Lawmakers receive letter on crucial budgetary items from Chilton

FRANKFORT, Ky. (KT) – Kentucky lawmakers are in recess until Feb. 5, but State Budget Director John Chilton sent them a letter on budgetary items he says must be dealt with before final adjournment on March 29.

Legislation passed by the 2018 General Assembly gave 118 quasi-governmental agencies (such as airport boards, libraries and community action agencies) who participate in the Kentucky Employees Retirement System a one-year break on contributions to the system, requiring only a contribution of 49 percent of their payroll, instead of the permanent 83 percent.

Chilton says the one-year break resulted in a $132 million underfunding of the retirement system, which is already the worst-funded public pension plan in the nation, at less than 13 percent funded. Chilton says the General Assembly must address the issue in a way that doesn’t increase the underfunding.

A new Public Pension Working Group announced by House and Senate leadership last week has been given the task to review and analyze the state’s public pension systems, including a review of the systems’ structure, costs, benefits, and funding. The group’s first meeting will be Tuesday.

Chilton says there is a possibility of a shortfall in the Medicaid budget, most notably during the fiscal year that begins July 1, 2019.

“The Cabinet for Health and Family Services and the economists in my office are analyzing enrollment figures in order to create an updated projection of enrollment and costs in the Medicaid program during the biennium,” he said.

Chilton expects to complete the analysis within the next several weeks. An updated projection of any anticipated shortfall in the Medicaid budget during the biennium will be discussed around Feb. 1, he said.

The 2018 session of the General Assembly included changes to Kentucky’s tax structures. Based on feedback received from legislators and various groups, Chilton said his office and the Department of Revenue have worked with legislative staff to draft legislation to remedy certain unintended consequences of those changes and to address other administrative and policy issues. These changes should not have a material impact on the FY 2019 or FY 2020 budgets.

Chilton also noted there has been discussion regarding other needs that are not currently funded in the budget, including school safety, Department of Corrections costs, funding for state parks, and other infrastructure needs. Due to the complexity of most of these issues, he says they need to be considered early in the session, so that there can be appropriate discussion and action.

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