Good evening and welcome to Kentucky tonight.

I'm Renee Shaw coming to you from a legislative conference room in the capital and next.

And Frankfort.

We're here with just a few days left for the 2024 Kentucky General Assembly in regular session.

Our topic tonight is the state budget.

The Republican led House and Senate have each passed budget bills.

But there are disagreements.

Negotiations are under way to reconcile the differences and there are disagreements between the Republican plans and Governor Andy Beshear's budget request to discuss the budget and what we should expect.

We're joined by 4 members of the Kentucky General Assembly who are part of those budget negotiations.

States.

Senator Chris McDaniel, a Republican from Rylan Heights and chair of the Senate Appropriations and Revenue Committee state Senator Robin Webb, a Democrat from Grayson and a member of the Senate appropriations and Revenue Committee.

State and amaze Bledsoe, a Republican from Lexington and vice chair of the Senate appropriations and Revenue Committee and state Representative Cherilyn Stevenson, a Democrat from Lexington and House Minority Caucus chair.

We do want to hear from you tonight.

So send us your questions and comments by X, formerly Twitter at K why Tonight K E T send an e-mail to K why tonight at KET Dot Org or use the web form at KET DOT Org.

Slash K why tonight?

Or you can simply give us a call at 1, 804, 9, 4, 76, 0, 5, will welcome you all.

Thank you.

I know it's a busy, busy time and I cannot express my immense gratitude for taking the time you do have, which is so precious to be here for tonight's discussion about the state budget.

I want to go to you.

Chair McDaniel just say, how's it going?

Where are we here?

Well, we're continuing through the process and I would say it's going We we're in a very fortunate >> Our colleagues in the House passed over a spending document it largely aligned with a lot of the philosophical views that we share.

And I think that while we do have disagreements and we're still working through those disagreements, I'm I'm optimistic that we will have a shortly at the weekend that we can put out to the public.

>> So the time is easing out of that hourglass right now.

The sand is and we by Thursday.

That's when you think that you'll have a budget that will be agreed upon and voted on.

>> By both chambers, I would say that if there's one thing we're committed to its ensuring that we protect all of our a veto override and we would having up by Thursday and Friday could be a late night.

But nonetheless, Thursday, last until 11, 59 59 right.

>> What I want to come to you to talk about the budget negotiation process, what you hope is possible what it comes to, perhaps some of the governor's requests or do you see things?

Well, the bench is a long time, you know, better part of 2 decades since a lot more fun.

When you get a little money.

>> And you can be a little more hopeful.

And if you're finding your final word, put their money and not put the cut.

So well.

I think we are up have agreed on some some good things in it.

You know, not everybody is going to get what they want.

That's for sure.

And some of the pros a government such as Pre K and you know, I don't never was too.

Didn't think that was going to happen anyway.

As far as sustainability and the dollar amounts.

But there are other things.

I think everybody agrees on Manda where you're going to see some improvements programs.

I center McDaniel can talk about this more than a, but it appears that, you know, we're just going to do a one-time money and some of the but we've got some great projects.

We've got some great and that's not a bad word.

Will he get when you look at the AG Center, it read in and things like that.

Investments in order, Kentuckyian pays Kentucky.

I think I think FIFA we're going to turn out a fairly good product.

>> Well, as has been, so it is nice when you do have some extra money to play around with ride.

This is not a Santa steer time is sometimes we have had in years past.

So how do you view the opportunities that lie before the state right now and and what do you hope the final product will look like?

The main priorities in the message?

It will send a Kentucky ends about where you put your priorities when it comes to funding.

Sure.

You write it the benefit of having the discipline.

The General Assembly has had for years has led us to this point.

It's a privilege to walk in early in and see that.

It's it's nice for me and others who are and if you will, to say this is a great opportunity to invest in services for our state.

And that's what this is.

Taxpayer money is essentially investments into the commonwealth.

The projects too investments in personnel and other things that really provide good services.

So I like the conversation around the recurring expenses in operating funds and looking at the one-time expenses that really are here now may not be here in the future and to make those one-time investments that are transformational, that really do think the commonwealth are one on one opportunities, a lifetime, maybe some time.

So I'm I'm excited for that conversation and the whys and discipline around operating expenses so we don't put ourselves in the future positions.

We can't continue to do so.

Those investments of the one investments, Representative Stevenson, what do you think is missing from the list?

>> Well, missing from the would be, of course.

I'm going to I'm going to talk about universal Pre-K teacher raises or school employee bonuses, as you will.

If if if we're going to use one-time money, I understand that a recurring program like universal Pre-K cannot be in there.

you know, at missing from all of the budget so far has been.

Raises for school employees.

And I think that that is of a very sorely missed opportunity here.

And obviously we're talking about making investments in Kentucky's future and there is no better investment than in education.

And so I think that while there's going to be a lot put toward education.

I think that we're missing the boat on several key, KET he says.

Well, the governor said as much today when he talking about an economic development initiatives that were being rolled out today and he said this, quote, I want to thank both the House leadership for originally sitting down with us and making some pretty significant changes.

>> To their budget before sending it to the Senate.

And then the Senate has sat down with us numerous times called with any ways that we can help.

And while I very much want to see teacher raises and any final budget and it would be hard to have a good final budget without them.

I do appreciate the level of communication we've received, especially from Senate leadership.

chairman, again, we don't always hear that that there's been a lot of conversation between the first floor in the 3rd floor of the Capitol.

