James Richardson
Phone: +1 404 527 4086 Email: james.richardson@dentons.com

James Richardson serves as managing editor of Soap Box and as a managing director in Dentons' public policy and regulation practice. A former spokesman and advisor to Governors Haley Barbour and Jon Huntsman and the Republican National Committee, he has written for the Washington Post, the New York Daily News, USA Today, The Guardian, TIME, The Atlantic, Newsweek, GQ, CNN, Fox News, Politico, and others.


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Sine Die in Maryland: policy, political highlights from this year’s legislative session

The following deep dive comes by way of Dentons 50 partner firm Mannis Canning & Associates.

The 2019 General Assembly Session came to a close at midnight on April 8. This session was the first of a new four year term with a total of 60 legislators out of 188 beginning their role as a new senator or delegate and with several changes in committee chairmanships. The session was also an emotional one as Senate President Thomas V. Mike Miller, Jr. announced he had prostate cancer at the start and House Speaker Michael E. Busch passed away the day prior to Sine Die.

A total of 2,481 pieces of legislation were introduced – 1,051 originating in the Senate1,430 originating in the House, 16 Joint Resolutions, and two simple resolutions.  Of this number, the General Assembly passed 864 pieces of legislation and 2 resolutions.

Legislators focused on balancing the fiscal year 2019 budget, increasing the minimum wage, expanding opportunity zones, laying the ground work for increased funding for K-12 education, banning the use of polystyrene, and moderating the costs of prescription drugs to name a few.

Becoming more of a trend with a Republican Governor and Democratic majority in the General Assembly, a number of bills were passed and presented to the Governor at the end of March/early April to provide sufficient time for the General Assembly to override any potential vetoes. Of the bills presented, the Governor vetoed four bills on March 27 and one bill on April 4, all of which were overridden by the General Assembly. Legislation referred to as the “Federal Shutdown Paycheck Protection Act” had broad support and was passed and signed by the Governor the end of March.

With the early presentment of bills, one bill signing was held prior to the end of session on March 26. The traditional bill signing, which is held the day after session, was canceled this year to appropriately honor Speaker Busch and other bill signings were scheduled following his services. Bill signings have been scheduled for April 18, April 30, and May 13.

Below is a summary of some of the major issues that passed the 2019 General Assembly Session. A more detailed overview of significant legislation that passed and failed can be found in the Department of Legislative Services 90 Day Report.

Fiscal Year 2020 Budget

The fiscal year 2020 budget as enacted by the General Assembly (House Bill 100) totals $46.6 billion, a 4% increase from fiscal year 2019. The general fund budget, the portion supported by tax related revenues such as the income tax, sales tax, and state lottery, accounts for 41.6% of the total budget or $17.9 billion. The general fund budget is subject to volatility as its revenue sources are directly affected by the economy. The term structural deficit or shortfall often refers to the gap between general fund expenditures and general fund revenues.  Significant revenue over attainment mostly eliminated any cash and structural shortfalls for fiscal 2020, but projections for fiscal 2021 indicate a structural deficit returning of more than $1.4 billion.

Following submission of the Governor’s budget, revenues were revised downward by the Board of Revenue Estimates resulting in a larger than expected shortfall. To keep the budget in balance, the Governor introduced a supplemental budget to make some adjustments and House Bill 1407 – the Budget Reconciliation and Financing Act of 2019 was introduced to address the revenue shortfall and fund certain budget priorities.

The budget as enacted by the General Assembly leaves a $118.2 million general fund balance and a structural surplus of $26 million at the end of fiscal year 2020. $1.1 billion is preserved in the State’s Rainy Day fund and state spending was constrained in preparation for fiscal 2021.  State support for public schools is a record $7 billion and total state aid for primary and secondary education will increase by an estimated $435.2 million. The budget dedicates at least $255 million to support the fiscal 2020 recommendations of the Commission on Innovation and Excellence in Education (Kirwan Commission) and funding for school construction, both operating and capital, is $500 million. To achieve these funding levels, the General Assembly repurposed $182.2 million in general funds and $101 million in special funds to provide $104.8 million for Kirwan, $127 million for school construction in the operating budget, and $25 million for housing programs originally funded with taxable bonds in the capital budget. The budget also directs the Governor to process a budget amendment to provide an additional $150.3 million to implement recommendations of the Kirwan Commission.  Additional funding for Kirwan may be provided by Senate Bill 728/House Bill 1301 which requires a marketplace facilitator and a market place seller to collect and remit the State sales tax. Revenues in excess of $100 million are to be distributed to “The Blueprint for Maryland’s Future Fund” created through the Kirwan legislation.

