WELCOME TO "KENTUCKY TONIGHT."

I'M RENEE SHAW.

THANK YOU SO MUCH FOR JOINING US FROM THE CAPITOL ANNEX IN Frank OUR TOPIC TONIGHT: THE STATE BUDGET AND TAX PROPOSALS.

THE KENTUCKY SENATE AND KENTUCKY HOUSE HAVE EACH PASSED A BUDGET BUT THERE ARE DIFFERENCES BETWEEN THE TWO.

AMONG THE DIFFERENCES, THE SENATE PLAN SPENDS LESS.

IT DOES NOT FUND A AND THERE'S DISAGREEMENT IN FRANKFORT OVER TAX POLICY.

GOVERNOR ANDY BESHEAR WANTS TO LOWER THE SALES TAX, BUT THE HOUSE VOTED ON MAR 4th FOR A BILL THAT WOULD GRADUALLY ELIMINATE THE STATE'S INCOME TA THE SENATE PLAN WOULD GIVE TAX REBATES, $500 TO INDIVIDUAL TAX FILERS AND $1,000 TO MARRIED CO TO DISCUSS THE BUDGET AND TAX PROPOSALS, WE ARE JOINED IN FRANKFORT BY: SENATOR CHRIS MC REPUBLICAN FROM TAYLOR MILL AND CHAIR OF THE SENATE APPROPRIATIONS AND REVENUE COMM SENATOR REGGIE THOMAS, DEMOCRAT FROM LEXINGTON AND SENATE MINORITY CAUCUS CHAIR.

JOINING US SHORTLY REPRESENTATIVE JASON PETRIE, REPUBLICAN FROM ELKTON AND CHAIR OF THE HOUSE APPROPRIATIONS AND REVENUE COMMITTEE.

AND REPRESENTATIVE BUDDY WHEATLEY, DEMOCRAT FROM COVINGTON.

WE WANT TO HEAR FROM YOU.

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WELCOME TO ALL OUR GUESTS.

AND WE HAVE ANOTHER ONE COMING IN IN JUST A MOMENT.

THOUSANDS JUST ADJOURNED OR AT LEAST COMPLETED THEIR ORDERS FOR THE DAY.

REPRESENTATIVE WHEATLEY MADE THE JUMP OVER HERE AND CHAIRMAN PETRIE IS GETTING READY TO GET SUITED UP, MIC'D TO COME IN AND AND PLATE GAME.

THANK YOU ALL FOR BEING HERE, SENATORS.

APPRECIATE YOU.

THANK YOU, MR. CHAIRMAN, FOR BEING HERE.

LET HIM CATCH HIS BREATH BECAUSE WE WANT TO TALK ABOUT WE GOT A CHANCE A COUPLE OF MONTHS AGO TO TALK ABOUT THE ON HIS VERSION OF THE BUDGET, SO WE WANT TO SPEND A LITTLE TIME GETTING YOUR VIEWERS CAUGHT UP ON WHAT THE SENATE JUST PASSED LAST WEEK, CHAIRMAN MCDANIEL SO.

TALK TO US ABOUT THE OVERALL APPROACH SENATE REPUBLICAN BUDGET PLAN.

>> SURE.

THANKS, RENEE, AND I FRESH THE OPPORTUNITY TO BE HERE TONIGHT.

INSIDE OF OUR PLAN, THE BIGGEST THING THAT WE LOOKED AT WAS THERE WAS THE MOST PRESSING NEED CONFRONTING KENTUCKY STATE GOVERNMENT, AND TEN YEARS AGO WHEN I GOT HERE, WE WERE DEALING WITH A MASSIVE FINANCIAL ISSUE OF THE STATE'S PENSION SYSTEM, AND THAT ISSUE GOT WORSE AND WORSE AND WORSE FOR MANY, MANY YEARS.

AND AS WE SET ABOUT THE STEPS TO DISCIPLINE OURSELVES, TO PAYING THE APPROPRIATE AMOUNT INTO THAT PENSION SYSTEM, ONE OF THE THINGS THAT REGULARLY GOT SET ASIDE WAS EMPLOYEE RAISES.

AND THE FACT IS WE HAVE CREATED THROUGH THAT A VERY GOOD DISCIPLINE FOR FUNDING THE PENSION SYSTEMS BUT NOT A VERY GOOD DISCIPLINE FOR ROW.

80IALITY CHANGING PAY -- APPROPRIATELY CHANGING PAY RATES INSIDE THE STATE WORKFORCE.

SO ONE OF THE OUR PRIORITIES WAS BEGIN TO ADJUSTING STATE WORKFORCE PAY SO THAT WE CAN RETAIN APPROPRIATE PEOPLE INSIDE OF GOVERNMENTAL SERVICES.

AFTER THAT WE TRIED TO MAKE SURE WA WE PRIORITIZED, LIKE I SAID, PUBLIC PENSION PAYMENTS.

THOSE ARE KEY.

EDUCATION IS WELL-FUNDED IN THIS BUDGET, AS WELL AS MANY OTHER PROPRIETORS, WHETHER THEY BE IN INFRASTRUCTURE OR JUSTICE, TO MISTAKE SURE THAT GOVERNMENT CAN APPROPRIATELY FUNCTION FOR THE PEOPLE IT'S CALLED TO SERVE.

BUT ALSO WE TOOK A VERY CONSERVATIVE FRONT OF EXTENDING SO THAT WE WOULD HAVE THE ABILITY TO INVEST THE IN STATE'S RAINY DAY FUND AS WELL AS HAVE MONEY LEFT OVER AT THE END FOR ANYTHING ELSE THAT MIGHT BE UNFORESEEN.

>> AND THE TAX REBATE PLAN IS PART OF THE BUDGET?

>> ABSOLUTELY, ALTHOUGH IT'S TECHNICALLY A SEPARATE BILL, THE FACT IS THE COMMONWEALTH IS GOING TO RECOGNIZED OVER $2 BILLION OF UNANTICIPATED REVENUE IN THIS FISCAL YEAR.

THAT'S FROM A COUPLE OF THINGS.

PRIMARILY THE FACT THAT WE BUDGETED VERY CONSERVATIVELY ACROSS THE LAST TWO YEARS.

AMERICANS AND KENTUCKIANS ARE DEALT WITH WITH ABSOLUTELY CRUSHING INFLATION AND WE FELT THE BEST WAY IN THE SHORT TERM TO HELP THEM DEAL WITH THAT INFLATION WAS THROUGH THE TAX REBATE PLAN.

AS YOU MENTIONED EARLIER, UP TO $500 FOR INDIVIDUALS AND $1,000 FOR JOINT AND FAMILY FILERS.

>> BASED ON THE 2020 TAX RETURNS, CORRECT?

>> CORRECT.

>> SO BEFORE WE GET SENATOR THOMAS' PERSPECTIVE ON THAT, LET'S TALK ABOUT THE RAISES FOR STATE WORKERS.

THERE'S ALSO RAISES FOR STATE TROOPERS, RIGHT, AND FOR SOCIAL WORKERS.

SO LET'S TALK ABOUT STATE WORKERS IN GENERAL.

$4,500 MAX THE FIRST YEAR?

>> IT'S $4,500 FOR EVERYONE ACROSS THE BOARD.

WHAT WE DID IS THAT'S A 10% INCREASE IN OVERALL STATE PAY SCALE THAT'S BEEN AGGREGATED AND DIVIDE BY THE TOTAL NUMBER OF FLEES.

WHAT THAT DOES IS IT WILL EVEN MORE POSITIVELY AFFECT THOSE EMPLOYEES WHO ARE MAKING $45,000 A YEAR AND LESS BECAUSE THOSE ARE SOME OF OUR TOUGHEST RETENTION AREAS, SO NECESSARILY THEY WILL HAVE A HIGHER PERCENTAGE INCREASE THAN SOMEBODY WHO MIGHT BE MAKING $80,000, $90,000, $100,000 A YEAR.

THEN IN YEAR TWO IT IS A 10% BUT WITH SOME EVALUATION TRIGGERS BASED OFF THE PERSONNEL CABINET NOR LOCALITIES, POSITIONS AND SO ON.

>> AND WHEN WOULD THE PERSONNEL CABINET BE REQUIRED TO SUBMIT TO YOU THIS COMPENSATION PAY SCALE?

>> HAVE TO SUBMIT IT DURING THE INTERIM SO THAT WE CAN REVIEW AND IT MIKE FINAL DECISIONS ABOUT IT.

>> SO SENATOR THOMAS, YOUR TAKE ON THE SENATE PLAN THAT WAS JUST PASSED LAST WEEK.

>> WELL, RENEE, I WOULD SAY THAT THIS COMMONWEALTH HAS BEEN GIVING US A TREMENDOUS OPPORTUNITY TO DO SOME TRANSFORMATIVE ACTIONS WITH REGARD TO THIS STATE.

AS INDICATED, WE HAVE A $1.9 BILLION SURPLUS.

IN ADDITION DIGS HAD TO THAT WE'VE GAT A $1.3 BILLION ADDITIONAL MONEYS FROM THE CARES ACT.

WHEN YOU LOOK AT, RENEE, HOW MUCH MONEY WE HAVE TO SPEND, WE'RE NOT PINCHING PENNIES THIS TIME.

WE'VE GOT OPPORTUNITY.

AND WHAT I THINK THE BUDGET FAILS TO DO, RENEE, IS TO GIVE KENTUCKIANS OPPORTUNITIES TO DO TRANSFORMATIVE, DO CREATIVE, AND EXPAND OPPORTUNITIES THAT WE'VE NEVER BEEN GIVEN BEFORE, AND I THINK THIS BUDGET FAILS IN THREE SIGNIFICANT ASPECTS.

WE CAN TALK ABOUT THEM OVER THE NEXT HOUR.

ONE, IT FAILS IN THE AREA OF EDUCATION.

THAT'S THE MOST GLARING FAILURE.

NUMBER TWO, IT FAILS IN HEALTH CARE.

AND WE JUST WENT THROUGH TWO YEARS LARDING -- WITH RESPECT TO COVID, AND IT FAILS IN HEALTH CARE.

AND NUMBER THREE, TALKING ABOUT DEPARTMENT.

I THINK THERE'S A LOT OF FISCAL IR RESPONSIBILITY CONNECT WITH THIS BUDGET THAT I THINK WE NEED TO TALK ABOUT.

SO -- >> WHAT DO YOU MEAN BY THAT?

>> RENEE WHAT HASN'T BEEN TALKED ABOUT ENOUGH IS THAT THIS BUDGET ASKS THREE AND TWO-THIRD BILLION DOLLARS IN NEW DEBT TO OUR STATE.

THIS IS THE MOST IN THE Wii BIENNIUM IN THE HISTORY OF OUR STATE AT A TIME WHEN WE HAVE THE MOTION MONEY IN OUR STATE.

GENERALLY A FINANCIAL ADVISER WILL TELL YOU THAT WHEN TIMES ARE GOOD, YOU WANT TO REDUCE YOUR CONNECTICUT DEBT YOU.

WANT TO SPEND MORE MONEY -- REDUCE YOUR DEPARTMENT.

YOU WANT TO SPEND MORE MONEY OOH ITEMS AND REDUCE YOUR DEBT.

AND WHEN TIMES ARE HARD, YOU INCREASE YOUR DEBT.

WE'RE GOING THE EXACT OPPOSITE, RENEE.

WE'RE ADDING MILLIONS AND MILLIONS OF DOLLARS TO OUR DEBT RATIO WHEN WE'VE GOT MONEY, CASH IN THE BANK.

>> FOR WHAT?

>> PARDON?

>> FOR WHAT?

>> RENEE, LET ME BEGIN BY TALKING ABOUT EDUCATION IS NUMBER ONE.