As we call it.

It seems that the governor is quite complimentary of being included in this process.

>> Certainly, you know, while ultimately it is our task is our constitutional duty to present a budget of the The governor is the head of the executive branch has access to a lot people and information that we as the legislative branch don't necessarily have.

And also there will be responsible to execute a document that problem date.

And having regular conversations with them is I do think certainly we don't share a unanimity in our priorities, but we do have a common element of trying to make the best decisions for Kentuckians is hope.

>> So raises for teachers out right off the table.

>> I think it's a very difficult step to I was here the last time as was Senator Webb that we did teacher raises.

And one of the it was actually my first budget session.

One of the things it sticks in my memory very dramatically is a school superintendent coming in and saying, look, when you guys do raises because of how the seek formula pushes.

It is different.

And he showed me in just in the 5 districting.

I have 5 school districts in my Senate district.

How it hit different ones differently.

And for some, it actually netted them money and for others, it cost them money to do.

The raises that we mandated and and, you know, the nature of of the seek formula, which we used to fund our schools is it started with a constitutional provision to provide a common system of schooling through the rows decision at the Supreme Court through hero for hot for education reform that gave us the seek formula.

So this is a constitutionally based funding formula and any deviation from it.

The begins to skew us towards being out of constitutional compliance.

And so both from the practical side as well as a constitutional side.

I for how we make this happen.

>> Yeah, so what has this sidewalk teacher raises?

Do you think the approach should be let the local districts had all that money, give the money to them?

Let them dispersant or should it come directly from the state is an appropriation.

Individual districts have individual priorities and not teachers.

Don't always get the benefit of that in parity.

>> If you will.

And I think, you know, with the court decision kind of requires parity of some sort of Ida, a district that borders to other states and we lose teacher.

So we've got to really focus on on not attraction.

Retention and pay them a living wage so that that that would be a priority.

Mine in you know, retired state employees and we hear a lot from them.

I would like to wave a wand and help those folks.

But but I think, you know, overall, as far as executive branch goes when you've got to give them regardless, he's governor, not about this is always been my budget.

Plus, be gardens.

He's in the executive branch leadership.

You've got to give them the flexibility necessary given expense expanding and for economic development for disasters, for things of that nature.

I think we're going to have polls of money for those things.

But but what if, you know, we East and West Kentucky, the experience last couple years, just I want to make sure there's safety net there and the governor's got whoever the governor is has flexibility to respond and that we've still got people suffering and mode next of the woods in LA.

I made a promise to not forget about him.

Yeah.

So want to go to as buzz about that, too, to talk about disaster, perhaps or about direct appropriation from the state for teacher raises to teachers instead of sunlight through the local school districts.

Your perspective on that?

I share the chairman's perspective and I think the challenge.

>> And before I came, I only had Fayette County.

So I know how Fayette County did things and you kind of get outside realize it's not the same in these counties that do have different struggles.

Their priorities are sometimes different.

And I think you have to get the context as well.

The whole piece of the education puzzle it is transportation is per people funding.

It is lots of things we do one on Lars list, other things we do.

Investments for education, all ties into how we want to give some support for educational systems.

You can't.

You can focus on one with that.

Look in the context of the whole.

But I think we're trying to pretty good job addressing that.

Yeah.

So representative students and we've heard from a lot of the members of the education community, the K groups about the teacher pay along with student discipline issues have been things that have really contributed to the teacher shortage on the ranking of teacher paid.

You think that should be the thing that state lawmakers put some emphasis and focus on?

>> I absolutely do.

And I well, I love our teachers.

I think it should be across the board.

I think it should be all school employees because cafeteria workers and janitors and bus drivers.

You know, they help make our schools go as well.

So I don't want to leave them out of this conversation.

However.

You know, I think it's important that we really stop it and think about that because we know that last time plan, we just gave money through sake.

Only one single district in all of Kentucky gave a comparable raise as to what state employees got.

So I think that plan we're looking you know, it not being equal.

I think it's only going to be equal if it comes from us.

And we know that the governor had proposed 11% across the board for all school employees.

And that would put us right in the middle of was starting an average teacher pay.

So.

We can't KET wanting in saying that we want to attract the best and the brightest and then retain those teachers here.

If we're not going to pay them.

As you hear, we're losing teachers to Tennessee.

We're losing teachers to Ohio, West Virginia all the time because they are paying a higher salary.

And I think that we have to look at that because education is absolutely without a doubt.

The best investment that we can make in Kentucky.

If we are talking about returns on our investments, that is absolutely the place where we are going to say the most return and also I think it's what my constituents absolutely want as well.

But also think if we want to KET investing in economic development.

It doesn't make any difference.

How much money we put in that if we do not have an educated workforce.

So speaking of races, we've gotten a question or And this comes from a viewer Sean Crowe, Anderson County and says, quote, the governor proposed 6% for state employees.

But plus, compression raises.

And I want us to talk about that.

The House decrease this to 4% with no compression raises.

The Senate is now trying to decrease again.

>> To 2.6%.

Why doesn't the legislature understand the state employees have needs to a quote, world drowning in this inflation?

I'll let you answer that.

Mister Chairman.

>> Unfortunately, you know, President Biden passed expose Inflation Reduction Act.

We've seen nothing but more and more inflation.

And the fact is in our budget last time we appropriated millions of dollars to employ one of the nation's best a compensation survey firms and they went with our personnel cabinet position by position throughout state government.

