaits action in the House. (Chamber Supports)

Teacher Compensation – HJR 165 (Moberly) directs the Department of Education to examine aspects of teachers’ compensation and work environment, provide proposals and report to the Interim Joint Committee on Education. The idea for this initiative originates from an informal workgroup the Chamber participated in over the past year. This legislation passed the House Monday and has been assigned to the Senate Education Committee for consideration. (Chamber Supports)

Postsecondary Transfer – HCR 166 (Moberly) directs the Legislative Research Commission to study postsecondary education student transfer. This legislation reflects efforts by the Chamber to move forward on the recommendations of the Postsecondary Education Task Force Report. HCR 166 awaits action in the Senate Education Committee. (Chamber Priority)

Task Force Recognition – HR 177 (Rasche) and SR 185 (Winters) both honor the Kentucky Chamber of Commerce's Task Force on Postsecondary Education for their outstanding work on the recent higher education report. Both resolutions were adopted unanimously in their respective chambers.

Workers’ Comp – SB 199 (Jones) would suspend the current statute that calls for the use of the most current (6th) edition of the American Medical Association (AMA) guidelines to the evaluation of impairment and keep the current (5th) edition for one year. The bill passed the Senate 33-0 with a Chamber-backed floor amendment and now moves to the House.

Prevailing Wage – SB 193 (Jensen) exempts school construction projects from the definition of “public works” relating to prevailing wage.  This legislation would substantially lower the cost of school construction projects throughout Kentucky by removing the prevailing wage provision.  The Chamber supports this legislation as it decreases the burden on elementary, secondary and postsecondary institutions in creating and maintaining their infrastructure. (Chamber Supports)

Health Mandate – HB 148 (Keene) would create a highly negative precedent in law that would take away the ability of a health insurance plan to negotiate rates (one of the principle ways insurers moderate health care costs) with a select provider group. In addition to legislatively mandating reimbursements for a specific provider group, it would also automatically increase reimbursement costs annually by the consumer price index (CPI). The bill passed the House 80-7 and now awaits action in the Senate.  Contact your senator to oppose HB 148.  (Chamber Opposed)

Wage Mandate – HB 382 (Marzian) amends current Kentucky law which prohibits gender-based wage differentials by introducing the discredited standard of “comparable worth.”  Gender-based wage discrimination is already illegal under Kentucky law and the federal Equal Pay Act.  This legislation would place a heavy burden on employers and would lead to significant confusion, increased litigation and harm Kentucky’s efforts to recruit jobs. After picking up a positive floor amendment, HB 382 passed the House 81-14 and now makes its way to the Senate.  Please contact your senator to voice your opposition to HB 382. (Chamber Opposed)

Increased Litigation – HB 297 (Wilkey) would allow a surviving spouse to add a “loss of consortium” claim as part of a wrongful death action in addition to unlimited economic damages and the potential for punitive damages. As currently drafted, the legislation would be retroactively applied to all wrongful death causes of action existing at the time of the legislation’s effective date. HB 297 remains in the House Judiciary Committee. SB 247 (Stivers) is another “loss of consortium” bill filed this week. This legislation does not contain a retroactive clause, but goes in the same wrong direction by expanding civil liability in Kentucky. (Chamber Opposed)

“Streamsaver” Legislation – HB 526 (Pasley) inserted language from HB 164 that would have mandated changes to EPA-approved mountaintop removal mining practices in Kentucky.  This legislation would have prevented earth moved due to mining operations from being placed in any valley or near any “water of the Commonwealth.”  This legislation would have drastically affected coal mining practices, leading to increased costs for coal operators and utility customers.  The bill failed to make it out of committee due to a lack of favorable votes. (Chamber Opposed)