RENEE, THIS BUDGET DOES NOT FUND UNIVERSAL PRE-K, WHICH WOULD CAUSE OVER TWO YEARS, ONLY $344 MILLION.

WE'VE GOT ENOUGH MONEY, RENEE, TO PROVIDE UNIVERSAL PRE-K TO ALL FOUR-YEAR-OLD IN THIS STATE OVER THE NEXT 20 YEARS.

WE'VE GOT ENOUGH MONEY TO DO THAT BUT E WE DO NOT DO THAT.

RENEE, WE DON'T EVEN FUND FULL-DAY KINDERGARTEN WHICH WAS A RECOMMENDATION OF THE SCHOOL FUNDING TASK FORCE THAT MET ALL LAST SUMMER.

I WAS ON THAT COMMISSION.

AND THEY CAME BACK AND THEY SAID AFTER MEETING FOR THE ENTIRE SUMMER THROUGH NOVEMBER, THAT'S OUR NUMBER ONE PRIORITY, AND CHAIRMAN PETRI WILL TELL YOU THEY FUND THAT IN THE HOUSE.

THEY SAID WE'RE GOING TO HONOR THAT.

THE SENATE TAKES THAT AWAY.

AND THEN THIRDLY, RENEE, TEACHERS' RAISES.

NOTHING.

THE SENATE BUDGET BASICALLY THUMBS THEIR NOSES AT TEACHERS.

>> BUT THE HOUSE BUDGET DIDN'T HAVE THAT EITHER.

>> AND I THINK THEY'RE BOTH WRONG ON THAT.

THE GOVERNOR PROVIDED RAISES THE FOR TEACHERS.

AND THESE ARE PEOPLE WHO ARE THE FOUNDATION OF OUR FUTURE, RENEE, WHO SOMETIMES, WHO MANY TIMES COME OUT OF THEIR OWN POCKETS TO PAY FOR ITEMS, AND WE DON'T GIVE THEM A RAISE AT ALL?

>> I THINK I'M GOING TO BRING IN CHAIRMAN PEET RE BECAUSE HE WOULD DISAGREE THAT I JUST SAID THAT THERE ARE NO RAISES APPROPRIATED FOR TEACHERS IN THE BUDGET BECAUSE I KNOW YOU HAVE A STRONG RETORT TO THAT.

>> YES, AND THANK YOU.

>> GOOD TO SEE YOU, BY THE WAY.

>> FOR INVITING ME TONIGHT.

TEACHER RAISES.

THE IN THE HOUSE SIDE OF THE BUDGET, THERE IS EVEN A LINE IN THE BUDGET THAT SAYS WE ARE ASKING THE LOCALS TO CONSIDER THOSE RAISES.

WE PUSHED HUNDREDS OF MILLIONS OF DOLLARS OUT INTO THE LOCAL DISTRICTS SO THAT THEY WOULD HAVE DISCRETIONARY FUNDS EASED UP SO THEY COULD DEAL WITH RAISES AS WELL AS OTHER THINGS THAT THEY HAVE.

UNDERSTAND THAT IT'S BEEN, I THINK, SINCE ABOUT 2008 OR THEREABOUTS THERE'S BEEN A STATE MANDATED RAISE.

UNDERSTAND THAT WE HAVE NO HIRE ORE FIRE AUTHORITY OVER TEACHERS AT THE STATE LEVEL, UNLIKE THE EMPLOYEES IN THE EXECUTIVE RANCH.

, JUDICIAL, SO FORTH AND SO ON, WE HAVE DIRECT RESPONSIBILITY FOR THEM AND THEIR PAY SCALES AND HOW THE THEY ARE HUNDRED FUNDED.

WE WE HAVE TO LOOK AT THOSE LOCAL SINGERS WE'VE GOT SURVEYS BACK FROM KRBA BOARD ASSOCIATION OF HOW MANY DISTRICTS HAVE GIVEN STIPENDS, RAISES THE, INCREMENTAL AND FULL RAISES TO GO OVER THE TOP THAT OF WITH A BULLDOZER MENTALITY AND SAY WE'RE GOING TO MANDATE THIS DESPITE WHAT YOUR PAY SCALE NEEDS ARE AT THE LOCAL LEVEL AND YOUR HISTORY AT THE LOCAL LEVEL I THINK IS IRRESPONSIBLE, NOT A PROPER FUNCTION OF STATE GOVERNMENT.

THAT'S A LOCAL FUNCTION IS WHAT THAT IS.

>> REPRESENTATIVE WHEATLEY 1 YOUR TAKE TO THAT, PARTICULARLY THE RAISES FOR TEACHERS.

>> RENEE, THANK YOU AGAIN FOR HAVING ME TONIGHT.

I COMPLETELY SUPPORT THE GOVERNOR'S PROPOSAL FOR THE TEACHERS' RAISES.

YOU KNOW, THE CHAIRMAN TALKS ABOUT PUSHING THOSE DOLLARS OUT TO THE SCHOOLS AND MAYBE NOT HAVING THE KIND OF CONTROL THAT THE STATE WOULD LIKE TO HAVE OVER THE HIRING AND FIRING OF TEACHERS.

BUT WE KNOW THAT THOSE KIND OF DOLLARS, WE HAVE DONE PLENTY OF OTHER THINGS TO PERHAPS BE INVOLVED IN LOCAL CONTROL OF OUR LOCAL SCHOOL DISTRICTS, SO PROVIDING A RAISE LIKE THIS WOULD BE A TREMENDOUS BOOST, WE THINK, TO THE TEACHERS, AND IT SAYS A LOT, AND THERE'S -- WE KNOW THROUGH THIS PANDEMIC, THROUGH EVERYTHING THAT THEY'VE HAD TO GO THROUGH, THAT THERE ARE MANY OTHERS WHO DESERVE THE RAISES BUT TEACHERS TO NOT BE INCLUDED IN THE STATE BUDGET, IS SYMBOLIC GESTURE OF JUST THE RAISE WE CAN PROVIDE, WE HAVE THE DOLLARS THIS TIME AND RECOGNIZING THESE ARE NOT OUR DOLLARS.

THESE ARE THE TAXPAYERS' IS THAT CORRECT WE'RE BEING RESPONSIBLE WITH THESE FUNDS.

WE DO HAVE THE FUNDS TO DO IT AT THIS TIME.

IT'S NOT A TIME TO BE FOOLISH WITH OUR DOLLARS, WITH THE BUDGET DOLLARS, BUT WE DO HAVE THE DOLLARS THIS TIME.

AND FOR MANY YEARS, AND I THINK THE CHAIR OF THE SENATE A&R HAD SAID SINCE 2012 WE HAVE PRACTICALLY HAVE HAD TO CUT EVERY YEAR, AND WE HAVE ALWAYS HAD A CONSERVATIVE OUTLOOK ON THE BUDGET, TOO, BUT THIS IS A TIME THAT WE CAN BE BOLD, WE SHOULD BE BOLD, AND THERE ARE MANY WAYS THAT I THINK BESIDE JUST TEACHERS' RAISES THAT I'D LIKE TO EVENTUALLY TALK ABOUT.

>> DO YOU FAVOR THE SENATE VERSION WHEN IT COMES TO RAISES FOR STATE WORKERS OVER WHAT THE HOUSE PASSED?

>> I DO PREFER THAT VERSION.

THAT VERSION DOES INCLUDE A FLAT RATE THAT GOES ACROSS THE BOARD, SO IT DOES HELP OUR LOWER WAGED EMPLOYEES, SO THAT IS VERY HELPFUL.

THAT IS THE PREFERENCE.

AND PERHAPS IT IS SOMETHING THAT WE CAN -- YOU KNOW, THE BUILT-IN PART OF IT WHERE WE STUDY THE WAY THAT ALL OF OUR EMPLOYEES ARE COMPENSATED AND WE COME UP WITH A MORE REGULAR COLA, SOME TYPE OF RAISE THAT IS THERE ON A REGULAR BASIS, THAT'S BASED ON THE COST OF LIVING ADJUSTMENT, BUT THAT'S ALSO A GOOD IDEA, I THINK, THAT WE SHOULD FURTHER.

>> SCHOOL TRANSPORTATION FUNDING.

I DO WANT TO TALK ABOUT THAT BECAUSE THERE IS A DIFFERENT BETWEEN THE HOUSE VERSION AND THE SENATE VERSION.

THE SENATE PROVIDE LESS WHEN IT COMES TO SCHOOL TRANSPORTATION.

TELL US A LITTLE BIT MORE ABOUT THAT, CHAIRMAN MCDANIEL.

>> WHAT WE SAY IS THE SAME AMOUNT IN YEAR TWO AS THE HOUSE DID, JUST NO ADDITIONAL FUNDING ALTHOUGH THERE IS THE NORMAL AMOUNT OF FUNDING IN YEAR ONE.

YOU KNOW, RENEE, WHAT'S IGNORED IN THIS ARGUMENT IS THE FACT THAT STATE DOLLARS ARE NOT THE ONLY DOLLARS THAT FLOW INTO SCHOOL DISTRICTS.

IN FACT, THE DISTRICTS ACROSS THIS COMMONWEALTH HAVE GOTTEN OVER $1.9 BILLION IN FEDERAL FUNDS IN THE LAST 18 MONTHS THAT WERE UNANTICIPATED, THAT WENT INTO THOSE SCHOOLS IN ADDITION TO SEVERAL OTHER POTS OF MONEY THAT HAD FLOWN IN AS WELL, AND WHEN WE TALK ABOUT THE IDEA OF TEACHER RAISES, WHAT EVERYBODY NEEDS TO REMEMBER IS THAT SCHOOL DISTRICTS, WHILE THEY'RE ALL FUNDED THROUGH THE SEEK FORMULA WITH THE SAME PER-PUPIL GUARANTEE, THERE'S FLUCTUATIONS BASED OFF OF PROPERTY TAXES, AND WHEN THE STATE PUSHES MONEY THROUGH THAT STANDARD FORMULA BUT THEN DICTATES AN AMOUNT OF A RAISE, WHAT YOU NECESSARILY CREATE IS WINNERS AND LOSERS BASED OFF OF PROPERTY TAX VALUATIONS IN THOSE DISTRICTS.

AND SO NOT ONLY ARE THOSE NOT EMPLOYEES OF THE STATE, IT ALSO WILL -- THERE WILL BE SOME DISTRICTS THAT END UP OVERFUNDED AND SOME DISTRICTS END UP UNDERFUNDED RATTLER AS A RESULT OF THOSE GENERAL FOUND POLICIES AND IT'S SIMPLY NOT SOUND FINANCIAL POLY.

TO THE POINT OF TRANSPORTATION, WE LARGELY BELIEVE THAT A LOT OF THE MONEY THAT WAS APPROPRIATED INTO THE FEDERAL GOVERNMENT WILL STILL BE AVAILABLE IN THE COMING YEAR, AND IN ADDITION WITH A LOT OF THE SITUATIONS THAT AROSE DURING COVID, TRANSPORTATION WASN'T AS MUCH OF A NECESSITY WITH THE AMOUNT OF SCHOOLS THAT WERE CLOSED, AND SO THERE IS SOME RESIDUAL MONEY STILL FLOATING AROUND IN THE DISTRICTS THAT CAN CONTINUE TO ACCOMMODATE BECAUSE LIKE I STEAD THE FUNDING REMAINS AT THE CURRENT YEAR LEVEL AND THEN THE SECOND YEAR DOES SEE A BUMP.

>> CHAIRMAN PETRIE?

DO YOU CARE TO COMMENT ON THE HOUSE'S PROPOSAL WHEN IT COMES TO TRANSPORTATION FUNDING?

>> TRANSPORTATION, I'LL SAY REASONABLE MINDS CAN DISAGREE.