And we appropriated a series of to raise is the first was 6%.

And the second was an aggregate of 12 and a half percent in order to start out the raises and then fully implement them in the end, we're with the exception of a few.

It We're at the end of that.

Those have been fully implemented fully paid for 2.6% is the Federal Reserve's personal consumption expenditures, which is largely their preferred measure for inflation at this point.

So it's our belief the governor finished the implementation of this at the end of last calendar year that we should adjust as based off of the Federal Reserve's recommendations for inflation so that we don't get ourselves into a bind again.

But you raise an excellent point which is which is a very unique thing inside of the type structure the state government has the the House as a called for a study in to fund in their budget and we are largely in agreement with them because it is an issue that needs to be addressed.

But much the same way that we found it necessary to pull in relevant data points from around the nation as well as the We think the same thing needs to be done with the compression issue.

Now, now that we understand where the various positions and rankings ball in terms of compensation.

Now we need this study understand how to decompress, where those positions are.

And I think that there is a a pretty universal commitment.

I would in both chambers as well as across the to address that right.

>> And so when you say compression for those who are not for me with the term talking about salary compression, where those who may be newcomers to the system are getting as much salary compensation as those who have been and a system of the agency for period of years, 20 years, plus or so.

That's the essence.

So yes, make it simple, Anyone else want to comment on the compensation for state workers because that's also a worker retention issue, too, right?

I mean, maybe perhaps is even felt in the legislative ranks with the staff.

I think we're I think we're failing at all over other feeling.

Miller say to be honest for the first time, I can see her.

>> It says my tenure here.

But when you're talking about personnel, I think it's also worthy to note that.

So we need to fund person that full personnel complement, which is budget banal may not be totally do.

And when you're talking agencies that have unfilled positions, those need to be funded now and then we need to talk about the increases.

But what I fear is what the inability to to have those slots filled.

If you look at permitting which, you know, I had a lot of national committee's permitting says a problem.

If you don't have the staffing in the agencies to permit him for some in administer.

It's going to slow economic growth and that it's it's going to be a problem.

So I just hope we can feel our spins it in some of that.

The state government can run.

So does the Senate agree with the House on the vacancy language?

Largely >> The the so that the house did took into consideration.

A lot of the recommendations from the executive branch about how those working to for the for those at home.

It's a it's a bit of a nuance inside of state government called vacancy credits and how long those are open and whether or not positions need to be field can be filled so on.

And you know, the adjustment that they may when they made gotten pretty where we think that they need.

>> It's right.

And it doesn't affect active current workers.

What I think people hear that they can seize, they think of possible elimination of jobs.

And so we want to be clear that that's not where that is going to.

Sara Lee, anything you want to add their server but said, okay.

So this question all from I'm Patricia Doherty of Lexington.

She says, quote, senior citizens have lost the federal discount for Internet and phone service.

My bill has gone from $14 a month to $50 a month, even though this was a federal issue.

Why has the legislature not looked at solutions statewide to help out the seniors and disabled community whose rates are going up.

>> I would struggle to comment on that one.

Yes, that's a that's a federal program that I'm not terribly familiar And where we are regularly called upon to take a look at expiring federal programs, whether or not to the state as it is a compelling interest in participating beyond that.

And you certainly something could be taking a look at sure.

The districts like mine.

You you're working on getting Internet to everyone.

We don't quite hit, but we're not there yet, right?

But there are broadband investments, right?

We both both by Camel agree on right?

>> Maybe just happen.

You want to comment?

you know, the one thing that we definitely do have control of is >> the retirees that we have from the state the House Absolutely nothing.

The Senate budget includes about 75 million dollars for one-time benefit for state retirees and Governor Beshear head in about 100 million dollars.

And this group hasn't had a raise in over a decade.

So I think you know what?

We have direct control over.

That would be the one thing that we could do that would help, you know, elderly retirees, at least those from the say, well, we do get a lot of questions.

We have one from Harrisburg, our state retirees going to get a raise.

I've been retired 10 years.

>> Without a Senator blood.

So this may be something that you hear about.

I absolutely think we all hear about it.

And I think the question with inflation that they got feels more intense than it did before.

And the promise of the Johnson, but at least thus far has been until we reach a certain threshold.

That's just not something that we're going.

Take a look at the 13th check, though, was what that is as close.

And that's a separate idea.

And that was kind of a knowledge.

None of we haven't had that and having to do is to provide that.

And that's a one-time expenditure would provide someone isn't some assistance.

Its immediate that doesn't.

I'm coming to that long-term.

The current cost issue right childcare.

So they want to shift their because I think the House and Senate have different approaches when it comes to childcare funding.

And we know that childcare is many would say, and we've had several programs on Kentucky tonight.

We've talked about how this industry undergirds other industries and allows particularly women as primary caregivers to get back into the workforce.

I'll start with Houston.

Representative Stevenson almost gave status Senator Webb was in a season.

Have your your take on the thank you.

Well, we all know that there is a looming childcare crisis in September.

A lot of the >> Funds that were coming from the federal government are going to go away.

And that's about 330 million dollars that we need >> replace, I think passing Senator Perils Horizon Act could a really good step in the right direction.

It gives about 150 million toward childcare needs the Senate budget has a believe about 90 million combined for the 2 years.

So it's definitely something that we need to look for because this is a huge problem is going to face are young Kentucky family soon in September.

