2022 was another historic year for the Bluegrass Institute and the state of Kentucky with the passage of charter school funding, massive increases in the state’s rainy day fund and much-needed tax reform. Policies we supported passed in legislation addressing critical areas of education, budget and spending, taxes and the protection of individual rights along with stopping an increase in the gas tax for another year.

Charter schools!!

Thanks to the efforts of House and Senate leadership, the commonwealth will soon see its very first public charter schools! Five years after we worked to pass a charter school law allowing public charters to open, the General Assembly has finally established a funding mechanism for public charters by allowing existing state education dollars to follow the student to the public charter school district. This, combined with the passage of Education Opportunity Accounts and a scholarship tax credit program passed last session, sets Kentucky up to join the ranks of states like Florida and Indiana which have seen massive increases in math and reading proficiency — including among low-income minority students — by allowing parents more flexibility to choose the best environment for educating their children. As states increase choice, academic achievement gaps begin to narrow and public-school performance improves.

BIPPS priorities reflected in biennial budget

The governor’s line-item vetos of both the executive and legislative branch budgets were easily overridden by both chambers. Of note is an 8% salary increase for executive and legislative branch employees including state troopers, a $2,000 salary boost for non-elected judiciary branch employees, an increase in state funding for education across the board, funding for full-day kindergarten and extra money for local school districts to spend on teacher raises or other greatest needs.

One of the big wins for the Bluegrass Institute in the budget is a historic investment in the state’s Budget Reserve Trust Fund, also known as the “rainy day fund.” Covid and more recently the tornadoes that ravaged parts of the state show the need to have a solid reserve so we can help our fellow Kentuckians through economic ups and downs, natural disasters and declared states of emergency. In his November 2020 white paper titled The Lost Decades, BIPPS Policy Fellow Andrew McNeill reported that Kentucky had one of the lowest reserve funds among the 50 states. In a letter to House Appropriations and Revenue Chairman Jason Petrie, R-Elkton, McNeill wrote, "Rainy day funds are most effective if used as part of a multiyear strategic plan. Rating agencies favor states that design their funds to align with the economic cycle, depositing revenue when available and utilizing reserves when there is a downturn.”

We commend budget chairmen Rep. Jason Petrie, R-Elkton, and Sen Chris McDaniel, R-Ryland Heights, for their leadership in laying a solid foundation upon which to build a stronger fiscal future for Kentucky.

BIPPS calls for tax reform overhaul becomes a reality

Our support for moving Kentucky’s economy from a production-based to a consumption-based tax code hasn’t gone unnoticed. House Bill 8 could start reducing income taxes for Kentuckians beginning in January 2023. The bill expands industries subject to state sales taxes in order to lower the personal income tax rate slowly over time as certain conditions are met by using a formula that lowers the income tax rate if the balance in the rainy day fund is equal to or greater than 10% of the General Fund revenues for that fiscal year and if those revenues exceed the expenses incurred plus the individual income tax rate equivalent for that fiscal year. If these conditions are met and the legislature gives final approval, the Kentucky Department of Revenue will reduce the current tax rate by a half-percent (0.5%). The new law also includes taxes on electric vehicles beginning in 2024.

Senate Bill codifies key BIPPS education priorities

Another important education reform passed this session makes needed changes to the governance of our schools. The Kentucky Education Reform Act (KERA) passed in 1990 stripped school boards and superintendents of authority over important district-wide decisions such as principal hiring, spending decisions and choosing curriculum. Instead, KERA formed in-school councils called School Based Decision-Making Councils (SBDMs), creating new public entities that have no accountability to taxpayers. BIPPS has worked with Sen. John Schickel, R-Union, for several years as he has championed this legislation. The important changes he put forward will ensure that the people of the commonwealth can hold superintendents and school boards responsible for how Kentucky’s education tax dollars are spent.

Also part of SB1 is a huge boost to teaching American history in Kentucky public schools. Originally a stand-alone bill filed by Senate Education Chairman Max Wise, R-Campbellsville, and titled the “Teaching American Principles Act,” its addition to SB1 addresses our concerns with the most recently adopted social studies standards for their lack of inclusion of countless important historical figures such as Dr. Martin Luther King and Abraham Lincoln. Preserving History, a 2020 BIPPS Policy Point, points out that the deficient standards are particularly problematic because Kentucky law requires student statewide testing to only include what is in the standards. This legislation now strengthens social studies standards by more thoroughly outlining topics to be included in history teaching.

BIPPS research leads to bipartisan literacy bill

Thanks to BIPPS education analyst Richard Innes, Kentucky is making major changes to how Kentucky teachers teach reading in the classroom. Senate Bill 9, which has been signed by the governor, improves how educators teach reading and and helps to better identify struggling students for intervention. With low reading proficiency across the state, Kentucky will now have the ability to instruct teachers on scientifically-based research as to what works best for students learning to read.

Bill protects free speech from government retribution

A bill to help protect Kentuckians’ freedom of speech by shielding them from retribution by government agencies passed the General Assembly on the last day of the 2022 legislative session with bipartisan support. According to co-sponsor Rep. Nina Kulkarni, D-Louisville, the bill allows judges to “dismiss certain civil lawsuits that are used to intimidate, censor or silence those who speak out on a matter of public interest or concern by burdening them with the cost of a legal defense against what is ultimately a meritless lawsuit.”