Other budget priorities include Medicaid funding to provide coverage to 1.4 million residents, an additional $80 million targeted at substance use disorder treatment, and funding to moderate tuition increases at Maryland’s public four-year colleges and universities.

Additional information on the fiscal year 2020 budget as enacted by the General Assembly can be found in the Budget and State Aid section of the Department of Legislative Services (DLS) 90 Day Report.

Income and Sales Tax Legislation

Opportunity Zone Enhancement Program

The Federal Tax Cuts and Jobs Act of 2017 established the Qualified Opportunity Zones Program to incentivize private investment in distressed communities. These zones are specified areas designated as a federal opportunity zone under Section 1400Z-1 of the Internal Revenue Code. Senate Bill 581 establishes the Opportunity Zone Enhancement Program which provides qualifying businesses within an opportunity zone enhanced incentives under the following tax credit programs: (1) job creation; (2) One Maryland; (3) enterprise zone; (4) biotechnology investment incentive; (5) cybersecurity investment incentive; and (6) More Jobs for Marylanders.

The bill also extends the More Jobs for Marylanders program by two years and expands the program’s geographic and business eligibility criteria. Additionally, the bill extends the geographic eligibility for a number of other State economic development/tax credit and financing programs available for priority funding areas and/or sustainable communities to include opportunity zones in Allegany, Garrett, Somerset, and Wicomico counties.

Remote Sales Tax Collection

Senate Bill 728/House Bill 1301 requires an online marketplace facilitator and a marketplace seller to collect and remit the State sales and use tax under specified circumstances. The need for this legislation results from the South Dakota v. Wayfair, Inc. decision where the U.S. Supreme Court upheld a South Dakota law requiring remote sellers with sales over $100,000 or with more than 200 different transactions to residents in the state to collect the state’s sales tax. Effective October 1, 2018, regulations promulgated by the Comptroller require a similar threshold for the collection of sales tax by out-of-state vendors who sell tangible personal property or taxable services for delivery in Maryland. However, the regulations did not address the collection of sales tax by online marketplace facilitators that host third-party marketplace sellers.

In addition to requiring the collection and remittance of the State sales tax, the bill establishes tax collection and licensing requirements for marketplace facilitators and marketplace sellers. The first $100.0 million in sales taxes collected from marketplace facilitators and certain out-of-state vendors is to be distributed to the General Fund.  Any revenue in excess of $100.0 million from these sales taxes is required to be distributed to The Blueprint for Maryland’s Future Fund to fund K-12 education.

Business and Labor

Alcohol and Tobacco Commission

Legislation that passed in 2018 established the Task Force to Study State Alcohol Regulation, Enforcement, Safety, and Public Health. The task force was required to examine whether the Comptroller’s Office, the Office that currently regulates the alcoholic beverage industry and enforces the laws, is the most appropriate agency to carry out these activities or if another entity should perform this function. In its final report, the task force recommended establishing a new separate agency in charge of regulating and enforcing alcohol, tobacco, and motor fuel laws in the State.

House Bill 1052 (Ch. 12) implements this recommendation and establishes the Alcohol and Tobacco Commission (ATC). The commission is granted various powers and duties, including (1) educating the public on topics related to using and consuming tobacco products and alcoholic beverages; (2) ensuring that all alcoholic beverages sold in the State with an alcohol content exceeding 4.5% by volume bear a large and conspicuous label stating the percentage of alcohol content; (3) conducting certain studies; and (4) developing best practices for various topics related to alcoholic beverages regulation. The Act also transfers the Field Enforcement Division and the personnel of the division from the Comptroller’s Office to the commission. House Bill 1052 was presented to and vetoed by the Governor in late March.  The General Assembly overrode the veto and the bill became Chapter 12 of the Acts of 2019.