I THINK THAT TRANSPORTATION IS ONE OF THOSE THINGS MANY DISTRICTS REQUIRE MONEY.

WE UNDERSTAND THAT WE'RE NOT ANYWHERE CLOSE TO 100%.

I WOULD LIKE TO SEE US MOVE TOWARD 100%.

AND IF WE COULD ADOPT THE SENATE'S VERSION AND PUT MONEY THROUGH A FORMULA, AND WE COULD GET TO 100, I CAN SEE THAT BEING AS SOMETHING THAT MIGHT BE POSSIBLE.

BUT IF WE'RE NOT GOING TO DO THAT, THEN I THINK THE DISTRICTS THAT ARE STRAPPED THE HARDEST ARE THE ONES THAT WE TRIED TO FOCUS ON IN THE HOUSE BUDGET.

NOW, I DID NOT AGREE THAT THERE IS A LOT OF RESIDUAL MONEY LEFT FROM FEDERAL FUNDS THAT THE FLOWED IN THE BILLIONS INTO THE SCHOOL DISTRICTS.

WHAT THOSE FUNDS HAVE BEEN ALLOCATED TOWARD AND WHAT'S REMAINING THAT THEY COULD USE FOR TRANSPORTATION, I'M NOT SO CERTAIN ABOUT THAT.

THAT'S WHY WE PREFERRED OUR METHOD OF APPROACH ON THAT.

>> THERE ARE OTHER MEASURES THAT HAVE APPROPRIATIONS.

ARE THEY ABSORBED INTO EITHER OF THESE BILLS?

I'M THINKING OF THE $23 MILLION FOR KSU AND OTHER AREAS THAT MIGHT NEED TO BE FUNDED.

WAS THAT CONSIDERED?

I'LL START WITH YOU, CHAIRMAN PETRIE, WHEN IT COME TO THE HOUSE PROPOSAL.

>> SOME THINGS WERE, FOR INSTANCE, KSU WAS NOT.

WE WEREN'T SURE WHERE THAT ISSUE WAS GOING TO END UP ON DOLLAR FIGURE.

SO IT'S A STANDALONE SEPARATE BILL AND ACTUALLY TWO BILLS THAT HAVE GONE BETWEEN THE CHAMBERS TO ADDRESS THE NEEDS OF KSU.

I'LL GIVE ONE FOR INSTANCE.

WE HAD AN EARLY LITERACY PROGRAM IN THE HOUSE BILL BUDGET FOR AROUND $11 MILLION A YEAR, I THINK, AND WE ASSUMED THEREAFTER THROUGH A&R IN THE HOUSE PASSED REPRESENTATIVE TIPTON'S BILL ON READ TO SUCCEED AND READ TO ACHIEVE, GUIDANCE THOSE TWO TOGETHER, AND I BELIEVE THAT WAS MAINTAINED IN THE SENATE.

SO SOME BILLS ARE RUNNING TO THE SIDE TO MAKE SURE WE HAVE CODIFICATION, STRUCTURAL FLESH FOR HOW THAT MONEY IS GOING TO BE APPLIED.

>> THIS QUESTION COMES IN FROM A RETIRED STATE EMPLOYEE.

DIDREs RECEIVE THEIR RAISES IN 2022 AND 2021?

AND IF SO, HOW MUCH?

I THINK I'LL TAKE ABBERANT DIFFERENT APPROACH TO THE QUESTION THAT THIS EMPLOYEE IS ASKING BECAUSE THERE WAS A SEPARATE BILL, THE LEGISLATIVE BUDGET, THAT PROVIDES RAISES FOR THE LRC STAFF AND FOR LEGISLATORS OF 6%.

SO YOU CAN CHOOSE WHICH ONE OF THOSE YOU WANT TO ANSWER, CHAIRMAN PETRIE WORK BOTH.

>> I'LL TRY TO FIELD THE QUESTION AS BEST I CAN.

AS FAR AS RAISES ON LEGISLATORS, I'M THINKING THAT 2008 WAS THE LAST TIME THERE WAS ANY INCREASE IN LEGISLATIVE SALARY.

I MAY BE WRONG ABOUT THAT BUT I THINK IT'S CORRECT.

IT'S BEEN QUITE A LONG TIME AND OTHER INCREMENTS HAVE BEEN GIVEN TO OTHER SEGMENTS OF STATE GOVERNMENT IN THE MEANWHILE.

AND, YES, THAT IS ONE THAT IS TREATED ESSENTIALLY THE SAME AS LRC STAFF, WHICH IS VERY SIMILAR TO THE WAY WE TREATED JUDICIAL STAFF AND ELECTED, UNELECTED AND THE WAY WE TREATED THE REGULAR STATE GOVERNMENT.

>> SO THE WAY YOU POSIT IT ON THE FLOOR, IT WAS A 6% ACROSS THE BOARD, ALL THREE BRANCHES OF GOVERNMENT.

>> ESSENTIALLY THAT IS IT.

>> REPRESENTATIVE WHEATLEY.

>> YEAH, I WOULD ADD THAT WE HAVE HAD A EXCELLENT AMENDMENT OPPORTUNITY IN THAT BILL.

REPRESENTATIVE JONI JENN CONVINCE METEORITE LEADER, HAD MADE THE -- HAD AN -- JENKINS, MINORITY LEADER, MADE AN AMENDMENT THAT WE WOULD NOT GIVE A RAISE -- BE WE WOULDN'T GIVE LEGISLATORS, OURSELVES, A RAISE AT THE SAME TIME WE GAVE OUR STAFF A RAISE.

IT'S A LITTLE BIT OF AN UNDERSTANDING THAT WE HAD DONE IN OTHER SECTORS, BUT WHEN YOU'RE GIVING YOURSELF A RAISE, AND AGAIN, IT'S NOT FOR THE CURRENT YEAR, IT'S FOR -- YOU HAVE TO BE AROUND FOR THE NEXT -- AFTER THE NEXT ELECTION FOR WHEN THAT HAPPENS.

MIND YOU, THERE ARE QUITE A FEW UNOPPOSED ELECTED OFFICIALS FOR THIS NEXT SESSION, FOR THIS NEXT ELECTION CYCLE.

BUT WE HAD AN OPPORTUNITY TO SEPARATE IT OUT.

WE WOULD GIVE THE LRC STAFF THEIR RAISE, THEIR 6% X-RAYS, THEN WE COULD VOTE FOR THE RAISES FOR LEGISLATORS IN ITS OWN BILL, IT IS OWN AMENDMENT.

I WISH WE WOULD HAVE DONE THAT, AND THAT WAS A MISSED OPPORTUNITY.

IT'S THE PERCEPTION OF IT.

AND IT'S TRUE, WE HAVE NOT HAD A RAISE FOR QUITE WHILE, AND I DON'T KNOW THE EXACT DATE, EXCITED, OF COURSE, I ALWAYS BELIEVE IN AN HONEST DAY'S WORK FOR AN HONEST AS A DAYS PAY BUTTONS HAS TO BE DEFINED OF COURSE.

>> AND OF COURSE THIS UNDER DOESN'T END THE SENATE FOR TO EXECUTIVE BRANCH BUT IS THIS SOMETHING YOU -- YOU THAN THE 2021 CHAIR BUT IS THIS SOMETHING THAT THE SENATE REPUBLICAN CAUCUS HAS TALKED ABOUT?

>> IT'S NOT BEAN DISCUSSED YET BUT CERTAINLY THE LEGISLATIVE AND JUDICIAL BURGLARS BUDGETS WILL HAVE TO COME THROUGH THE COMMITTEE AT SOME POINT.

>> WHAT ARE YOUR GENERAL THOUGHTS ABOUT A RAISE FOR LEGISLATORS OF WHATEVER AMOUNT AT THIS PARTICULAR TIME?

>> CERTAINLY.

IT'S SOMETHING THAT IF IT'S DONE SHOULDN'T EXCEED WHAT ANY EMPLOYEE IN THE COMMONWEALTH WOULD GET, BUT ALSO, YOU KNOW, MUCH LIKE WE HAVE TO ATTRACT REMEMBER RECRUIT AND RETAIN QUALITY EMPLOYEES ELSEWHERE, THE SAME HAS GOT TO BE SAID OF THOSE FOLKS WHO CHOOSE TO ENTER PUBLIC SERVICE ON THE ELECTED SIDE, AND SO I DON'T SEE ANY REASON NECESSARILY TO OPPOSE THAT.

>> HOW DO YOU FEEL ABOUT IT, SENATOR THOMAS?

IT COULD BE A RECRUITMENT AND A RI TENSION EFFORT, CONSIDERING EVEN THOUGH IT IS A PART-TIME LEGISLATURE, YOU ALL DO MEET DURING THE INTEREST REMIT, AND THERE'S A PRETTY ROBUST SCHEDULE THROUGHOUT THE YEAR.

>> RENEE, HERE'S MY RESPONSE TO THAT QUESTION.

I BELIEVE IT'S IMPORTANT TO HAVE GOOD LAW ENFORCEMENT OFFICERS, AND WE'RE GOING TO GIVE KENTUCKY STATE POLICE A $15,000 RAISE.

I THINK THAT'S IMPORTANT.

WE WANT HIGH QUALITY POLICE OFFICERS OUT THERE ON OUR ROADS.

I THINK IT'S IMPORTANT, RENEE, TO HAVE QUALITY SOCIAL WORKERS, AND WE'RE GOING TO GIVE SOCIAL WORKERS A SIGNIFICANT RAISE, AND THEY NEED IT.

AND IN THIS BUDGET WE PROPOSE EVEN -- WHAT I THINK IS HIGHLY CREATIVE, A RETENTION PROGRAM WHERE AFTER EVERY FOUR YEARS THEY'LL GET A RESPITE, HAVE DOWN-TIME.

I THINK THAT'S GREAT.

BUT, RENEE, I ALSO THINK IT'S CRITICALLY IMPORTANT THAT WE HAVE QUALIFIED TEACHERS.

WE'VE GOT TO HAVE QUALIFIED TEACHERS IN THE CLASSROOM BECAUSE THEY TEACH OUR YOUNG PEOPLE.

THEY TEACH OUR CHILDREN, RENEE.

AND TO SAY, WELL, WE'RE GOING TO GIVE OURSELVES A RAISE AND NOT GIVE TEACHERS A RAISE, RENEE, THAT'S FRANKLY TROUBLES ME.

YEAH, WE NEED QUALIFIED LEGISLATOR, NO DOUBT ABOUT IT, PUT I THINK QUALIFIED TEACHERS PROBABLY A LITTLE BIT MORE IMPORTANT.

>> SO LET'S TALK ABOUT -- I THINK WHEN CHAIRMAN PETRIE WAS ON EARLIER, I DON'T KNOW IF WE TALKED ABOUT IT OR NOT, BUT THE $10 MILLION A YEAR GRANT POOL.

SOME HAVE CALLED IT WHO ARE OPPOSED TO IT, A LEGISLATOR SLUSH FUND.

SOME HAVE REFERRED TO IT AS THIS COULD BE USED FOR PROJECTS, LOCAL PROJECTS, EACH SENATOR WOULD GET $130,000, EACH REPRESENTATIVE $50,000.

IT'S BASED ON POPULATION.

THIS WAS NOT INCLUDED IN THE SENATE VERSION.

SO CAN YOU REMIND OUR VIEWERS YOUR THOUGHT THAT WAS NECESSARY PORTION OF THE HOUSE PLAN.

>> SURE.

THANK YOU.

AS MENTIONED, IN COMMITTEE AND I BELIEVE ON THE HOUSE E. FLOOR, AS A&R CHAIRMEN, WE GET ALL KIND OF REQUESTS FOR SMALL FUNDING ISSUES ACROSS THE BOARD, AND EVERY AREA YOU CAN THINK OF.