A lot of them are going to either be looking at having no child care or a huge balloon payment for their child care.

All of a sudden.

And I think that we need to look for because as you said, it is a workforce issue and we want women to be able to maintain themselves in the workplace or get back into the workplace.

This is something that we're absolutely going to have to invest and as a public Senator, Bledsoe, your your take on this child care is a is a major issue.

We know about the horizons acted.

Representative Stevenson just mention 300 million dollars that Senator Danny Carroll, a Republican, has that would help kind of shore up.

>> The industry give it the Bowie it needs and kind of help with the workforce issues and keeping childcare providers even afloat.

Your take on, do you want to see more money for child care assistance?

I think that's almost like saying we have so much money has been a one-time cost.

What's a bigger priority?

There are so many opportunities and childcare and what it looks like in parts of our state.

When there's deserts, it's a vastly different conversation than those in some other places with higher population.

There.

There are opportunities and mechanisms are just different.

So I think the Senate added things like Innovation Fund resented what being up up to to have.

You know, I'll give an example in Polk County, the school that system they're donated school back to the community to their city to basically how can we together pull resources for the Chamber of Commerce there.

The ball kind of high school and they pull resources.

So we're going to childcare this way and provide for our community.

Well, that that's could their take on to great, innovative Not Sterling has done something similar.

And so I think we're seeing different communities have different options that fit what works there.

Best.

That's an opportunity.

I think we need to do.

I think even our own chambers are in Cox's.

How far do we go to support the industries where the questioners, lots of things we could do, but how much do we want to spend on it?

And to what extent we want to offer it because those come those committed base payments almost coming to expected costs and and that's some of the concern.

The Gunners I go into much above what we've already said.

Yeah, anything else to add there?

>> Well, certainly a survey puts it touched a lot fundamental issues surrounding We certainly and the Senate's version of the budget a program to provide free childcare for those who are providing to try to help those folks in the market.

But it certainly speaks to a lot of the problems win big in to invest federal funds into the private is Representative Stevenson alluded to.

This was supposed to be pandemic We know that we've heard that the pandemic's been over for years and yet these funding supports remain and they have caused.

I'm certain distortions in the markets while enabling other opportunities in the markets in the in the problem becomes once those supports temporary supports go away, sometimes there's an expectation state can continue those programs.

I don't know that that's necessarily the case.

And I think is survey puts it referred to.

We do deal with a child care deserts that look one way.

But we also have areas of the state look very different.

And you know, trying to stay out of creating more market distortions is is a very large priority as well.

>> And that's the only religious later on the You know, the childcare deserts are real him.

And when these pandemic funds do dry up, you know, I fear that our providers now are going to be at risk certain bit discussions with manufacturers last couple years on in been told them, you know, we would welcome any innovative ideas that but, you know, to come help them accommodate or and set their Nate because there's there are some innovative things going on.

And I think you will see more that.

So there's got to be a conversation.

Continue along these lines and trying to incent and and see where this fall's when subsidy >> Let's talk about K through 12 education.

So there was little bit of a discrepancy between the House version.

The Senate version.

The Senate did more for K through 12 based per people funding.

Correct?

>> Yes, so we we invested in what's called the Tier one component which gets into a matching funds above the entry level contributions into a secret thought was important to push out a kind of it some of lesser affluent districts a little bit more intensely than others.

And so we felt like that was a good place investment additional dollars.

You.

>> Any comment on thanks for people funding.

Well, obviously we we know that right we are about a 4th last.

If you compare for inflation than we were in 2008, if if 2008 is our high water mark and so I just I feel like we need to be even more with that.

And then also kde just some new see calculations for transportation in early March in actually when the House budget came out that was sitting at about 398 million dollars for a full funding for transportation and at the end of fiscal year.

22 and at the end of fiscal year, 23 that has jumped to 484 million dollars.

So the House budget came out and it had the second year of transportation fully funded at 100%.

And it is no longer 100% because we have seen such an increase in that total actual cost.

And that, again, is new information that just came out from Kde.

So that's a concern for us as well.

So does the take the position that that needs to be addressed, even bump up that of >> school transportation funding to levels that Representative Stevenson just mentioned.

I think there's 2 things that have to be addressed.

First of all, is this idea of inflation versus 2008?

Because I I noticed that that argument was never made when Steve Beshear was governor.

Only Bme made with Matt Bevin became governor.

>> And I think so.

I think it's clear what we see going on there.

But what what isn't accounted for and that argument is the fact that we're putting record amounts in to teacher pensions above and beyond what was ever done before.

And if you look at the very numbers at the teachers retirement system brought us the underfunding started with Steve Beshear and it ended with the Republican General Assembly is Matt Bevin.

And so, you know, we we have increased by over half a billion dollars a year.

What is going into the Kentucky teachers retirement system?

In addition the Commonwealth pays on behalf of payments for health insurance.

On behalf of districts.

And this year we'll be putting over 400 million new dollars on top.

We're already putting in for district health insurance.

So when you include those items which most states include as education funding, but for some reason, we don't include teacher health and teacher retirement in this state.

And a lot of these numbers that are referenced, what you find is the spending on K 12 education has dramatically outstripped the inflationary effects of the economy.

And so certainly you can't ignore those.

But I do think that you also see in our budget, the recognition that, yes, those are benefits and those are good benefits for our teachers.

But the the district's needs some ability to work with the pay scales.