Minimum Wage

One of Democratic Leadership’s legislative priorities, Senate Bill 280/House Bill 166 (Chs. 10 and 11) increase the State minimum wage rate to $15.00 per hour. For employers with 15 or more employees, this will occur in six increments until the full phase-in is reached on January 1, 2025. For employers with 14 or fewer employees, the wage rate reaches full phase-in after eight increments on July 1, 2026. The Board of Public Works (BPW), however, may temporarily suspend one scheduled increase in the State minimum wage for one year between October 1, 2020, and October 1, 2024, if it determines that the seasonally adjusted total employment is negative as compared with the previous six-month period. If total adjusted employment is negative, BPW may also consider the recent performance of State revenues in making its determination.

Senate Bill 280/House Bill 166 were presented to and vetoed by the Governor in late March.  The General Assembly overrode the veto and the bills became Chapter 10 and 11 of the Acts of 2019.

Education

The Blueprint for Maryland’s Future (Commission on Innovation and Excellence in Education – Kirwan Commission)

Senate Bill 1030 extends the term of the Kirwan Commission and establishes The Blueprint for Maryland’s Future as a policy to transform Maryland’s education system and align it with the recommendations in the commission’s January 2019 interim report. The fiscal 2020 budget provides funding for multiple programs and entities established under The Blueprint for Maryland’s Future: (1) $75.0 million for teacher salary incentive grants; (2) $65.5 million for the education of students with disabilities; (3) $54.6 million for concentration of poverty school grants; (4) $31.7 million to expand full-day prekindergarten for four-year-olds; (5) $23.0 million to provide transitional supplemental instruction grants; (6) $2.5 million for teacher collaborative grants; (7) $2.0 million to fund a full-time mental health services coordinator for each local school system; (8) $689,137 for an Office of Inspector General for Education; (9) $500,000 to expand MSDE’s direct certification IT system to include Medicaid data; and (10) $250,000 for outreach and training on The Blueprint for Maryland’s Future.

While provisions in the fiscal 2020 State operating budget, and in the Budget Reconciliation and Financing Act, House Bill 1407 (Ch. 16), restrict and direct funds to cover the $251.6 million increase in State aid (as well as other provisions), funding of these fiscal 2020 enhancements is at the discretion of the Governor. In total, approximately $255.0 million is made available through separate legislation to implement The Blueprint for Maryland’s Future in fiscal 2020, contingent on enactment of Senate Bill 1030. Section 47 of the fiscal 2020 budget bill restricts $100.8 million in Education Trust Fund (ETF) lockbox funds to specific purposes. It also expresses legislative intent that the Governor process a budget amendment to appropriate $134.5 million in special funds set aside in fiscal 2019 to implement the Commission’s recommendations.

Public School Calendar

On August 31, 2016, the Governor issued Executive Order 01.01.2016.09 (later amended by Executive Order 01.01.2016.13) requiring the local boards of education to open schools following the Labor Day holiday and conclude the school year by June 15, beginning in the 2017-2018 school year. During the 2018 session, legislation was introduced and passed to authorize a local board of education to extend the school year for up to five school days beyond June 15 without approval from the State Board of Education. Senate Bill 128, the Community Control of School Calendars Act, repeals the 2018 legislation and instead requires each local board of education to set start and end dates each year for public schools in the county. This again provides flexibility to the local boards of education to determine the start and end dates for the school year no longer complying with the Executive Order. Senate Bill 128 was presented to and vetoed by the Governor in late March.  The General Assembly overrode the veto prior to the end of session and the bill became Chapter 13 Acts of 2019.

Environment and Natural Resources

Polystyrene Ban

Expanded polystyrene foam is often used in food product packaging. Senate Bill 285/House Bill 109 prohibit (1) a person from selling or offering for sale in the State an “expanded polystyrene food service product” and (2) a “food service business,” which includes specified businesses, institutional cafeterias, or schools from selling or providing food or beverages in an expanded polystyrene food service product. To ease the financial burden placed on business entities, MDE may grant to a food service business or school a waiver from the bills’ prohibition for up to one year if MDE determines that compliance would present an undue hardship or a practical difficulty that is not generally applicable to other food service businesses or schools in similar circumstances.

Maryland is the first state to impose a statewide ban on these products.

