House speaker predicts austere Kentucky budget due to virus
FRANKFORT, Ky. (AP) — Economic damage from the coronavirus outbreak will force Kentucky lawmakers to scale back spending plans, House Speaker David Osborne said Thursday in forecasting an austere state budget.
Proposed pay raises for teachers and state employees are now unlikely, he told reporters. Increases in the state's main funding formula for K-12 schools, known as SEEK, are in jeopardy,
“There are a lot of things we know that we’re not going to be able to accommodate right now,” Osborne said. “So we’ll make this as thoughtful a budget as possible but at the same time it’s going to be pretty austere.”
Lawmakers are bracing for a sharp downturn in state tax collections as many Kentucky businesses closed and others scaled back operations because of efforts to curb the virus's spread. Layoffs caused filings for unemployment benefits to skyrocket last week.
“We are seeing a huge, grinding halt to our economy right now,” the speaker said.
House and Senate budget negotiators are crafting a final version of a new two-year state budget that will take effect July 1. Lawmakers hope to vote on it next week as part of an abbreviated schedule for the rest of this year's session due to the virus outbreak. The GOP-led legislature would reconvene in mid-April to vote on any vetoes by Democratic Gov. Andy Beshear before ending the session.
The spending plan presented by Beshear in January, and the version passed by the House in early March, were based on revenue forecasts made in late 2019.
Reflecting the new economic uncertainties, the Senate spending version passed recently includes “bumpers” that would stop certain spending increases if state revenues fall short of projections.
Beshear campaigned last year on giving teachers a $2,000 salary boost and highlighted it in his budget plan as a way to overcome a shortage of teachers. It would amount to a 3.7% raise for the average teacher making $53,923 in 2019.
The House version provided a 1% pay increase in each year of the biennium for teachers but spread it to other school employees. Under the Senate's plan, school districts would have to tap into SEEK funding to cover teacher pay raises.
The governor also proposed hiring hundreds of additional social workers to combat child abuse and reduce their high caseloads. The House scaled back the number of social workers to be added but offered more generous salary enhancements to hire and retain more of them working in child protective services.
On Thursday, Osborne said social workers need relief but that it probably won’t be as much as it would have been before the virus struck.
“Obviously this is an important time to give some relief to social workers," the speaker said. “They’re going to be dealing with a lot of additional workload right now.”
In their budget negotiations, legislative leaders now are using the most pessimistic revenue estimate from the previous forecast. That version forecasts $115 million less in the 2021 fiscal year and $174 million less in the 2022 fiscal year, the Courier Journal reported.
Together with a pessimistic forecast of $12 million less revenue for the remainder of the 2020 fiscal year ending June 30, that would leave legislators with more than $300 million less to appropriate for state government through mid-2022, the newspaper reported.