House-Passed Budget Bill Is Unbalanced By Up To $100 million. ONLY In Kentucky, Folks.
House-passed budget bill is unbalanced by up to $100 million
By Tom Loftus
FRANKFORT, Ky. — A miscalculation of the state's cost for public employee health insurance has left the House-passed budget out of balance by perhaps as much as $100 million.
Rep. Rick Rand, the Bedford Democrat who is chairman of the House budget committee, said Friday that the problem was flagged by the Beshear administration’s budget office earlier this week.
“We have confirmed that, in fact, there was an internal miscalculation on our side,” he said.
A disagreement remains, however, on the size of the problem.
Rand said his staff believes that an additional $28 million needs to be added to each of the budget’s two years to adequately fund the state's contributions for public employee health insurance.
But John Hicks, deputy budget director in the Beshear administration, said the fix will cost about $50 million a year.
The budget bill, House Bill 290, is now before the Senate, which could make its revisions and pass it as soon as Monday. Then the bill will go to a conference committee, led by leaders of both chambers, which must resolve differences in the two versions.
The problem will make the budget even harder to balance. The House rejected Gov. Steve Beshear's plan to help fill a projected $1.5 billion revenue shortage by legalizing slot machines at the state’s race tracks and generating $780 million over two years.
House and Senate leaders quickly rejected that plan, saying there wasn’t enough support to pass it. Critics have questioned some of the dozen or so House moves — spending cuts, fund transfers and assumptions — to balance the budget without the gambling revenue.
Perhaps the most controversial was to eliminate two days from the public school calendar — which would save $76 million during the two years.
Rand said the Senate has been informed of the miscalculation, but was not sure whether it would have time to address it.
“If not, it will be addressed in the conference committee,” Rand said. “Because we’re going to have to go back in and find savings somewhere else. It's critical as we go through this that state employees believe that their health insurance plan is sound.”
House Speaker Greg Stumbo, D-Prestonsburg, called it a “$20 million-plus hole” Friday. And he said addressing the issue is an additional reason for the conference committee to get to work on the final budget bill “as soon as possible.”
Sen. Bob Leeper, the Paducah independent who is chairman of the Senate budget committee, the error is "fairly substantial" but staff members are still trying to determine the exact size of it.
The House revamped the coverage options available to state employees in ways that its leaders said the employees would find acceptable. And House budget writers concluded that funding this revised plan would require the same amount in first fiscal year of the new budget as the state is spending for its contribution to the plan this fiscal year.
The basic mistake, as explained by Hicks and Rand, is that in making the calculation the House budget staff did not account for the fact that the state health plan operates on a calendar year — not on the budget's fiscal year beginning July 1.
In other words, the House assumed under its new cost-saving approach that no additional funds would be needed for the plan in the fiscal year that begins July 1 without accounting for the fact that until Dec. 31 employees are still covered by the current year's health plan.
The gap, whether $28 million or $50 million in the first year, recurs in the second year because the budget funds health insurance with an increase of 2 percent on top of the miscalculated number for the first year.
“Our staff does a great job, but with so many different areas of the budget we have to deal with, these things can happen,” Rand said. “And when we make one it can result in big dollars. But we caught it in time. We have the opportunity to make a correction, and we will.”
By Tom Loftus
FRANKFORT, Ky. — A miscalculation of the state's cost for public employee health insurance has left the House-passed budget out of balance by perhaps as much as $100 million.
Rep. Rick Rand, the Bedford Democrat who is chairman of the House budget committee, said Friday that the problem was flagged by the Beshear administration’s budget office earlier this week.
“We have confirmed that, in fact, there was an internal miscalculation on our side,” he said.
A disagreement remains, however, on the size of the problem.
Rand said his staff believes that an additional $28 million needs to be added to each of the budget’s two years to adequately fund the state's contributions for public employee health insurance.
But John Hicks, deputy budget director in the Beshear administration, said the fix will cost about $50 million a year.
The budget bill, House Bill 290, is now before the Senate, which could make its revisions and pass it as soon as Monday. Then the bill will go to a conference committee, led by leaders of both chambers, which must resolve differences in the two versions.
The problem will make the budget even harder to balance. The House rejected Gov. Steve Beshear's plan to help fill a projected $1.5 billion revenue shortage by legalizing slot machines at the state’s race tracks and generating $780 million over two years.
House and Senate leaders quickly rejected that plan, saying there wasn’t enough support to pass it. Critics have questioned some of the dozen or so House moves — spending cuts, fund transfers and assumptions — to balance the budget without the gambling revenue.
Perhaps the most controversial was to eliminate two days from the public school calendar — which would save $76 million during the two years.
Rand said the Senate has been informed of the miscalculation, but was not sure whether it would have time to address it.
“If not, it will be addressed in the conference committee,” Rand said. “Because we’re going to have to go back in and find savings somewhere else. It's critical as we go through this that state employees believe that their health insurance plan is sound.”
House Speaker Greg Stumbo, D-Prestonsburg, called it a “$20 million-plus hole” Friday. And he said addressing the issue is an additional reason for the conference committee to get to work on the final budget bill “as soon as possible.”
Sen. Bob Leeper, the Paducah independent who is chairman of the Senate budget committee, the error is "fairly substantial" but staff members are still trying to determine the exact size of it.
The House revamped the coverage options available to state employees in ways that its leaders said the employees would find acceptable. And House budget writers concluded that funding this revised plan would require the same amount in first fiscal year of the new budget as the state is spending for its contribution to the plan this fiscal year.
The basic mistake, as explained by Hicks and Rand, is that in making the calculation the House budget staff did not account for the fact that the state health plan operates on a calendar year — not on the budget's fiscal year beginning July 1.
In other words, the House assumed under its new cost-saving approach that no additional funds would be needed for the plan in the fiscal year that begins July 1 without accounting for the fact that until Dec. 31 employees are still covered by the current year's health plan.
The gap, whether $28 million or $50 million in the first year, recurs in the second year because the budget funds health insurance with an increase of 2 percent on top of the miscalculated number for the first year.
“Our staff does a great job, but with so many different areas of the budget we have to deal with, these things can happen,” Rand said. “And when we make one it can result in big dollars. But we caught it in time. We have the opportunity to make a correction, and we will.”
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