Renewable Energy

Senate Bill 516 increases the Renewable Energy Portfolio Standard (RPS) from 25% by 2020 to 50% by 2030. Effective October 1, 2019, the bill reestablishes the expired Tier 2 of the RPS as an additional requirement to include electricity from large hydroelectric sources for two years, in 2019 and 2020. New offshore wind capacity is required beginning with at least 400 megawatts in 2026, increasing to at least a cumulative 800 megawatts in 2028, and to at least a cumulative 1,200 megawatts in 2030, along with goals and reporting requirements for minority business enterprise and minority workforce participation. The carve-out for solar increases to 5.5% in 2019, with further annual increases until the solar carve-out reaches 14.5% in 2028. Electric cooperatives are exempt from any solar carve-out increase beyond 2.5%. To control ratepayer impacts, the bill reduces Tier 1 Alternative Compliance Payments (ACP) beginning in 2019; by 2029, solar and nonsolar Tier 1 ACPs reach parity. ACP revenue remains dedicated to supporting new renewable energy sources in the State, but under the bill, those new renewable energy sources also must be owned by or must directly benefit low-income residents.

Oyster Sanctuaries

House Bill 298 establishes in statute a network of five oyster sanctuaries (in Harris Creek, the Little Choptank River, the Tred Avon River, the St. Mary’s River, and the Manokin River) and prohibits catching oysters in or removing oyster seed from the five sanctuaries or those established in regulation by the Department of Natural Resources (DNR). The bill also establishes requirements and deadlines relating to restoration plans for the five identified sanctuaries.

House Bill 298 was presented to and vetoed by the Governor in early April. The General Assembly overrode the veto prior to the end of session and the bill became Chapter 17 Acts of 2019.

Health

Prescription Drug Transparency and Affordability

House Bill 768 establishes a Prescription Drug Affordability Board to address issues of transparency and affordability.  The board must conduct a study on the entire pharmaceutical distribution and payment system and policy options being used in other states and countries. The board must also collect publicly available information and data and enter into memoranda of understanding with other states to collect data in order to identify prescription drug products that may cause affordability issues. The board may conduct a cost review of each identified drug product. If the board determines that it is in the best interest of Maryland to implement a process for setting upper payment limits on prescription drug products, the board must draft a plan of action to implement the process and submit the plan to the Legislative Policy Committee (LPC) for approval. If LPC does not approve the plan within 45 days, the board must submit the plan to the Governor and the Attorney General for their approval. The board may not set upper payment limits before getting approval of the plan.

Opioid Treatment Services

House Bill 116 establishes programs for opioid use disorder screening, evaluation, and treatment (specifically medication-assisted treatment) in local correctional facilities and in the Baltimore Pre-trial Complex. The program begins in four counties and phases in to include all counties and the Baltimore Pre-trial Complex by January 2023. The State must fund the programs of opioid use disorder screening, examination, and treatment of inmates, and the bill establishes requirements for screening and treatment. By November 1, 2020, and annually thereafter, GOCCP must report specified data to the General Assembly from local correctional facilities.

Survey of TN Political Insiders Offers Glimpse Into Most Influential Policy Shapers

Ed. note: The following survey and analysis comes by way of Dentons 50 partner Adam Nickas of Capitol Resources

Dentons 50 partner firm Capitol Resources conducted an anonymous survey on the news source, policy and advocacy organization preferences and habits of Tennessee policy insiders. The purpose of this survey was to discover what sources are considered most valuable and trustworthy by policy makers and shapers.

Survey recipients included state legislators and their staff, elected and appointed executive branch leaders and their staff, education officials from colleges and universities from across the state, municipal and local government leaders and registered lobbyists and organizations. While not inclusive of all policy organizations, the survey asked about twenty-five (25) specific statewide organizations and associations. 223 individuals responded to the survey.

In regards to exposure, 67% of participants indicated they regularly or often see or hear of the Beacon Center of Tennessee mentioned in connection with state or local policy issues. 63% indicated the same for the Tennessee Medical Association and 58.6% for the Tennessee Chamber of Commerce.

The Tennessee Medical Association (86%), Tennessee Chamber of Commerce (80%), Beacon Center of Tennessee (80%), and Tennessee Hospital Association (80%) were identified as being influential in the formulation and debate of public policy at either a high or moderate level.

Among those entities that are either regularly or often studied, cited, or utilized by policy insiders, Tennessee Medical Association (49.7%), Tennessee Hospital Association (37.58%), Tennessee Chamber of Commerce (36.95%), and Beacon Center of Tennessee (32.5%) came out on top.