WE JUST NEED $2,000 OR $5,000.10000 WOULD MAKE A WORLD OF A DIFFERENCE FOR THIS ORGANIZATION OR FOR THIS ACTIVITY AND SO FORTH AND SO ON, AND A LOT OF GOOD THINGS.

BUT WE REALLY HAVE NO MECHANISM IN STATE YOU GOVERNMENT TO FUND OR ATTEMPT TO ADDRESS THOSE NEEDS.

THEY'RE TOO SMALL IN SO MANY SENSE SO IT DIDN'T YOU FIT INTO ANY PATTERN THAT WE CAN FIND OR ANY FUNDING SOURCE FOR THAT UNLESS YOU START HUNDREDS OF HUNDREDS OF LINE ITEMS IN THE BUDGET, AND I'M NOT PARTICULARLY INCLINED TOWARD THAT PATHWAY.

SO WE CAME UP WITH A MECHANISM TO SAY NON-PARTISAN, EVERYBODY SO NO ONE IS EXCLUDED IN THE HOUSE OR IN THE SENATE.

SAME AMOUNT IN EACH CHAMBER.

AND THOSE INDIVIDUAL LEGISLATORS WOULD HEAR THOSE LOCAL NEEDS, LOCAL FUNDING NEEDS.

THAT CAN'T BE GOTTEN TO IN OTHER WAYS.

THEN THEY WOULD HAVE THE OPPORTUNITY TO DESIGNATE BY I THINK JULY THE 1st BY THE DEPARTMENT OF LOCAL GOVERNMENT TO WHOM, REALLY TO WHOM AND FOR WHAT THE MONEY WOULD BE PAID.

I THINK WE RESTRICT IT TO EDUCATIONAL ACTIVITIES, GOVERNMENT AND CAUSEWAY EYE GOVERNMENTAL ENTITIES SO THAT WE CAN GET TO PROPER FUNCTION.

IT'S NOT JUST YOUR PET PROJECT, BUT PROPER FUNCTIONS OF FUNDINGS FOR STATE MONEY BUT GET TO THOSE LOCAL ISSUES WE REALLY CAN'T GET TO ANY OTHER WAY.

>> WHAT WOULD BE THE VETTING PROCESS FOR THOSE TYPES OF PROCESS?

>> THE VETTING WOULD BE ARE RESTRICTION TO THE CATEGORIES THAT WE PUT IN THE BUDGET, NUMBER ONE, AND THEN AS FAR AS A INVESTIGATE, I'M NOT GOING TO SAY IT'S THAT BUT IT'S GOING TO BE PUBLIC OVERSIGHT BECAUSE ONCE YOU EDITION THAT IT WITH DEPARTMENT OF LOCAL GOVERNMENT, THAT'S PUBLIC RECORD, AND I STATED IN COMMITTEE DON'T BE TOO CUTE OR TOO STUPID ABOUT THIS.

SO IF YOU'RE GOING TO NOMINATE SOMEONE TO HAVE ARE SOME OF THAT MONEY BECAUSE IT'S A GOOD LOCAL FUNDING ISSUE, IT WILL BE PUBLIC AS SOON AS YOU MAKE IT KNOWN TO DOG, AND NOT ONLY WHETHER THE L.T.

MEDIA BE LOOKING AT IT BUT I WILL REBE REVIEWING THOSE.

>> THE LAWMAKERS ARE GOING TO BE GIVEN 130 OR 150 GRAND TO GO WILLIE NILY.

>> THE LAWMAKERS SIMPLY MAKE THE PUBLIC DESIGNATION OF PROCEEDS THAT HAVE BEEN ALLOCATED TO THEIR DISTRICT FOR LOCAL FUNDING NEEDS, TO WHOM THAT SHOULD BE PAID AND FOR WHAT PURPOSE.

>> SENATOR MCDANIEL, WHAT DO YOU THINK ABOUT THAT?

IT DIDN'T MAKE THE SENATE VERSION OF THE BUDGET.

>> IT SURELY IS, AS CHAIRMAN PEET RE, REASONABLE MINDS CAN DIFFER AND WE DISAGREED ON THAT ONE.

>> END OF COMMENT?

>> YES, MA'AM.

>> YOU ALL HAVE COMMENTS ON THAT FUND?

>> I'LL WEIGH IN ON THAT FIRST, RENEE.

BELIEVER IT OR NOT, THAT'S ONE AREA WHERE CHAIRMAN PETRIE AND I DEFINITELY AGREE ON, AND I'LL TELL YOU WHY.

RENEE, IN MY AN ACT DISTRICT I GET REQUESTS FROM DIFFERENT PROGRAMS, GOOD PROGRAMS, WORTHY PROGRAMS ABOUT LET'S -- CAN YOU HELP FUND BACK-TO-SCHOOL PROGRAMS, BACK-TO-SCHOOL PROJECTS.

I WANT TO DO THAT, RENEE.

I GET REQUESTS FROM GROUPS THAT ARE INVOLVED WITH REFUGEE MINISTRIES, REFUGEE EFFORTS, AND WE'RE GOING TO SEE THAT NOW WITH REGARD TO WHAT'S GOING ON IN UKRAINE.

I WANT TO HELP SUPPORT THAT.

AND I AGREE WITH CHAIRMAN PETRIE, YOU DO NOT WANT TO GO BACK AND NICKEL AND DIME EVERY KIND OF REQUEST.

I'VE GOT A COUPLE OF WHICH IS IN THE BUDGET NOW.

SENATOR MILLENNIAL DANIEL KNOWS THAT I'M VERY PROUD OF IN LEXINGTON HELP FUND SOME VERY NOBLE PROJECTS.

SO I THINK THAT'S VERY HELPFUL TO DO THAT.

I LIKE THAT IDEA.

I HOPE IN THE CONFERENCE COMMITTEE THAT THAT OCCURS BECAUSE THAT'S GIVING MONEY BACK TO THE CITIZENS, THEIR MONEY, IT'S THEIR MONEY, TO BE USED, AGAIN, FOR SCHOOL PROJECTS, TO HELP WITH REFUGEE AREAS, TO HELP WITH A LOT OF NOBLE AND WORTHY CAUSES.

I THINK THAT THAT'S A GREAT IDEA.

>> IS THERE A RIGHT LEVEL OF TRANSPARENCY IN THAT EFFORT, DO YOU THINK?

>> ABSOLUTELY, AND I HAVE NO PROBLEM WITH WHATEVER I WANT TO DO WITH THE MONEY.

I HAVE NO PROBLEM SENDING THAT TO LCR OR WHOEVER IT WASN'T TO SEE IT, THIS IS WHO I APPROVED FUNDING FOR BECAUSE I THINK IF IT'S DONE THE RIGHT WAY AT CAN HELP A LOT OF PEOPLE ACROSS THE STATE.

>> REPRESENTATIVE WHEATLEY.

>> I HOPE THIS ISN'T A FIRST BUT THIS WILL BE A TIME THAT I DISAGREE WITH THE CHAIR OF THE ADAR AND THE HOUSE AND MY FINE FRIEND THE SENATOR HERE, AND I AGREE WITH THE SENATOR FROM KENTON.

I REALLY DO APPRECIATE INNOVATE WAYS AT LOOKS THAT WE CAN HELP KENTUCKIANS AND IT'S NOT QUITE BAKED ENOUGH.

I DON'T KNOW HOW FISCAL RESPONSIBLE IT IS.

I DON'T KNOW ENOUGH ABOUT IT PER SE.

I JUST HAVE NOT HAD ENOUGH TIME TO PERCOLATE WITH IT.

BUT I APPRECIATE THE LOOK AT IT.

BUT I DON'T THINK WE'RE READY FOR IT YET.

>> 200 EXPLAIN THE NOTION FURTHER, CHAIRMAN MCDANIEL?

>> I THINK IN CONFERENCE COMMITTEE EVERY DIFFERENCE WE HAVE WILL BE ENTERTAINED TO SOME ILK.

>> TO SOME DEGREE.

OKAY.

LET'S TALK ABOUT THE BUDGET RESERVE TRUST FUND.

WE LEARNED FROM CHAIRMAN PETRIE NOT TO CALL AT THIS TIME RAINY DAY FUND.

>> PLEASE.

>> BACK IN JANUARY WE LEARNED THAT.

THE SENATE $1.75 BILLION, AND THEN THERE'S $1.27 BILLION NUN SPENT MONEY.

THE HOUSE $1.5 BILLION IN THE BUDGET RESERVE TRUST FUND AND $1.4 BILLION IN NON-APPROPRIATED MONEY.

SO WHAT HAPPENS TO THE NON-APPROPRIATED MONEY, CHAIRMAN PETRIE?

>> AS I'VE STATED ON THE HOUSE FLOOR, THE UNAPPROPRIATED FUNDS ARE TAXPAYER MONEYS THAT WERE NOT NEEDED IN THIS BUDGET CYCLE AND SHOULD BE RETURNED, AND WE CAN TALK ABOUT HOW THAT METHOD WOULD BE RETURNED.

>> IS THAT THROUGH YOUR TAX MODERN STATION PLAN?

>> TAX MODERNIZATION IS THE PLACE THAT I GO TO, YES.

>> AND CHAIRMAN MCDANIEL, SAME TO YOU.

IS THE UNSPENT MONEY THAT THE SENATE WOULD HAVE $1.27 BILLION, IS THAT ABSORBED IN THE STATE INCOME TAX CREDITS OR REFUNDS?

>> NO.

IN FACT, THE REFUND ARE ACCOUNTED FOR BEFORE THAT, SO THAT'S ANOTHER $1 BILLION, AND JUST LIKE SENATOR THOMAS SAID, THAT'S THE PEOPLE'S MONEY.

THAT THEY HAVE SENT OUT THROUGH THEIR HARD WORK AND T. VIA TAXES AND THAT'S TIME IN THEIR LIFE THAT THEY HAVE INVESTED TO MONEY THAT THE STATE HAS TAKEN, AND SO IT NEEDS TO BE SPENT WISELY IN FRANKFORT AND THE BEST PLACE IS FOR THEM TO SPEND IT THEMSELVES.

>> THERE MAY BE VIEWERS WHO WERE THINKING, THE HOUSE PASSED ITS VERSION OF THE BUDGET IN UNPRECEDENTED FAST FASHION.

BY THE END OF JANUARY.

THE SENATE HAS HAD IT FOR A COUPLE OF MONTHS.

THERE MIGHT BE AN ASSUMPTION THAT THE HOUSE AND THE SENATE WERE TALKING DURING THIS TIME AND THAT YOU ARE CLOSER TO A FINAL PRODUCT THAN PERHAPS YOU ARE.

WHERE DOES THAT FIT?

AND HOW HAVE THOSE CONVERSATIONS TRANSPIRED OVER THE LAST TWO MONTHS.

>> I CAN ASSURE YOU AND I'M SURE CHAIRMAN PETRIE WILL TELL YOU THE SAME, THAT WE WERE PRETTY ISOLATED TO THE SENATE, AND THE CONVERSATIONS THAT WE WERE HAVING INTERNALLY, AND WE HAVE HAD SOME PRELIMINARY TALKS ABOUT WHAT THE SCHEDULE WILL LOOK LIKE AS WE MOVE FORWARD THROUGH THE NEXT COUPLE OF WEEKS, BUT BEYOND THAT THERE'S NOT BEEN A LOT OF INNER CHAMBER RECONCILIATION, AND I DO HAVE APPLAUD HIM FOR THE INNOVATION THAT THEIR CHAMBER TOOK IN GETTING WORK PRODUCT OUT EARLY.

THEY DID A FINE JOB.