And that's what you saw as an attempt to do.

Now to question about transportation, it's always difficult and I do not envy my House colleagues who put out a budget where they felt like they fully funded transportation.

And after the publication date of the budget, the number was change.

And so those those conversations will be ongoing as to what that looks but it is very difficult when you receive bills for extra hundreds of millions of dollars after the initial document that the governor didn't have that the numbers, the house didn't have the numbers and now we have to work through that right.

>> Higher education.

How is that Because we often hear that that funding going back to 2008 levels, How are they looking to fared this budget cycle?

>> Well, we certainly think I'm very highly of what's going on in our higher education system.

And I think you saw that reflected in the performance funding model where we put an extra 100 million dollars per year, actually 103 million dollars.

We more than doubled.

What went through that because of the performance funding model.

We lay out the priorities for the state.

The first generation students back, Laura, to change you know, underrepresented minorities, things of that nature.

And then the and the universities are incentivized to hit certain targets inside of that.

And so we really felt strongly I'm helping them, first of all, with pace, inflationary costs.

And then secondly, really pushing on those areas to try to make those higher Ed investments that transforms for 21st century.

>> And we know that non-traditional students that's been a proposition by Senate President Pro Tem David Givens.

So is that something that would be a part of the metrics that for performance-based funding?

>> Well, certainly he is far more of an expert and I will ever in that space.

we do recognize that the the makeup of a student in is not exactly what it was 20 years ago ensuring that people are servicing.

Those students is important tonight.

I think that conversational KET going.

Yeah.

Anything else you care that there are some of the most positive.

We also saw our Missouri budget priorities for the universe is number one projects and construction money and >> all of that super important for them to be successful.

So that's the high commitment on on both chambers to be thoughtful and deliberate, given the resources they need to be and even the transportation.

I think one of things you miss is that they they did 100% right.

There was an intent on by but you have to house to to do the right thing and that that says a lot they've been doing the right thing on pensions have been doing the right thing on for people.

And now 200 petition.

I think this is a very important, consistent 2 things that Johnson was working on.

So go ahead.

But that performance based funding again, Israel legislator and and see sometimes.

>> World schools with challenge demographics, if you will, you know, no fare the best in performance-based funding.

So it's always a priority in line to make sure regional universities with the different demographics are not penalize in performance-based funding because it's just a different pool.

Different needs different set.

So that to me is always a priority.

And in watching And we've heard Morehead State University has is, you know, wondered about how that can be always an eagle.

Haha.

>> Okay.

Yes.

And so the projects for the university's 150 million for northern Kentucky University and UK College of Medicine for northern Kentucky University Chase Law and the medicine northern Kentucky campus to be, quote, relocate downtown Covington.

Some good things.

They're good thing right on the norseman to sell.

Haha.

So let's talk about the of the trigger.

If we will write a language in that the Senate may propose a maybe the house intent as well and to to make sure that in 2026 the conditions That's where the income tax reduction can be lowered.

Another half-percent.

What does the Senate proposing?

Is it on par with what the House is an agreement with?

>> I think that were by and large a in agreement.

And and what you see in the split of the 2 bills is that in House Bill one, you have one time spending that is coming from the reserve accounts that is not money that is not operational spending.

And so consequently, it should be treated very differently than those recurring expenses which we can, which we come to rely upon.

And I would say that it sits in the top of our minds to continue to find a way to reduce the amount of tax burden on working Kentucky.

And somehow we have done that very effectively so far away as we transition from 6 to 4 over the last 6 years.

And we're optimistic that we can continue to push that down.

>> And we know there is not a trigger for 2025, right?

Because our reduction 25 because one of the conditions were not met.

So this seems to be going in and a positive direction when it when it comes to some.

What do you disagree on?

I think that's question that 40 something minutes and I finally get to the not graph of the situation.

Where is it that you're having some rubber and road and some friction that the biggest disagreement as to his which chambers chairs better.

Haha, you know, I I think by what you see both like I say, across the parties from across the chambers is a commitment to Kentucky.

INS is a commitment some of the basics of of Kentucky, investing in our children, invest in education.

>> Making sure that we maintain a safe and just And, you but unusual things about the times last year we saw the crisis and Department of Juvenile We continue to work together on Obviously there's difference in approach those of manifest between the executive and legislative branches.

Well, on both ends of the chamber.

But at the end of the day, the commitment remains.

And I I really believe while we have their differences in approach, not differences and desired outcome, right?

>> So let's talk about public safety because it was before we got into the session, which now seems like 5 years ago.

That there was we thought there be an emphasis on public safety.

We know that the House has for Kentucky Act.

Woods estimates from 1 million to So you tell us what have you been able to find out about how much that act would cost?

And and I would assume be recurring funds, not just a one-time investment.

>> Certainly a pretty much anything that that occurs inside of the justice system outside the construction of new facilities, recurring cost and say for Kentucky has a lot of very, very good things in it.

We hear a lot of complaints from folks who are dealing problems with crime, people who feel the criminal justice system is failing the average citizen that it's become too weighted towards towards the criminal and not towards person being And so we could you.

We continue to try to make that pendulum swing back towards those who are victimized, too, that it's one of my biggest concerns in the >> In the biennium, is it the implementation of that act which our laws are pretty good right now.

I mean, I it it.

If we're going to incarcerate lower people, you know, back in the good old days, we have fiscal impact statement.

So for 2 reasons, only impact of that bill.