“The economy, health care and public safety clearly dominate the policy conversation in Tennessee,” said Adam Nickas of Capitol Resources’ Tennessee office.

“These findings fall in lockstep with the priorities Governor Bill Lee has set forth.  His focus on criminal justice reform, decreasing health care costs, and increasing vocational training and workforce development will provide these organizations the opportunity of becoming more influential in shaping public policy moving forward.”

Capitol Resources, LLC is one of the most comprehensive and successful government relations firms in the country and offers the full spectrum of lobbying and public affairs services tailored to meet the needs of their diverse array of clients.  With offices in nine states and Washington, D.C., their clients include Fortune 500 companies, small businesses, mission-driven non-profits and key trade associations. Capitol Resources is part of the Dentons 50 Network. 

The survey was conducted from July to October of 2018.

Connecticut guv race’s GOP stunner

The following comes by way of Dentons 50 partner firm the Connecticut Group.

Tuesday’s primary results yielded one big surprise: Republican Bob Stefanowski upset the party’s endorsed candidate, Danbury Mayor Mark Boughton, and won the GOP nomination for governor.

Stefanowski, a former GE and UBS executive who self-financed his campaign, took to the airwaves and ran ads months before his opponents – a strategy that paid off. He cruised to victory tonight, defying expectations, and teeing up an unlikely matchup for November.

Stefanowski will face Democrat Ned Lamont in the governor’s race. Lamont won the Democratic primary for governor by a large margin over Bridgeport Mayor Joe Ganim.

A complete list of the primary results for the state’s constitutional offices is below.

Party-endorsed candidates indicated by *
Republican Primary Democratic Primary
Governor
*Mark Boughton
Tim Herbst
Steve Obsitnik
Bob Stefanowski✓
David Stemerman
Governor
Joe Ganim
*Ned Lamont✓
Lt. Governor
*Joe Markley✓
Jayme Stevenson
Erin Stewart
Lt. Governor
Eva Bermudez-Zimmerman
*Susan Bysiewicz✓
Treasurer
*Thad Grey✓
Art Linares
Treasurer
Dita Bhargava
*Sean Wooden✓
Attorney General
*Susan Hatfield✓
John Shaban
Attorney General
Paul Doyle
Chris Mattei
*William Tong✓
Comptroller
Mark Greenberg
*Kurt Miller✓

Wisconsin drug take back initiative nets 63,000 pounds of unused meds

The following comes by way of Dentons50 partner firm Capitol Consultants

Attorney General Brad Schimel announced Wisconsin had become the national leader in drug take backs, netting some 63,541 lbs. of unused medications as a result of its Drug Take Back events on Saturday, April 28, 2018, at nearly 390 permanent drug collection receptacles located throughout the state.

Schimel also announced Wisconsin’s Sexual Assault Kit Initiative (WiSAKI), a statewide effort to address the decades-long accumulation of previously un-submitted sexual assault kits (SAKs) that were in the possession of local law enforcement agencies and hospitals, has completed inventorying all of these kits, collected those designated for testing, and submitted them to contracted laboratories for testing. Testing will be complete by the end of 2018.

Malloy vetoes ECS funding bill, prompting likely veto override session

The following state legislative speed read comes by way of Dentons50 partner firm the Connecticut Group.

Dannel Malloy vetoed his first bill from the 2018 regular session Friday, blocking a proposal that would have prevented he and future governors from making cuts to education-cost sharing (“ECS”) grants as a means of balancing budget shortfalls.

Malloy has used his ECS rescission powers in past years to reduce funding to some of the wealthiest municipalities in the state, which he argues can afford to absorb the cuts.

The bill–H.B. 5121, An Act Prohibiting the Executive Branch from Making Rescissions Or Other Reductions To The Education Cost Sharing Grant During The Fiscal Year–passed the Senate unanimously and received just 32 nay votes in the House, virtually ensuring that the governor’s veto will be overridden if the legislature deems it worthy to do so.