AND WE'RE LOOKING FORWARD TO GETTING INTO CONFERENCE AND WORKING THROUGH OUR DIFFERENCES.

>> BUT THE HOUSE HAS HAS BE THE OFFICIALLY TAKEN UP THE SENATE COMMITTEE SUBSTITUTE TO HOUSE BILL 1, CORRECT?

>> CORRECT.

>> YOU ANTICIPATE THAT HAPPENING TOMORROW SO THAT THE CONFERENCE COMMITTEE CAN START ITS PROCESS MID-WEEK?

>> SOON IT WILL TAKE IT UP FAIRLY QUICKLY, AND THOSE CONFERENCE COMMITTEES WILL START FAIRLY QUICKLY, ALSO.

>> BUT THERE'S BEEN NO CONVERSATION AS OF YET, EVEN CASUALLY.

>> WE HAVE HAD CASUAL CONVERSATIONS, AND I THINK WE'VE GOT A TENTATIVE AGENDA FOR PUBLIC CONFERENCES.

I DON'T KNOW IF THAT'S BEEN FINALLY APPROVED THROUGH LEADERSHIP ON BOTH SIDES BUT I KNOW CHAIRMAN MCDANIEL AND I HAVE TALKED ABOUT THAT.

>> DO YOU ANTICIPATE COMING TO SOME SORT OF AGREEMENT BEFORE APRIL 14th OR APRIL 14th ANOTHER 11:59 BE THE TIME THAT WE SEE THE FINAL VERSION OF THE EXECUTIVE BRANCH BUDGET?

>> WE CERTAINLY HOPE SO.

>> BEFORE APRIL 14th?

>> THAT WOULD BE THE PLAN.

>> COMMENTS ON THE PROCESS.

>> RENEE, I SUSPECT WE WILL GET INTO CONFERENCE COMMITTEE.

I WOULD HOPE -- HERE'S WHAT I KNOW.

I KNOW THAT THE DEMOCRATIC LEADERS WILL CERTAINLY VOICE THEIR CONCERNS AND THEIR EXPRESSIONS AS HAS BEEN SAID BY OUR FLOOR LEADER, WE HAVEN'T HAD MUCH INPUT TO DATE.

WE'RE GOING TO ASK FOR A LOT MORE INPUT WHEN WE GET TO CONFERENCE COMMITTEE.

AS I'VE ALWAYS SAID, RENEE, BIPARTISANSHIP DOESN'T MEAN THAT YOU ALWAYS HAVE TO AGREE.

BUT BIPARTISANSHIP CERTAINLY MEANS THAT YOU ALWAYS HAVE TO BE HEARD.

AND IN THE CONFERENCE COMMITTEE, THE DEMOCRATIC MEMBERS WILL CERTAINLY BE HEARD DURING THAT PROCESS.

>> I WOULD CERTAINLY AGREE WITH SENATOR THOMAS ON THAT.

YOU KNOW, THE VOICE NEEDS TO BE THERE.

THE VOICE NEED TO BE HEARD.

I SHARED THIS WITH CHAIRMAN PETRIE BEFORE.

THE FACT THAT THE HUES CAME OUT WITH ITS BUDGET AS EARLY AS DID IT WAS MAYBE NOT THE WORST PROCESS.

IT SEALED LIKE A LITTLE BIT OF ONE UPSMANSHIP TO THE GOVERNOR'S PROCESS AND ALL THAT, AND THAT'S A LITTLE BIT POLITICAL, POLITICAL GAMES MANSHIP, IT COULD APPEAR, BUT, YOU KNOW, IF IN ERNEST WE PLAN TO DO THIS EVERY YEAR IT MAY NOT BE A BAD IDEA TO HAVE OUR HOUSE BUDGET OUT EARLY SO SOME OF THESE CONVERSATIONS CAN START AT THE CONFERENCE COMMITTEE MIGHT BE ABLE TO THE GET GOING A LITTLE BIT SOONER.

I'M NOT SO SURE HOW AWARE THE SENATE WAS OF THE HOUSE BUDGET COMING OUT AS EARLY AS IT WAS.

MAYBE IT CAUGHT THEM A LITTLE BIT OFF-GUARD TOO.

BUT IT'S REALLY IMPORTANT THAT WE DON'T TRY TO PLAY POLITICAL GAMES HERE.

IT'S A CONFERENCE COMMITTEE.

IT IS TIME TO GET DOWN TO BUSINESS AND DO IT.

AND WE WANT TO BE HEARD OF COURSE.

>> CHAIRMAN MCDANIEL, WERE YOU YACHT GUARD BY HOW FAST THE HOUSE MOVED?

>> I WAS CERTAINLY IMPRESSED WITH THE WORK THAT THEY HAD PUT IN AND THEIR ABILITY TO GO AHEAD AND GET THE INITIAL DOCUMENT OUT INTO THE PUBLIC SPHERE SO THAT THE CONVERSATIONS COULD BEGIN, AND CLEARLY THEY HAVE THEIR TIMELINES, AND WE'RE VERY AGGRESSIVE AND WE WERE IMPRESSED WITH THAT, AND WE HAVE OURS AS WELL.

WE'RE ON TO CONFERENCE COMMITTEE NOW.

SO I THINK THE IMPORTANT THING IS THE END PRODUCT, AND LOOK FORWARD TO GETTING THERE.

>> DO YOU CONSIDER YOURSELVES BEING VERY FAR APART?

KIND OF FAR APART?

>> PROBABLY AN ISSUE-BY-ISSUE DETERMINATION, RENEE.

>> RIGHT, RIGHT.

SO THIS QUESTION FROM ANTHONY SYLVIE FROM LEWIS COUNTY.

THEY LOOKING TO GIVE RETIREES A COST OF LIVING RAISE DUE TO INFLATION?

>> IT IS OOH CERTAINLY BEEN A REQUEST THEY'VE WEEN SEEN PEOPLE SURE IT WILL BE PART OF THE CONVERSATION.

>> CHAIRMAN PETRIE?

>> IT'S SOMETHING WE HAVE HAD REQUESTS ON ALSO AND I THINK IT WILL BE PART OF THE CONFERENCE CONVERSATION, BUT IT'S ALSO PART OF THE HOUSE VERSION OF A TAX REFORM PACKAGE BECAUSE IF THERE IS A PERCENTAGE DROP, THEN THAT GOES DIRECTLY TO A COLA ADJUSTMENT BECAUSE THERE'S LESS TAXES TAKEN OUT.

>> YOU ALL'S THOUGHTS ON THAT.

>> WE SPOKE ABOUT THIS IN THE PUBLIC PENSION OVERSIGHT BOARD FOR RETIREES TO BE ABLE TO GET A RAISE, AND THERE HAS BEEN A COUPLE PROPOSALS ON HOW IT CAN BE DONE.

CERTAINLY I'M IN FAVOR OF THAT, AND I KNOW IT'S BEEN VERY, VERY TINY RAISES SINCE 2008.

AND, YES, IF WE CAN CREATE SOME KIND OF MECHANISM, AND I WASN'T AWARE THAT THAT WAS A PART OF THE BUDGET OR THE OTHER BILL THAT THE CHAIR WAS TALKING ABOUT, BUT -- >> THE TAX MODERNIZATION PLAN?

>> A REGULAR WAY THAT WE WOULD HAVE A COLA FOR OUR RETIREES.

>> IT WOULD BE AN IMPLICATIONCATION, IT WOULD BE AN EFFECT OF HOUSE BILL 8.

>> AND WE'LL TALK ABOUT HOUSE BIM 8 IN JUST A MINUTE.

SENATOR THOMAS.

>> RENEE, AGAIN, AS A SAID AT THE OPENING, AS I INDICATED, WE'VE ALLOCATED 1 -- A LITTLE OVER $1 BILLION TO RETURN TO THE TAXPAYERS IN THE FORM OF REBATES FOR TAXES THEY PAID.

$500 PER INDIVIDUAL.

$1,000 FOR MARRIED COUPLE'S.

WE'VE GOT TO LARGEST RAINY DAY FUND EVERY EVER EVER, WHATEVER YOU WANT TO CALL.

>> IT THE BUDGET RESERVE TRUST FUND.

>> THE BUDGET RESERVE TRUST FUND.

I'M GOING TO USE YOUR LANGUAGE, REPRESENTATIVE PET PETRIE.

$1.8BILLION.

LARGEST EVER AND WE STILL HAVE $1.3 BILLION OF UNAPPROPRIATED MONEYS.

YES, THEIS THOSE RETIRE EAST NEED A COALA.

WE HAVE TO MONEY TO GIVE IT TO THEM.

WE'RE IN A HIGHLY INFLATIONARY PERIOD RIGHT NOW.

WE'VE GOT TO DO SOMETHING TO HELP THOSE PEOPLE.

GIVE THEM THE MONEY THAT WE HAVE SO GHEEN THEY CAN LIVE RESPECTFULLY AND DECENTLY.

>> SO LET'S TALK ABOUT HOUSE BILL 8 WHICH IS THE, AS IT'S CALLED, THE TAX MODERNIZATION PLAN, DOES A FEW THINGS.

CHAIRMAN PETRIE, THE FLOOR IS JURIES TO GIVE AS A READERS DIGEST VERSION.

>> HOUSE BILL 8 WOULD SIMPLY DO THIS.

OVER I'M IT WOULD TAKE THE PERSONAL INCOME TAX RATE FROM ITS CURRENT FLAT 5% TO ZERO ULTIMATELY.

IT WOULD DO THAT PRIMARILY OVER REVENUE TRIGGERS SO THAT AS OUR REVENUES WENT UP, IF A CERTAIN AMOUNT WAS ACHIEVED, THEN THERE WOULD BE A DECREASE OF THE PERSONAL INCOME TAX RATE.

IT DOESN'T AFFECT ANY OTHER INCOME TAXES, JUST THE PERSONAL INCOME TAX RATE.

WE HAVE A LIMIT ON HOW MUCH THE RATE CAN GO DOWN IN ANY GIVEN CYCLE TO MAKE SURE WE DON'T GO TOO FAR TOO FAST.

SECONDARILY, THERE IS AN EXPANSION, A SLIGHT EXPANSION OF THE BASE, SO WE TALK ABOUT SALES TAX BASE, SO THAT'S BEEN EXPANDED TO CERTAIN AREAS.

WE DID HAVE A LARGER BASE EXPANSION THAT WAS PULLED BACK IN A COMMITTEE SUB.

THAT MADE IT OFF HOUSE FLOOR.

IT IS IN THE POSSESSION OF THE SENATE.

THIRD MAJOR PIECE OF THE BILL IS A TAX AMNESTY PROGRAM THAT SAYS DURING A PARTICULAR TIME PERIOD, THE DEPARTMENT OF REVENUE, EITHER THROUGH AN RFPFP PROCESS WITH A THIRD PARTY CONTRACTOR OR THEMSELVES OR ITSELF WOULD ADMINISTRATOR A TAX AMNESTY PLAN.

THAT MONEY THAT WOULD BE REALIZED WOULD NOT -- HAS NO INTENTION GOING FORD THE REVENUE TRIGGERS.

IT'S SIMPLY ANOTHER COMPONENT THAT OF BILL.

THERE ARE OTHER MEASURES IN THERE, SMALL ISSUES.

I'M NOTE GOING TO GET INTO.

OTHERS ARE THE MAJOR COMPONENTS.

>> AS YOU HEARD THE KENTUCKY CENTER FOR ECONOMIC POLICY DID WHEN THEY DID THEY ARE FISCAL ANALYSIS, THEY SAID, OF COURSE, THE SALES TAX IS 40% OF THE STATE REVENUE, THAT IT WOULD LEAVE A $1.1 BILLION HOLE IN THE STATE BUDGET.

