2021 Final Legislative Session Report

The Session of 2021 -- One for the History Books

When the short, 30-day 2021 Regular Session of the General Assembly gaveled in on January 5 some things were clear. It was clear that it would be a session unlike others under the cloud of the COVID-19 pandemic with very limited public access to the Capitol and rules that gave leadership more control over the movement of bills and allowed for remote voting under some circumstances.

It was also clear that the main item of business would be the unusual task of passing a budget in a short session and that the Republican supermajorities in each chamber were determined to reign in what they felt were excesses in executive use of emergency orders.

There was a widespread expectation that fewer bills might be considered and that committee meetings might be limited. This turned out not to be the case. There were more bill introductions than in past 30 days sessions, bills moved through committee at a rapid pace, and many bills -- a number of them very significant -- were enacted.

Along the way, there were twists that made 2021 a historic session to remember as one interrupted by flooding and ice storms, impeachment charges, record numbers of gubernatorial vetoes and overrides, and the cash infusion to state government from the American Rescue Plan Act.

The Budget and ARPA Appropriations

The 2020 session ended abruptly with the onset of the COVID-19 pandemic and legislators only adopted a one-year budget due to the many uncertainties about the economy and state revenues. So it was necessary to pass a budget in the 2021 session, and the budget process began with the Governors budget address during the first week of the session. The Governors proposed spending plan was promptly dismissed and legislative leadership moved quickly to name a free conference committee. The General Assemblys version of the executive budget, HB 192, was passed just before the veto recess and was fundamentally a continuation budget. Final passage of HB 192 came after Gov. Beshear line-item vetoed twenty items and the General Assembly overrode sixteen of these.

The budget, however, is only a part of the 2021 session spending that must be noted. The American Rescue Plan Act passed by Congress will infuse $2.4 billion of federal funds into Kentucky state government. The General Assembly took care in HB 192 to prevent the Governor from spending these funds, but in the final days of the session, the executive and legislative branches reached an agreement for the use of some of these funds. Supplemental appropriation bills, HB 382, SB 36, and HB 556 appropriate federal ARPA funds of roughly $1 billion for various uses such as $127 million for school construction, $58 million for Capitol renovation, $575 million to Unemployment Insurance Trust Fund, $50 million for broadband deployment, and $250 million for drinking water and wastewater projects.

Priority Legislation

Both the House and Senate filed priority legislation the first week in January, much of it focusing on the Governors actions on COVID-19 and to reign in executive power. These bills moved quickly. By Saturday, January 9, House Bills 1-5 and 10 and Senate Bills 1-3 and 9 were either on the Governors Desk or out of the originating chamber. For the first time since the advent of short, 30-day sessions in 2001, the legislature continued in session during the second week in January, completing the passage of many of the priority bills of the chambers.

Governor Beshear vetoed seven of the priority bills. On its return, the General Assembly wasted no time in overriding all the gubernatorial vetoes within a matter of hours. For his part, Governor Beshear wasted no time and by the close of business on the day of the overrides filed a lawsuit challenging the constitutionality of HB 1, SB 1 and SB 2. Following a hearing, Franklin Circuit Judge Phillip Shepherd issued a restraining order preventing the implementation of provisions of HB 1. Judge Shepherd has since temporarily enjoined HB 1, SB 1 and SB 2.

Bills of Note

Aside from legislation affecting executive powers, 2021 saw the passage of significant legislation. Some bills of note:

School Choice and All-Day Kindergarten - Passed over the Governors veto, HB 563 establishes education opportunity accounts for tax credits to be used for school expenses, including private schools in more populous counties and open borders between public schools. The politics of the passage of HB 563 became intertwined with all day Kindergarten and led to an appropriation of $140 million of general funds for all day Kindergarten.

Broadband Deployment - Significant strides were taken toward broadband deployment with HB 320 that appropriates $250 million for broadband and allows electric cooperatives to capitalize broadband affiliates to bring unserved and underserved areas of the state, as well as an additional $50 million appropriation of federal ARPA funds.

COVID Liability Relief - SB 5, a priority of business and healthcare interests, was passed on the final day of the session.