But when we arrived, the justice budget, my house, we like to know much.

I was going to call so we can fold it in.

I don't think, you know, on this bill I think it's going really hamstring a lot of county budgets.

When you're looking at this.

And I think I think we could to do a little better and and get ready for that.

>> Well, and I would say so as well.

I mean, I think and we know that part of this measure was built on.

Discredited There's a huge price tag to it, which is going to be ongoing.

I don't think our local jails can handle and the increase that they're probably about to think the prisons that we have right now.

Can it can handle that increase and the General Assembly has put a moratorium on itself of new prison.

So I think we're in for a rude awakening this bill makes it entirely through the process and we start incarceration rates skyrocket.

Senator.

But Sir, I'll have you comment on that measure or what do you think?

Perhaps the public safety investments should be from this general Assembly at this time?

>> Well, you could.

You could argue how much education funding is is fully how how much money and put to be safe.

Those are all kind of in the eyes of the beholder to a certain extent.

And if you're one of the 500 homes in Lexington, that's been shot up last couple years, you would argue we need to have better another safety and you want to put more money towards it.

You may not have that problem.

The parts of our state.

So you know, the fiscal note of 1 million to 1 Billion.

How often will pass something?

We think we know it's going to happen and then we have to react to what actually happened.

The world around us.

Nobody planned on tornadoes or flood do there.

And yet we adapted.

And so I think you see an intent on behalf of General Assembly to say we have a problem.

We're gonna dress it.

That's what we did.

So one of the things with the Kentucky safer acted it dealt with the unhoused population and and and had addressing of housing issues not to allow some people's liking, right.

And that many people say that it criminalizes.

>> Homelessness, affordable housing.

Is that being addressed in this General Assembly through at this school?

Policy position?

>> Well, I certainly think you what you saw on the Senate budget was an attempt to get de'von a little bit into one of the hardest hit areas and I would gladly different surveys.

Bledsoe is it relates to her area.

But if it becomes a the question once again of how much are you willing to involve the government to market to possibly distorted is somebody who is in this industry every day.

I can tell you that the trades that we're trying so desperately to get people into are stretched very thin as it stands and to continue to plow more money into for when when the number of housing units are not slowing up will only continue to accelerate the price and continue to make this problem worse.

And so we want to be very targeted, very specific about what it is that we There are affordability programs as it stands right now.

we think that we certainly need to see this market get into in a more space and in fear what our heavy involvement could do to the markets.

>> has been so your response.

Sure.

I mean, housing in the state is on different and housing nationally, which is we have a problem getting affordable housing and in Lexington up that in particular is higher and it's actually a bigger problem in Louisville with the person issues in the renting.

There's your far few houses for rent an apartment.

So what we saw on this in the Senate version of the bill, which was didn't it a year ago or so.

We had some people are community leaders in our Florida housing advocates.

We had bankers and other groups, builders kind of come together and say what can we do collectively to solve this in a private sector perspective and they come together and work to the transit project, which is a phenomenal project in leverages local state could have some federal opportunities to do something that works for us.

And I think that's an awesome opportunity.

It could be a model statewide.

It's one way of addressing a national problem or even a state problem that's very localized what that community needs.

And I think that's what we're trying to do is provide as many resources as we can.

That fits what lax enough.

It's what what Louisville needs, what works in rural areas.

It does look different and then to be addressed differently.

You have a different perspective on that represent a student?

Well, I think there the resolution it so waiting to be voted on in the House that would create a task force to actually look at this problem.

>> And I think it's something that we absolutely need to do and to try to to find solutions that we can help with.

And what the the private sector can help with.

And but I do know that it's, you know, it's a it's a problem.

So my district is part of Lexington and part of Georgetown and when I go to Georgetown to knock on those doors, there are a lot of people that work in Lexington that are living there because they cannot afford to live in Lexington.

I think we're seeing that all of the collar areas you know, people are are being pushed out there's just there's an inventory problem as in Lexington.

So even if could afford to live there, you know you if you don't snatched up something in the first hour that it goes on the market, you're not going to get it so what we do have Kentucky families that are struggling.

And, you know, I believe that it is our reason to be here is to make the lives better of Kentucky.

And so it's it's a problem that we really need to dig in on.

>> It's not just an urban World world can take it, too.

And we have a accessibility issues on rentals property people can afford.

And and certainly I think go like the has been so sad.

I mean, it's going to take community approaches and it's going to be different.

And there's going to have to be partnerships, you know, let some non-traditional partnerships, my perhaps to to access all the funds that are out there on the federal level and hopefully we can all bring some programs together.

Statement bristle locally.

>> So going back to taxes.

A question from a love love you are out.

Why lower the income tax while lowering the sales tax would be more beneficial for most working Kentucky hands.

>> So that's been a bit of a misnomer in this because we have to remember the Kentucky exempts many, many things from sales tax.

And most of those are personal level exemptions, groceries, pharmaceuticals, mortgage interest, residential utilities, retirement plan, contributions on and on.

And so what we really see is folks who are middle income a much larger percentage of their income goes into things like that.

And so, consequently, when you reduce the sales tax, they feel a far smaller impact on that.

Then if you reduce the income tax which directly puts more money into their pockets.

if we were taxing everything universally that statement.

It is very true, but it's it's it's unfortunate misnomer that's gotten out there in in in the conversation because we do exempt so many personal level things from sales tax that that's actually not the way it would work if you lowered sales tax.