CAN YOU -- >> IF I UNDERSTOOD YOU RIGHT YOU PLENTY THE INCOME TAX, NOT IS THE SALES TAX.

>> INCOME TAX.

>> YES, THERE ARE TWO DIFFERENT WAYS OF LOUNGE AT THIS.

ONE, ON THE HOUSE BUDGET -- I WON'T SPEAK TO THE WAY THE SENATE BUDGET'S SETS UP -- BUT ON THE HOUSE VERSION WE SHOWED THAT YOU COULD MAKE RECORD INVESTMENTS ACROSS THE BOARD IN ALL AREAS OF STATE GOVERNMENT AND STILL HAVE UNAPPROPRIATED FUNDS OF OVER $1 BILLION, SO IF OUR REVENUES ARE EXCEEDING WHAT WE NEED TO OUR APPROPRIATIONS, THEN WE SHOULD ABLE TO PULL OUR REVENUES DOWN AND RETURN THAT MONEY TO PEOPLE.

YOU CAN EITHER DO THAT WITH A FORCED DOWN LIKE WE PROPOSED IN THE ORIGINAL HOUSE BILL 8 OF 5% TO 4% FORCE BASED ON OUR APPROPRIATIONS RELATIVE TO OUR CURRENT REVENUES OR, SECONDARILY, FROM 4 TOASTER IN ORIGINAL HOUSE BILL 8 THAT SAYS AS YOU'RE REVENUES GO UP OVER TIME, YOU WILL RE REDUCE THAT RATE.

>> WAS THERE ANY THOUGHT THE GIVEN TO THE GOVERNOR'S PROPOSAL TO LOWER THE SALES TAX.

I'M SORRY I CONFLATED THOSE.

FROM 5 TO 4 PERCENT.

>> WE DID LOOK AT THAT.

I THOUGHT THAT WAS AN INTERESTING PROPOSAL.

IT'S A ONE-YEAR REPRIEVE FROM SALES TAX OF 1% SO 6% DOWN TO 5% BUT THERE WERE A FEW THING THAT CONCERNED US.

ONE, THAT SALES TAX DOES NOT APPLY TO THINGS THAT ARE ESSENTIAL, SUCH AS FOOD, MEDICAL, PHARMACEUTICAL, UTILITIES AT YOUR HOUSE.

THE THINGS THAT YOU NEED TO LIVE WITH ARE NOT AFFECTED BY THAT.

IT'S ONLY 1% DOWN FOR ONE YEAR ON NON-ESSENTIALS.

THAT COULD HELP, BUT WHAT CONCERNED US EVEN MORE WAS THIS.

WE HAD RECEIVED A LETTER FROM BUDGET DIRECTOR HICKS OF HOW THAT BILL WOULD BE PAID FOR, AND THAT'S WHERE I REALLY GOT CONCERNED.

ESSENTIALLY, AND I THINK IF CHAIR MCDANIEL I THINK WOULD HAVE GOT THE SAME LETTER, $250 MILLION WERE RATED OR RAIDED OR TAKEN FROM THE BUDGET RESERVE TRUST FUND AND $750 MILLION WAS BORROWED, SO YOU ADD THAT TOGETHER AND IT MAKES UP THE $1 BILLION PRICE TAG FOR THAT ONE POINT DOWN FOR ONE YEAR, SO ESSENTIALLY YOU'RE TANK MONEY IDENTITY YOUR SAVINGS ACCOUNT TO 250 AND THEN TAKING 750 IN NEW DEBT TO HAVE A 1 POINT DOWN ON NON-ESSENTIAL GOODS.

DIDN'T SEE THE UTILITY IN THAT.

>> SENATOR THOMAS AND REPRESENTATIVE WHEATLEY.

>> GO RIGHT AHEAD, SIR.

>> RENEE, UNDERSTAND THAT WE'RE DOING THE DECLINE IN THE INCOME TAX AT THE EXPENSE OF AREAS THAT -- WHERE WE COULD USE, AGAIN, TO TRANSFORM AND CREATE NEW OPPORTUNITIES FOR THE PEOPLE OF KENTUCKY.

WE DON'T FUND -- WE COULD USE THAT MONEY TO FUND FULL-DAY KINDERGARTEN.

WE DON'T.

WYE COUSE THAT MONEY TO FUND UNIVERSAL PRE-K. WE DON'T.

WE COULD FUND THAT MONEY FOR TEACHERS SALARIES.

WE DON'T.

THROUGH THIS PROCESS, AND WE HAVEN'T EVEN MENTIONED ZEKE WHICH BASICALLY STAYS THE SAME, RENEE -- ET.

>> BOTH HOUSE AND SENATE.

>> BOTH.

AND UNDERSTAND -- I DON'T WANT TO GET TOO MUCH IN THE WEEDS, RENEE, BUT MOST OF THAT SEEK FUNDING, INCREASE IS COMING FROM, AS SENATOR MCDANIEL'S INDICATED, PROPERTY TAXES, NOT FROM OUR MONEY.

AND YET THEY SET ASIDE THIS $1.3 BILLION SO WE COULD LOWER THIS TAX OVER TIME, WHICH WHEN YOU TALK ABOUT JUST A FLAT TAX RATE, RENEE, UNDERSTAND, AND WE ALL KNOW THIS, THAT BENEFITS YOUR WEALTHIER CLASSES AT THE EXPENSE OF THOSE LOWER INCOME INDIVIDUALS, SO IF YOU -- IF YOU'RE EARNING $500,000 A YEAR AND NOW YOU HAVE TO PAY 1% LESS, YOU'RE GOING TO GET A $5,000 TAX BENEFIT.

BUT IF YOU'RE THE AVERAGE KENTUCKIAN, YOUR MEDIAN INCOME IS ARE $47,000 A YEAR AND YOU ARE GOING TO GET A 1% TAX BREAK, THAT'S IF $70.

$5,000 FOR THE WEALTHIER CLASSES VERSUS $470.

THERE'S SOMETHING WRONG ABOUT THAT, RENEE, WHEN YOU COULD USE THAT MONEY AGAIN TO INVEST YOU.

>> CHILD, YOU COULD USE THAT MONEY TO INVEST IN YOUR HEALTH CARE, YOU COULD USE THAT MONEY SO YOU DON'T HAVE THIS GREAT DEBT.

WE COULD SPEND THAT MONEY, RENEE, INSTEAD OF ADDING $3.6 BILLION TO OUR DEBT THIS TIME.

SO THIS IS INTENTIONAL ON THEIR PART, RENEE, TO CREATE THIS BUDGET SO THAT WE CAN GIVE TAX BENEFIT, AND I MEAN THE BENEFIT TO YOUR WEALTH HER E. WHY HIGH INCOME INDIVIDUALS.

>> REAL QUICKLY BEFORE REPRESENTATIVE WHEATLEY RESPONDS PART OF THE 2 OF THAT IS TO EXPAND THE TAX BASE LIKE HOME SECURITY SYSTEMS, RECREATIONAL THINGS, WATERCRAFT, FITNESS CENTERS, COSMETIC SURGERY.

WHAT ARE YOUR THOUGHTS ABOUT THAT?

>> I'M OKAY WITH THOSE THINGS AS LONG AS WE DON'T TOUCH FOOD AND MEDICINE.

>> WHICH ARE NOT PROPOSED.

>> WHERE NOT PROPOSED.

I THINK WE COULD DO MORE TO TAX SERVICES.

>> REPRESENTATIVE WHEATLEY.

>> FUNDAMENTALLY WITH THAT THIS DOES, IT REDUCES THE INCOME TAX FROM 5 TO 4 PERCENT.

$1.12BILLION A YEAR.

THAT'S EVERY YEAR.

THIS YEAR WE HAVE SOME DOLLARS IN RESERVE TO TAKE CARE OF IT, BUT THIS YEAR WE HAVE SOME UNSPENT DOLLARS TO TAKE CARE OF IT, BUT THAT 1.2, $1.12 BILLION IS GONE EVERY YEAR.

IT'S IRRESPONSIBLE TO DO THAT, TO HAVE -- IN ANY OTHER KIND OF PART OF OUR ECONOMY THAT BECOMES A DOWNTURN SITUATION IN THE FUTURE, WE WON'T HAVE THOSE DOLLARS.

THE GOVERNOR'S PROPOSAL FOR JUST THE SALES TAX IS A ONE-YEAR PROPOSAL.

THEN WE CAN TAKE A LOOK AT IT AGAIN TO SEE IF IT'S ABLE TO DO IT AGAIN.

WHEN YOU REDUCE THE INCOME TAX IN KENTUCKY, YOU ARE PLAYING A GAME.

IT'S RISKY.

IT'S NOT SOMETHING WHERE WE WILL KNOW, AS WE DO NOW WITH OUR TAX SYSTEM -- OUR TAX SYSTEM HAS BEEN IN PLACE FOR A LONG TIME AND IT NEEDS SOME MODERNIZATION, BUT TO DO IT WHERE YOU'RE NOT SURE AND THERE ARE TRIGGERS THAT YOU CANNOT REDUCE THE INCOME TAX UNTIL CERTAIN REVENUE AMOUNTS ARE MET.

THOSE ARE FINE.

THEY'RE BASED -- I ASKED THE CHAIR ON THE FLOOR IF THEY ARE BRACE ODD SOME INFLATION MEASURES AND THEY ARE IN THERE, BUT THERE'S TOO MUCH UNPREDICTABILITY ON WHAT'S GOING TO HAPPEN WITH INFLATION AND WITH THE CHANGES, AS HAPPENS WITH COST OF LIVING RAISES OR COST OF LIVING THAT HAPPENS EVERY YEAR ANYWAY.

WE'RE GOING TO GET TO THOSE TRIGGERS PERHAPS WITHOUT -- WITH HAVING SO MUCH EXPENSE WITHIN THE GOVERNMENT THAT IT'S JUST GHOST GOING TO CASTOFF TO DO MORE WITH THESE SALES TAXES.

THE CURRENT SALES TAXES ARE MORE LUXURY TYPE TAXES, AS THE SENATOR REFERRED TO, AND THEY'RE NOT SO BAD, BUT THEY ONLY BRING IN A LITTLE OVER $100 MILLION A YEAR, AND AGAIN WE'RE REDUCING EVERY YEAR WITH 1%, $1.12 BILLION.

SO NOT TO BE ABLE TO HAVE THAT KIND OF REVENUE, WE'RE GOING TO LOOK AT A SOME REALLY DRACONIAN CUTS IN THE FUTURE IF WE DON'T CORRECT THIS OR STOP IT NOW.

>> ARE THERE PLANS TO REPLACE THAT LOST REVENUE TO THE TUNE OF 1 POINT SOMETHING BILLION?

>> I WANT TO COMMENT ON SOMETHING REAL QUICK HERE, RENEE, BECAUSE WHEN YOU LOOK AT A REDUCTION IN SALES TAX VERSUS A REDUCTION IN INCOME TAX, THE REDUCTION IN SALES TAX IS DISPROPORTIONATELY UNFAIR TO WORKING CLASS KENTUCKIANS, AND HERE'S WHY.

PRESENT, FOOD, UTILITIES, ABLE AUTOMOBILE PAYMENTS, HEALTH CARE ARE ALL TAX EXEMPT RIGHT NOW, SO NECESSARILY WHEN YOU GRESS THE SALES TAX, WHO YOU'RE ADVANTAGING IS PEOPLE WITH MORE DISPOSETABLE INCOME WHO OTHERWISE WOULD BE BUYING TAXABLE GOODS, WHERE DOES A REDUCTION IN INCOME TAX -- WHEREAS A REDUCTION IN THE INCOME TAX PUTS MORE MONEY IN THOSE LOW AND MIDDLE-INCOME FOLKS POCKETS.