Unemployment Insurance reforms - The unemployment insurance trust fund deficit was partially addressed with an appropriation of $575 million of ARPA funds by HB 382. SB 7 waives UI overpayments and establishes a program integrity fund and HB 413 freezes employer UI tax rates in calendar year 2021 and suspends the employer surcharge.

Criminal Justice Reform - There were some modest bills adopted in the area of criminal justice. HB 497, re-entry assistance for formerly incarcerated persons; SB 84 dignity for female prisoners and HB 126, to increase the felony theft threshold from $1,000 to $2,500.

Historical Horse Racing- SB 120, a bill to restore historical horse racing after the Supreme Court ruled it unconstitutional, was enacted with bipartisan support but only after lengthy and emotional debate in both chambers that revealed differences in the Republican supermajorities between urban legislators and their colleagues from rural, more socially conservative areas of the state.

Social Justice - Several measures passed: Limitations on the use of No Knock Warrants were enacted on the final day of the session in SB 4; creation of a Racial Equity and Access to Opportunity Commission SB 10 and creation of a West End Opportunity Zone with an appropriation of $10 million.

Immunizations - There were several bills to grant exceptions to mandatory immunizations, SB 8 was enacted.

Infrastructure Funding - Supporters of increased funding for transportation were disappointed when the General Assembly adjourned without addressing needed infrastructure improvement through new revenue in the Road Fund. The legislature did reduce the amount of road funding that is diverted to other areas of state government to the tune of approximately $50 million. Transportation needs, though, have eclipsed $1 billion and will only increase until further action is taken.

Executive vs Legislative...Gubernatorial Vetoes

Tensions between the Democrat Governor Andy Beshear and Republican supermajorities in each legislative chamber were prominent throughout the session. Press reports estimate that more than forty bills limiting executive powers were filed. Aside from the priority bills filed early in the session that focused mainly on emergency powers and orders, these bills sought to shift many duties and authority away from the Governor and to GOP statewide office holders. The Governor responded with his veto pen on these and other bills.

By the time of sine die adjournment, Governor Beshear had vetoed a total of thirty-five bills and one joint resolution in whole or in part by line item budget and appropriation vetoes. The Republican supermajorities of House and Senate had no trouble coming up with the constitutional majority needed for override and virtually all the vetoes were overridden. The only exception was HB 563, the school choice bill, which was overridden with the minimum fifty-one votes in the House.

The list of vetoed bills may grow as Governor Beshear will have the opportunity to veto bills passed on the last two days of the session and the General Assembly will have no chance to override these as it will not be in session.

Impeachment

Impeachment petitions were filed seeking the removal from office of Governor Andy Beshear, Rep. Robert Goforth and Attorney General Daniel Camron. An impeachment panel was formed and all petitions were eventually dismissed.
 

KCFA Update

This was a particularly active session for issues of interest to KCFA and the three main bills we lobbied on were:

HB 259 - Was a bill pushed by One Main and some other larger consumer loan companies that would have amended the rating structure for our industry by moving the 36% band to loans up to $5000, create a new rate band of 28% for loans from $5000-$10,000, and allowing the rates to blended across all bands up to $15,000. In addition the loan processing fee would have been increased. KCFA members could support the bill except for the blended rate of which there was significant concerns with that provision. Ultimately we supported House Floor Amendment 1 to remove the blended rate, which was opposed by the proponents. With no agreement amongst the industry the House Leadership ultimately killed the bill and the amendment.

SB 71 - We worked with the insurance industry, the bankers, the transportation cabinet and others to crack down on unscrupulous towing operators. This should be beneficial for our members.

SB 5 - Along with the broader business community we advocated for the legislature to grant businesses relief from liability created by the COVID-19 pandemic. The bill ultimately passed, but not until after the veto recess meaning the Governor can veto the bill without the opportunity for the General Assembly to override that veto because they have already adjourned for the session.

Below we have provided a list of bills of interest, with high priority bills listed first. Please review and let us know if you have questions or concerns.

KCFA Priority Bills
 

These are the additional resolutions that we are monitoring.