>> I have a little different economic policy in taxation view.

And and that is all I can diversify the portfolio.

I think income taxes.

Part of that.

And I think it is a more fair And I I think the less we go, the more burden will be on the Porter to make it up.

And I fear for the sustainability of our for the programs that we have anything we'd like to do.

I think Ford is now.

It is pretty pretty workable.

But I like diversity.

And in the sales tax portfolio is carried us through.

Recessions is carried pandemics.

And I think we've got to be aware that other states that don't have that have not fared as well as we have and they have a different tax structure like Tennessee relies heavily on tourism dollars and transient because they have major entertainment centers and in Kentucky is not quite there yet.

But I think we've got to be really mindful of what path we go down, how fast we go down and not just my differing economic policy be Senator Maze.

But so yes, consumption based tax system, that's the way to go.

But how do you as to the concerns that a Senator Webb and others may have?

Sure I'm probably the minority on my side on on that position.

So all this is my only and had made that clear.

I'm probably the same minds of of.

>> Getting down to 2 and a half to 3 going all the way 0 makes me Someone who's done some budget, anyone that things weren't good and you kind of go that direction.

But you know, the will the majority is is where we are.

And so I think we're working through that was what that's why we have the trigger system to begin with.

Right?

This is not a 0 or a drive to 0 quickly to the thoughtful, intentional progression and maybe we will.

Maybe things will get there and we'll hit it.

But they were being wise about it.

Otherwise we would have done it immediately.

We haven't take that approach.

Well, I'm in Kansas would be a North star.

So perhaps a bit too to to look at how that did not fare so well.

Going back to the housing conversation.

We another question about its heavy involvement in housing is feared.

>> Why did the General Assembly block source of income discrimination bands and home rule class cities?

And I'm gonna go to Senator May's Bledsoe for this question first because we know that Louisville and Lexington had addressed this issue and a local level.

But the law now is is is to be in.

It would upset that.

Boy, that essentially sure.

And so I wear 2 different hat, right?

As member of the local government official.

One way this on.

It's our decision to make.

>> At the same time, I think what I would have said to if I did on the council that time, which is really to incentivize more people providing the rental space rather than go out the way they did.

And I make that argument to many of them actually last summer, we start this conversation was not to mandate and how and get that direction.

But how do we can set of eyes more people to Brad, more housing opportunities that weighs in the city and they can still do that.

This one is measures.

And I think that's what don't create more opportunities, more spaces rather than going mandate.

It became very, very clear.

Property rights issue pretty quickly.

And I kind of men I mentioned that several times to my colleagues done theirs.

This is not a not about policy more have, but this is a private property issue that's pretty near and dear to most Republicans heart.

So I wish they take a different approach.

May be another will and find some more creative ways to address some of those issues locally.

>> I bought a voted with the majority on I think it was a private property issue certainly.

And I don't know that it will end up.

Ridge is saying.

And a lot of the things that were said about that Bill.

I don't think it's going to come to fruition and I think it will again, KET the conversation going in and find ways in cent everybody to work together on.

>> Representative Stephen and I hope that that happens.

I hope that now that we are where we but, you know, I I was probably the only person on this panel that voted against that with the affordable housing crisis that we have.

I just feel like takes the inventory that is to some people away.

we just shouldn't be discriminating housing and sources of in any capacity.

>> So let's talk about some of the projects you know, the house of the different approach and the Senate took a different approach to that to to projects.

Where does that And there were quite a few.

We talked about them in a few moments ago, universities, but also airports, et cetera, et cetera.

What's the guiding principle that really helped inform the Senate direction in deciding which projects are worthy of allocation?

>> Well, certainly, you know, we were happy to start with a dark House colleagues sent and then add to that more statewide priorities that you saw there in and those priorities are all about statewide economic transformation.

Whether it is the as you mentioned, the center for biomedical excellence in northern Kentucky.

Well, there's a bout with cancer cancer treatment and Bell County and over in a bullet county, whether it's about a reinforcing success at the universities like Maria, their veterinary 10 new economic development, opportunities like and in Ashland with with their convention center.

But at the end of the day, it's about 22 Kentucky, 21st Century economy, super series of statewide priorities.

I'm in involved local that would really be transformational.

And that was it for 2.

>> So what do I want to get to some of the things?

Because today Senate bill one was passed that would have the courage that collaboration with regional universities to have our research focus.

We know you just mentioned Murray State University wants a vet school eastern Kentucky University wants and osteopathic school.

Western has some aides.

Everybody wants to get in on the research and doctoral program delivery.

How is that being looked at from a fiscal policy?

How does the state support those ambitions from higher ed institutions?

>> I think like a lot of be a justice or education, higher We have to start with what is good policy and then how can fiscal policy support good education policy?

And so that, you know, that's I think where you found us largely in this space.

And I think a lot of those programs enjoy a lot of support.

But we have a coordinating agency and the council on post-secondary education who is tasked with evaluating those programs.

you know, I think there are really some very good 21st century opportunities to be addressed.

And I think we're optimistic that we'll be able to help them in addressing this.

>> And this is beyond just a fiscal policy Chairman McDaniel, but it's also it was to me, it looks like we're reevaluating what the 1997, Higher Education Act was about.

Right where now these schools are getting in on their own action.

And we were once concerned about duplications.

But maybe we're now calling that collaboration.

Can you help make that make sense for us White's?