AND SO WHEN YOU LOOK AT THE COMPARISON OF THE TWO, IT'S HANDS DOWN.

THE BETTER THING FOR LOW AND MIDDLE INCOME FOLKS IS A REDUCTION IN THE INCOME TAX VERSUS A TEMPORARY REDUCTION IN THE SALES TAX, AS IS PROPOSED THERE, AND CERTAINLY, YOU KNOW, I THINK THAT WEI WE'VE GOT TO KEEP THAT IN MIND AS WE TRY TO PUT COMPARISONS NEXT TO ONE ANOTHER THERE.

>> CHAIRMAN PETRIE.

>> I'M NOT SURE WHAT YOU WANT ME TO RESPOND TO.

>> YOU LOOKED LIKE YOU WANTED TO SAY SOMETHING.

BUT THERE HAS BEEN SOME CONCERN, YOU KNOW, ABOUT THE TOP 1% OF KENTUCKIANS WOULD GET $11,000 IN TAX CUTS STARTING THE FIRST YEAR AND $55,000 ANNUALLY WHEN THE INCOME TAX IS ELIMINATED, SO SOME WOULD SAY IT SEEMS TO REALLY BENEFIT THE HIGHER INCOME EARNERS AND NOT THE LOWER WAGE EARNSERS.

>> IF YOU WANT TO GETTING INTO CLASSIC CLASS WARFARE, CERTAINLY, BECAUSE THAT'S BECAUSE THOSE FOLKS ARE PAYING A LOT MORE IN THE TAXES THAT ARE CURRENTLY GOING RIGHT NOW.

BUT WHEN YOU SIMPLY COMPARE A DECREASE OF 1% IN INCOME TO A DECREASE OF 1% IN SALES, THAT EVEN MORE SO ON THE SALES DECREASE WILL NECESSARILY BENEFIT THOSE WHO ARE BOOING MORE GOODS THAT HAVE TAXES ON THEM.

>> AND I WOULD -- IF I MAY ON THAT, BE REAL CAREFUL ABOUT HOW WE MAKE OUR COMPARISONS.

SO IF WE'RE ALL BEING TAXED 5% AT THIS TABLE AND WE'RE ALL MAKING DIFFERENT AMOUNTS, ABSOLUTE DOLLAR FIGURE WITNESS THEN THE AMOUNT THAT WE'RE MAY GO PAWING IN AND THE AMOUNT WE GET BACK ARE ALL ABSOLUTELY DOLLARS BUT WE'RE ALL GETTING OUT AND PUTTING IN THE SAME PERCENTAGES IF IT'S A DELEGATE 5 TO 4.

WHEN YOU WALK INTO A CHURCH AND YOU DO A TITHE AT 10%, IT'S 10% REGARDLESS.

IT DOESN'T MATTER HOW MUCH YOU MAKE OR NOT, AND TO CY, WELL, $1,111,000 OR 5,000 DOLLARS TO SOMEBODY WHO IS MAKING $100,000 ORE $200,000 IS A LOT OF MONEY IN ABSOLUTE DOLLAR FIGURES, YES, BUT PERCENTAGE-WISE THAT'S THE SAME AMOUNT RELATIVE TO THEIR TOTAL AS IT IS IF YOU'RE MAKING $50,000.

IT'S BASED ON A PERCENTAGE.

SO FOR ME THE FAIR WAY OF LOOKING AT SOMETHING IS THAT PERCENTAGE WHICH CUTS ACROSS ALL LINES.

IF YOU WANT TO LOOK AT A SAINT LOUIS, THEN YOU END UP WHAT I PROBLEM OF THIS.

WE HEAR THE NARRATIVE AUTOMATIC TIME THAT THE ITCH RAILROAD NOT PAYING IN ENOUGH.

WAIT A MINUTE.

THEY'RE PAYING TOO LITTLE COMING IN BUT WHEN THE SAME AMOUNT COMES OUT IT'S TOO MUCH.

I CAN'T SQUARE THAT.

THE PERCENTAGE WORSE, MUCH BETTER THAN WHEN YOU THAT YOU CAN TALK ABOUT THOSE ABSOLUTES.

>> IT'S VERY SIMPLE TO EXPLAIN THIS.

VERY SIMPLE.

IF YOU HAVE $100,000 AND YOU HAVE $11,000, AND THESE AREN'T COOK COUNTY FIGURE WITNESS $11,000 COMING OUTS, YOU HAVE $89,000 LEFT.

IF YOU HAVE $10,000 AND YOU HAVE $1,100 COMING OUT, YOU HAVE $10,000, YOU DON'T HAVE ANY DISPOSABLE INCOME.

SO THE SAME WITH A GRADUATED INCOME TAX RATE.

A GRADUATED INCOME TAX RATE WITH SOMEBODY MAKING OVER $400,000, SAY AT 6% AS OPPOSED TO OUR CURRENT FLAT RATE OF 5% AND WHAT THEY REDUCE OUT OF THEIR REVENUE SHARE, THEY'RE GOING TO HAVE LOTS OF DOLLARS STILL TO TAKE CARE OF THE RENT, TAKE CARE OF THE MORTGAGE, TAKE CARE OF THE GROCERIES, THE VACATIONS, THE CARS, EVERYTHING ELSE THEY DO, AS OPPOSED TO SOMEBODY IN THE LOWER INCOME EVEN IF IT'S 5 OR 4 PERCENT, EVERY DOLLAR THAT THEY HAVE, EVERY DOLLAR IS PRECIOUS TO THEM SO THEY CAN'T AFFORD ANYTHING EXTRA.

THAT'S WHY A GRADUATED INCOME TAX IS FAIRER THAN A FLAT RATE FOR ALL PARTIES, AND THIS IS NOT A CLASS WARFARE ACTION OR A DISCUSSION.

IT'S ABOUT WHAT'S REALLY FAIR AND WHO CAN AFFORD IT AND WHO CAN'T.

WHEN YOU ARE THAT FORTUNATE, THAT YOU HAVE REAPED THE BENEFITS YOUR OWN ENTREPRENEURIAL WORK OR YOUR OWN WORK AND YOU MAKE THOSE HIGHER LEVEL DOLLARS, YOU ARE -- YOU HAVE DONE IT IN AN ECONOMY THAT'S BEEN CREATED ALL AROUND -- EVERYTHING WE DO IN SOCIETY, AND WITH THAT YOU HAVE THAT OPPORTUNITY TO REWARD BACK TO THE, I GUESS TO SOCIETY WHAT YOU HAVE CREATED.

>> THAT'S GOOD, BUTTED LET'S BE HONEST ABOUT WHAT THAT STATEMENT MEANS.

AS REPRESENTATIVE WHEATLEY SAID IF YOU THROUGH YOUR OWN ENTREPRENEURIAL AND THIS AND THAT AND THE OTHER HAVE CREATED THIS AND THAT AND THE OTHER, WHAT WE WANTS TO SAY IS YOU SHOULD PAY MORE IN TAXES AND WE SHOULD BE THE ONES TO DECIDE HOW MUCH THAT IS, AND THAT'S REALLY WHAT THIS IS ABOUT.

IT'S A CONSUMMATE CLASS WARFARE ARGUMENT, AND DID FACT IS THOSE FOLKS WHO CREATE THOSE TYPE OF WEALTH PARTICIPATE IN THE ECONOMY AND THEM EMPLOY PEOPLE AND THEY BRING JOBS AND THEY BRING OPPORTUNITIES, AND THAT'S WHY THE IDEA OF A LOWER OR NON-EXISTENT INCOME TAX IS THE KEY TAXATION CATALYST FOR HIGH GROWTH ECONOMIES LIKE WE'RE SEEING JUST TO THE SOUTH OF REPRESENTATIVE PETRIE IN TENNESSEE, AND THAT'S YUL CONTINUE SEE US PUSH FOR THINGS LIKE THAT BECAUSE IT IS THE THING THAT HELPS STATES GROW, HELPS WAGES GROW AND PROVIDE OPPORTUNITIES FOR PEOPLE.

>> RENEE, I MUST MAKE THIS POINT, AND THIS IS WHERE SENATOR MCDANIEL AND I FUNDAMENTALLY DISAGREE BECAUSE I THINK REPRESENTATIVE WHEATLEY HIT THE NAIL ON THE HEAD.

IF YOU GO TO A TAX SYSTEM THAT'S PRIMARILY CONSUMPTION-BASED TAX SYSTEM, WHAT YOU'RE REALM ASKING IS FOR THE THE POOR AND THE MIDDLE CLASS TO TO A A HIGHER SHAW OF GOVERNMENT EXPENDITURES THAN THE WEALTHY.

AND, RENEE, I HAVE NO PROBLEM SAYING THAT IF YOU MAKE MORE, IF YOU EARN MORE, YOU SHOULD PAY A LITTLE BIT MORE.

I BELIEVE IN THAT PRINCIPLE.

AS OPPOSED TO SAYING WHAT WE WANT -- WE WANT GOVERNMENT EXPENDITURES TO BE PLACED ON THE BACKS OF POOR AND MIDDLE INCOME PEOPLE.

I THINK THAT'S THE WRONG WAY TO GO.

ONE OTHER POINT, RENEE, AND I'LL LET YOU GET BACK.

IF YOU LOOK AT THOSE STATES THAT HAVEY E. NO INCOME TAX: FLORIDA, TENNESSEE, NEVADA, THEY CAN DO THAT BECAUSE THEY'VE GOT TOURISTS FROM OUT OF STATE AND THEY'VE GOT US COMING IN, YOU KNOW, ENJOYING THEIR SHORELINES OR ENJOYING THEIR RECREATION OR WHATEVER OR BE YOU LOOK AT ALASKA OR TEXAS.

THOSE ARE HEAVILY MIDDLE RICH STATES AND YOU LOOK AT WHERE THEIR TAXES COME FROM.

THEY COME FROM THOSE MIDDLE RICH COMPANIES.

KENTUCKY, WE DON'T HAVE THE KIND OF TOURISM THAT YOU SEE IN FLORIDA AND NEVADA.

WE DON'T HAVE THE KIND OF MIDDLE RICH ELEMENTS THAT YOU SEE IN ALASKA IN TAXES.

SO WHO IS GOING TO PAY FOR THAT, PAY FOR OUR REVENUES?

THE POOR AND THE MIDDLE CLASS.

>> WELL, THAT WAS AN ARGUMENT THAT WAS MADE, I DO BELIEVE, DURING THE HOUSE FLOOR DEBATE ABOUT POPULATION GROWTH, THAT THIS WAS ONE WAY TO COMPETE WITH STATES LIKE TENNESSEE THAT DON'T HAVE A PERSONAL INCOME TAX, BUT YET TENNESSEE HAS MORE URBAN CENTERS, THERE ARE MORE OPPORTUNITIES FOR TOURISM.

YOUR RESPONSE TO THAT.

>> THERE ARE MORE OPPORTUNITIES FOR TOURISM, BUT I WANT TO GO BACK TO POPULATION.

SO I'M NOT WORRIED ABOUT SOMEBODY THAT COMES IN AND VISITS AS MUCH AS I AM SOMEONE THAT IT WASN'T TO STAY HERE, RESIDE HERE OR MOVE HERE.

AND I'VE TALKED ABOUT THIS BEFORE, AND I THINK R WHEATLEY AND I HAVE TALKED ABOUT IT SYMPTOM.

WHAT DECISIONS, WHAT ARE THE MAIN FACTORS OF SOMEONE DECIDING TO MOVE TO A STATE OR OUT OF A STATE, I SUBMIT IT'S NOT QUALITY OF LIFE, HOW MANY RESTAURANTS OR GOOD QUALITY RESTAURANTS OR IN SOME SENSES EVEN YOUR SCHOOL DISTRICTS.