After two years of working with a nonpartisan coalition including the Kentucky chapter of Americans for Prosperity, BIPPS joined several other organizations in signing a letter supporting similar legislation during the 2021 legislative session.

Because it was passed in the final hours of session, the legislature will not be able to overrode a veto should Gov. Beshear decide to issue one. However, the bill had widespread support from both parties, passing the House unanimously and passing the Senate with a 30-2 vote.

Relief from bloated vehicle taxes

Lawmakers saved taxpayers from having to pay inflated motor vehicle taxes by passing a bill requiring the Kentucky Department of Revenue to determine car values using last year’s values rather than the inflated ones caused by car-part shortages. It also requires motor vehicle taxes to be assessed at the average trade-in value and not clean trade-in value. 

Ignoring Kentucky law, former Gov. Steve Beshear’s administration began using the clean trade-in value which fails to take into account an automobile’s actual condition. Along with continuing this practice, Gov. Andy Beshear sent a letter late last year notifying county officials that 2022 vehicle valuations would go up about 40%. House and Senate members excoriated him for sending the letter rather than using his authority to address the issue. He responded by issuing an executive order that takes action similar to that in the General Assembly’s bill. You can read more about the need for action in a Bluegrass Beacon column by BIPPS CEO Jim Waters.

Getting Kentucky back to work
A controversial unemployment insurance bill sponsored by Rep. Russell Webber, R-Shepherdsville, addresses BIPPS’ criticism of the executive branch’s policies keeping Kentucky from a full economic recovery after COVID shutdowns. The state’s unemployment practices throughout COVID coupled with the federal government offering Kentucky’s unemployed an extra $300 weekly has driven up the unemployment rate, leaving employers short-handed as many previous employees aren’t interested in returning to the workforce.

HB4 makes changes to unemployment benefit payouts by basing the number of weeks an individual can obtain unemployment checks upon the state’s average unemployment rate at the time of his or her application for benefits, to a maximum of 24 weeks. Opponents argued this practice would hurt rural individuals because those regions have not bounced back from the COVID economy as quickly as urban areas. Supporters counter that the economy won’t improve if the state makes it more attractive for Kentuckians to remain on unemployment rather get back to work.

New law will help small businesses affected by executive regulations

Legislation providing greater transparency and accountability in developing administrative regulations passed the House this week. Currently, when the Executive Branch creates a new administrative regulation, an analysis of the regulation’s cost to state and local governments is required during the regulatory development process. House Bill 594 would require adding a cost analysis to the regulated entity, generally Kentucky businesses. Understanding the impact on small businesses and individuals should be a consideration when determining the consequences of regulations put in place by unelected bureaucrats.

State of emergency finally ends

More than two years after Beshear declared a COVID state of emergency for the entire commonwealth, the declaration finally ended when the General Assembly overrode the governor’s veto of a resolution lifting the emergency. Since the governor’s executive order issued on March 2, 2020, the state has remained in a constant state of emergency - an extreme measure meant to help the government deal with short-term crises. Beshear has never given any indication as to when he would end the emergency state and has simply left the constitutional rights and freedoms of Kentucky citizens suspended for over two years, causing economic devastation suffered by our citizens at the hand of the governor.

Churches now “essential"

Also in response to the COVID state of emergency is a religious freedom bill sponsored by Rep. Shane Baker, R-Someset, that includes places of worship as “essential” in order to exclude religious organizations from any future lockdowns during declared states of emergency when other services are permitted to remain open. Never again should our commonwealth see a governor directing state troopers to writing down license plate numbers of church attendees and removing people from churches, actions BIPPS has criticized since the onset of the pandemic.

Redistricting bills mean your representatives may have changed

Despite vetoes and pending lawsuits, redistricting plans for the state House and Senate and the commonwealth’s congressional districts are in effect. While the Senate redistricting plan would not require any incumbents to face each other in a primary, the House redistricting bill pits four sets of incumbents (two Republicans and two Democrats) against each other in the upcoming May elections. Because she was facing an incumbent primary opponent, long-time representative Mary Lou Marzian, D-Louisville, has decided to not run for reelection after nearly 30 years in office.

You can see if your district representation has been changed using the LRC’s online mapping tool.

Civility promoted through disaster support

This session began in January with Democratic legislators and the media falsely (and dramatically) accusing Republicans of passing rules to limit debate on Day One. In reality, the opposite was true. Republicans actually strengthened previous rules on ending exhausted debate with a simply majority vote to requiring a two-thirds majority vote.

Other sometime hours-long heated debates on everything from abortion to school choice make it difficult to see unity in the General Assembly.

However, Republicans and Democrats were able to rally together to provide disaster relief for areas of Kentucky affected by the devastating tornadoes that ripped through our commonwealth in December. In the end, things wrapped up much more amicably than they started with Republicans and Democrats joining together to honor public servants from staff and interns to state troopers as well as spending hours bestowing kind words on the floor to retiring members from and to both parties. This allows the public to sometimes get a rare glance at the bipartisan friendships usually invisible due to political grandstanding. Civility and respect, and an anchor in nonpartisan honesty, makes for a more constructive and effective government.

The legislative update is comprised by Sarah May Durand, director of government affairs for the Bluegrass Institute for Public Policy Solutions. She can be reached at sarahmaydurand@freedomkentucky.com.