I certainly >> You know, 30 years down the line, any policy that you have make sense to be revisited the world of higher education has Online delivery was unthinkable in the Mid 90's.

Some of the advances in the the revolution that artificial intelligence is brought to research and how quickly it can be conducted.

It would have been thought of the collaboration that you see not just inside of the state, but also outside of a state with with with major universities in real time, working with one another to solve complex problems.

And so a revisit of this is not unheard of.

cordinator approach is not radical to make sure we get right.

Yeah.

In the universities of the law on that on the row West looking at their programs and patients that they need, the workforce needs and >> I've got to give him credit on that.

So I think now it is time we want to spend our money wisely.

We want to accommodate regions.

We don't give them flexibility and serve demographic population so that made it.

So I think we have to do a thoughtful approach.

>> And so the bad goal, some would say maybe it's time that South Eastern Kentucky have a four-year publicly funded higher education institution.

>> They might be the time.

I think we need to look at everything and every made and I think there's a lot going on down there right now.

They just announced that big project them.

I think, you know, that that area's going to going to come up.

It's once again.

So is that part of the discussion right now, Chairman McDaniel?

And and I mean, I can't even imagine how you start that conversation.

Let alone try to fund it.

But is that a part of the conversation right now?

>> Well, you know, once we have studies looking at this last year, I think they're probably going to be some ongoing but make that having cpe as a coordinating agency to make sure that we're making the best decisions for all of Kentucky so we can provide high-quality education so that we do not dilute the talent pool professors and that administer that is important.

>> OK, senator, but so many care to comment.

I think he's exactly right.

And one of the neat things about having the surplus that we do right now is that invites all these interesting conversations that weren't even heard of 10 years ago when you did not have the financial ability to even consider them.

And now you are and there's some great opportunities for universities to grow to be intentional in.

How we do that is thoughtful.

And and we're going do that.

I love that.

We have the opportunity.

Even have the conversations about how to improve public education are universities systems are elementary schools.

All of those go into a context of the whole and I'm so excited for that higher education.

I think.

Well, I'm excited for the But I I'm cautious.

However.

>> I as we see tax rate come down, we are seeing revenue slow a bit.

So I just worry about future downturns in the economy and what happens when we have to start some hard decisions here?

Again, we aren't in a position to have a huge budget Reserve trust fund and things are getting tighter since we aren't backfilling a lot of those dollars.

So I just I just worry about adding recurring expenses and and and what that would do to us down the line.

>> What is a healthy Budget Reserve trust fund number Chairman McDaniel.

>> You know, this is a this is a off >> Around the nation and so much of it depends on what your economy based on, you know, mineral reliance will have to have a much bigger one because as mineral values fluctuate, so do the revenues, right?

So they have to be able to smooth.

>> More reasonably I can remember a time where we thought if we ever got the 5% of revenues, that would be a miracle.

Will it the end of this biennium?

There's a very good chance it will be pushing.

33% of revenues.

I would argue that 5 is too low and 33 is too high.

There's a number of different approaches to I would obviously we have stated in public policy, the 10% budget reserves trust fund.

We believe to be the floor through our tax reform package.

And from it's a matter of art in conversation as to how do you get to find?

>> Cover art in conversation alike that will put.

So the Senate does spin a little bit more of that Budget Reserve trust fund money than the House and proposed correct?

>> Well, actually, the the house of proposed about 1.8 that we largely concurred him and put about One-point-seven billion additional in there.

So we spent roughly the same.

But we did certainly a layer on top of that.

And so was 2 minutes remaining.

And we talked about this earlier.

We're going go back to where we first heard the conversation.

>> Thursdays kind of the day, How far apart are you and how quickly can you get to a meeting of the minds?

I would >> argue that we're not terribly far apart as we talk tonight and hopefully get there very quickly.

Yeah, >> has been so this is your first round of these.

And you came in as a vice chairman.

that says a lot about you as you observe this process, how amicable is it and working with the other chamber about getting to a solution that you feel works best for Kentuckians?

I will say I've been highly impressed with the policy discussions held on the table on both sides.

It's not about this dollar that dollar that project.

It's what's the best good we can do to invest the resources that we have in taxpayer dollars.

The commonwealth and it's down to nuances an about how to do that.

But I've been so impressed with intentionality the thoughtfulness that both most chambers have brought to the table and debating policy as we as we do with that, I'm very has very impressive.

Lot more money to Lexington, for are more conversation a lot.

Finally, the user Web Democrats included as conversation not too much, but we had we were I I do want give accolades to the chairman because our our our desires and our priorities >> were taken.

He's come and talk to several times.

And but I mean, he's listened to it.

Anything that reasonable ask for proof has pretty much been accommodated lot every pub later policy thing.

But you know that that then where he is right about the last minute.

>> you know, I think I think they're in a more perfect world that the minority party should be at the table a little more.

>> All right.

We'll have to leave it there.

We thank you all for taking time out of your busy schedule to be with us in the form, the dealers about the budget process and will be following that right will be here with you tomorrow and Wednesday and Thursday in the days to come.

We appreciate you watching tonight.

Make sure you tune into Kentucky edition tomorrow at 6.30, Eastern 5.30, central over break down the happenings here in the state capital when it comes to the Kentucky General Assembly and Bill Bart Bryant and a team working journalists will discuss all the week's news on Friday.

Thank you for watching.

I'm Renee Shaw at