I'VE LIVED AT IN AT LEAST TWO DIFFERENT STATES AND I'VE BEEN ASSOCIATED WITH BRANCHES OF CLIENTS IN MULTIPLE STATES, AND IN ALL THE CONVERSATIONS, ALL THE CONVERSATIONS, PEOPLE MIGHT CHOOSE TO LIVE IN A PARTICULAR AREA OF A CITY OR AN AREA OF A STATE FOR A SCHOOL OR A RESTAURANT OR AMENITIES BUT PEOPLE THAT ARE IN THE MODE OF PRODUCTION BY WAGE OR PRODUCTION BY ENTREPRENEUR LOCATE OR STAY WHERE THEY'RE ABLE TO REAP AND RETAIN THE BENEFIT OF THEIR LABOR EITHER THROUGH WAGE OR THROUGH ENTREPRENEUR.

THAT'S WHERE THEY CHOOSE A STATE.

THAT'S WHAT I WANT TO ENCOURAGE TO GET THAT POPULATION GROWTH.

WHAT I WOULD SAY ON THE FLIP SIDE IS, WELL, WHAT IF WE DON'T DO THIS?

WE JUST CONTINUE WITH THAT WE ALWAYS HAVE BEEN DOING.

TAXING, SPEND IT, SPEND IT WELL, TAIT WELL, SPEND IT, SPEND IT WELL.

WE'VE GOT A LONG SEVERAL DECADES HISTORY OF WHAT THAT DOES TO OUR POPULATION.

NOTHING.

AND WE ALSO CAN'T KEEP OURSELVES IN A VACUUM.

YOU HAVE MULTIPLES UPON MULTIPLE STATES THAT HAVE ALREADY ENGAGED ON THE ACTIVITY OF TAKING THEIR PERSONAL INCOME TAX DOWN OVER TIME WITH TRIGGERS OR OTHER METHODS.

WE'RE BEHIND THOSE STATES ALREADY, AND EVEN THIS YEAR AND AT THIS TIME WHILE WE SIT HERE TONIGHT, THERE ARE MULTIPLE STATES THAT ARE TAKING ON NEW MEASURES TOWING AHEAD AND DEAL WITH THEIR TAX TO DRAW PEOPLE IN AND RETAIN WHAT THEY HAVE AND HAVE THAT YOU CAN FROM GROW EVEN MORE.

THE IF WE STAY TILL WHERE WE'RE AT JUST LIKE ON POPULATION, IF WE STAGNATE, WE'RE FALLING NEGATIVE BEHIND BECAUSE EVERYONE ELSE IS MOVING FORWARD.

>> SO CHAIRMAN PETRIE, FOR THOSE WHO WOULD SAY, KANSAS TRIED THIS IN 2012 AND HAD TO DECORATE BACK BECAUSE THEY FACED FLIPS REPUBLICAN CONTROLLED LEGISLATURE REPEALED THAT EFFORT.

HOW IS KENTUCKY GOING TO BE DIFFERENT THAN CANDYCE?

>> THAT'S A GOOD QUESTION.

IT'S -- THAN KANSAS.

>> THAT'S A GOT REFRAIN.

WE'RE NOT KANSAS.

OUR METHOD IS NOT KANSAS.

OUR SETUP IS NOT KANSAS.

KANSAS MADE THE FATAL MISTAKE OF SIMPLY THIS, REDUCING THE REVENUES WITHOUT HAVING THEIR PAY-FOR-S IN EFFECT.

THEIR METHOD REQUIRED THE PAY FORS.

THIS METHOD DOES NO PROPER THE PAY FORS AND ONLY AFTER OUR REVENUE HAS GONE UP ON THE TRIGGERS $1 BILLION DO WE GO DOWN ABOUT 500 TO 580 MILLION.

LEAVES US PLENTY OF CUSHION AND IT ONLY HAPPENS AFTER THE FACT.

THOSE REVENUES HAVE TO BE ACTUAL, NOT ESTIMATED.

KANSAS, ALTHOUGH THEY HAD A GOOD TRY AT IT, SIMPLY THEIR TIMING WAS WAY OFF ON FUNDAMENTAL POINT POINT.

>> WHAT I TALKED TO THE CHAIR ABOUT, AND I TALKED TO HIM ON THE FLOOR A LITTLE BIT ABOUT THIS, IS THAT SHOW US ANY DATA THAT SAYS TAX, TAX STRUCTURE IS WHY WE'RE GOING TO MOVE TO THIS STATE.

NOW, THERE COULD BE SOME TAX INCENTIVES RELATED TO SOME JOB CREATORS AND SOME COMPANIES AND BUSINESSES, BUT WE'VE NOT STEEN THAT KIND OF TAX -- STEEN THAT KIND OF TAX -- SEEN THAT KIND OF TAX SYSTEM BEING WHAT'S THE MOST THING THAT'S ACCREDITED FOR POPULATION SHIFTS.

AND POPULATION SHIFTS, THERE'S SOME GOOD RESEARCH OUT THERE THAT SHOWS ALL THE STATES, ALL THE WAYS THAT THEY TAX THEIR RESIDENTS, AND THERE'S SUCH A BROAD RANGE OF THE WAZE THAY THAT WE TAX PEOPLE THAT NONE OF THEM CAN BE DECIDED TRULY ON AN INCOME-BASED TAX, A CONSUMPTION-BASED TAX, A MINERAL-BASED TAX.

IT'S ALL OVER THE BOARD.

YOU HAVE TO DO THE OTHER THINGS, THE INTANGIBLE THINGS THAT CREATE THE BEST SOCIETY TO LIVE IN.

A LOT OF THAT HAS TO DO WITH A GREAT PUBLIC EDUCATION SYSTEM, INFRASTRUCTURE THAT'S IN REALLY TOP SHAPE, HEALTH CARE THAT IS FAIR AND EQUITABLE AND AVAILABLE TO EVERYBODY, AND, OF COURSE, YOU KNOW, WE HAVE TO HAVE GREAT CRIMINAL JUSTICE SYSTEM.

ALL OF THAT IS IMPORTANT.

>> RENEE, WHAT STUDIES SHOW IS THIS.

THEY SHOW THAT HAVING NO INCOME TAX STATE IS INCONCLUSIVE AS TO WHETHER THAT WILL GROW YOUR ECONOMY, BUT WHAT IS A KEY FOUNDATION TO GROWING A STATE'S ECONOMY IS INVESTIGATING IN EDUCATION AND INVESTIGATING IN WORKFORCE.

THAT IS WHAT WILL GROW, THAT'S WHAT WILL GROW YOUR STATE BIGGER THAN ANYONE ELSE.

AND I'M GLAD THAT REPRESENTATIVE WHEATLEY MENTIONED THE -- SYSTEM BECAUSE THAT'S ONE THING THAT'S NOT TALKED ABOUT HERE.

BUT THIS BUDGET DOES NOTHING.

I'VE ABOUT AN TALKING A LOT ABOUT TEACHER SALARIES.

THIS BUDGET DOESN'T EVEN FUND OUR PUBLIC DEFENDER, AND ERROR AT A CRITICAL POINT WHERE IF WE DON'T PROVIDE INCREASE IN SALARIES FOR OUR PUBLIC DEFENDER, THEN WE WON'T HAVE A PUBLIC DEFENDER SYSTEM IN THIS STATE BY JULY 1st, 2023, AND, RENEE, THERE ARE VERY FEW INNINGS IN THE BUDGET THAT ARE CONSTITUTIONALLY REQUIRED BUT HAVING A PUBLIC DEFENDER SYSTEM IN KENTUCKY, THAT'S CONSTITUTIONALLY REQUIRED BY THE 6th AMENDMENT.

>> IF I MAY, ONE, HOUSE BUDGET DID HAVE THAT IN THERE AND I'M SURE THERE WILL THAT'LL BE A.

>>> COULDING TO ABOUT THE DEPARTMENT OF PUBLIC ADVOCACY.

NUMBER TWO, WE CAN GO AND LOOK AT STUDIES AND THERE WILL BE REASONABLE DISAGREEMENT ABOUT THAT.

BUT THIS IS ONE SALIENT FACT THAT I CANNOT GET OVER AND I MENTIONED AT THE END OF MY HOUSE FLOOR.

YOU CAN'T GET OVER THERE.

23 YEARS OF PROFESSIONAL SERVICES IN MY AREA AS AN ATTORNEY AND I'VE DEALT WITH ALL LEVELS OF CLIENTS, ALL TYPES OF CLIENTS ACROSS ALL KIND OF AREAS.

CONVERSATIONS AGAIN AND AGAIN AND AGAIN WITH TENNESSEE AND KENTUCKY.

I DON'T WANT A TENNESSEE MODEL THAT.

THEY'RE DIFFERENT THAN US.

BUT YOU CAN BOIL THINGS DOWN TO ESSENTIALS.

AND WHEN I LOOK WHEN I HEAR PEOPLE'S DISCUSSIONS ABOUT WHETHER THEY'RE GOING TO LIVE IN KENTUCKY OR TENNESSEE, THEY CAN GO ACROSS AN IMAGINARY STATE LINE BY AN INCH, BY 1 INCH, AND IF YOU'RE MAKING $50,000 IN WAGES IN A YEAR, YOU TAKE A 6% CUT BY COMING 1 INCH ONTO THE KENTUCKY SIDE.

AND WHEN I SAID GOOGLE IT, LOOK, IF YOU LOOK AT GOOGLE PICTURES, APPLE MAP PICTURES, WHATEVER KIND OF PICTURES, AERIAL, YOU LOOK AT DEVELOPMENT, YOU SEE THOSE HOUSES PUSH UP FROM TENNESSEE RIGHT TO THE EDGE OF KENTUCKY.

YOU MIGHT FIND ONE OR TWO THAT GO OVER BUT IT PUSHES RIGHT THERE AND HOLDS.

WHEN YOU TALK TO REALTORS, WHEN YOU TALK WITH ATTORNEYS, WHEN YOU TALK WITH PEOPLE THORACIC EXITING THE MILITARY, TALK WITH PEOPLE THAT ARE GOING THROUGH DIVORCES AND WHERE THEY'RE GOING TO LIVE AND ON AND ON AND ON AND ON, THAT PERSONAL INCOME TAX IS A BIG DEAL, AND IT'S NOT JUST FOR A PAGE WORKER BUT IT'S ALSO FOR EMPLOYER, ESPECIALLY SMALL EMPLOYER BECAUSE IF THEY'RE IN TENNESSEE AND THEY'VE GOT TENNESSEE WORKERS, WHEN THEY PAY $100, IT'S $100.

WHEN YOU ONCE YOU STEP INTO KENTUCKY IT'S A 6% DISCOUNT.

>> WE'RE GOING TO HAVE TO LEAVE THAT THERE BECAUSE WE ARE 30 SECONDS BEFORE WE END THE SHOW.

WE CAN TALK ABOUT THIS OFFLINE.

IT'S IT'S BEEN A GOOD CONVERSATION.

I WAS GOING TO ASK WAS IT EITHER/OR, CAN WE DO MCDANIEL AS ORE YOUR WHEN IT COMES TRACTS OR PERSONAL INCOME TAXES.

CAN THEY COEXIST?

>> THEY CAN.

>> I THANK YOU FOR THIS DISCUSSION.

IT'S BEEN A LIVELY DONE ONE HERE IN THE CAPITOL ANNEX.

I'M RENEE SHAW.

WE'LL TALK ABOUT SOMETHING ELSE NEXT WEEK OF INTEREST TO YOU.

MAKE SURE YOU WATCH "LEGISLATIVE UPDATE" TIGHTEN LENGTH P.M. EASTERN TIME RIGHT HERE ON KET.

TAKE GOOD COMPARE AND I'LL SEE YOU SOON.