With Connecticut’s legislative session in rear view, elections on horizon

The following legislative recap and elections forecast comes by way of Dentons 50 partner firm the Connecticut Group–editor

The 2018 legislative session came to a close on Wednesday night. Although it was a so-called “short session,” that didn’t mean it wasn’t packed with activity on a number of major policy proposals. Many big-ticket bills passed, including:

  • A compromise budget between Republicans and Democrats, which closed a $200+ million deficit in the ’18-’19 fiscal year.
  • Major energy legislation that increases the state’s “renewable portfolio standard,” requiring the state’s utilities and energy suppliers to purchase an increasing amount of energy generated by renewable resources.
  • A bill instituting a statewide ban on “bump stocks.”
  • Legislation providing “dreamers” with access to financial aid at state colleges and universities.

Many high profile proposals, such as a minimum wage increase, the anti-sexual harassment “time’s up” bill, two frameworks for state-based net neutrality regulations, and a bill authorizing tolling on state highways all died at sine die.

* * *

Danbury Mayor Mark Boughton secured the endorsement of the Connecticut GOP on Saturday evening at the Republican State Convention. It’s Boughton’s third time running for Governor, and his first time running with the party’s endorsement.

Former Trumbull First Selectman Tim Herbst and businessman Steve Obsitnik both received enough delegate support to qualify for a primary against Boughton, which they plan to take on. Businessmen David Stemerman and Bob Stefanowski, as well as Shelton Mayor Mark Lauretti plan to petition their way onto the primary ballot.

Sen. Joe Markley won the GOP endorsement for Lt. Governor over New Britain Mayor Erin Stewart and Darien First Selectwoman Jayme Stevenson. Both Stevenson and Stewart plan to challenge Markley in a primary race for the party’s nomination.

Kentucky puts leg. session in rear view

The follow legislative recap comes by way of Dentons50 partner MML&K Government Solutions–editor

The first three months of Kentucky’s 2018 legislative session now seem like prologue. The sexual harassment scandals and shakeups within House Leadership that informed the opening weeks of session were superseded a grand finale that included pension reform, a state budget, tax reform, vetoes, veto overrides and fixes to bills that were passed earlier in the session–all within the final four legislative days.

To some extent, the process became as much the focus as the policies themselves, as a seemingly more engaged public witnessed firsthand how the Schoolhouse Rock version of sausage making is largely discarded by General Assembly once they are staring down the clock.

Tax reform began as a straightforward revenue bill (HB366) to balance the budget, but it grew to encompass major tax policy shifts over a series of behind-closed-doors meetings prior to the veto recess. It was passed by the legislature after being in the public domain for mere hours, vetoed by the Governor, then overridden. House and Senate leaders, acknowledging the need to change the bill over the veto break but unable to make further changes to it, amended a new bill altogether that superseded HB366. HB487 was passed on the last day of session and is now law. It flattens the individual and corporate tax rates to 5%, phases-out the inventory tax, moves the state to a single-sales-factor corporate tax apportionment, suspends or caps several tax credits, requires combined filing among business groups, expands the sales tax to several services, and increases the per-pack cigarette tax by $0.50, among other changes. The legislature estimates that the bill will generate $400 million over the biennium, a number disputed by the Governor’s budget director.

The state budget (HB200) faced similar circumstances following the Governor’s veto. The veto was overridden, and changes to the law were included in a new bill, HB265. The combination of generating new revenue in HB487, draining the “rainy day” fund, and preserving some of the Governor’s proposed reductions balanced the budget without cuts to public education. As a result, public education advocacy groups, who were organized and motivated to rally against pension reforms, came out in support of the budget and revenue measures in the session’s final days. Pension reform, which became law with the signing of SB151, drew the ire of educators statewide. The law largely held harmless existing employees and retirees across most state retirement systems, but it puts future teachers into a hybrid cash balance plan, which new state and county employees have had since 2014. Such plans guarantee a minimal rate of return during periods of market downturns.

Pensions, budget and tax reform were considered a collective three-legged stool for purposes of final legislative negotiations, but there were other meaningful items that were considered over the 60-day session. Workers’ compensation reform (HB2) passed following defeat last year. Tort reform was filed as a constitutional amendment (SB2), and it did not through the Senate. However, medical peer review panels (HB4) are now law. The General Assembly passed a balanced road plan (HB202), but they did not act on a proposed $0.10 increase in the motor fuels tax (HB609).

It may take some time to ultimately score this session. The General Assembly passed a pension reform measure that doesn’t cut the unfunded liability in the short term, but will likely reduce the state’s long-term public pension risk by making changes to future hires. The two-year budget funds the pension systems and per-pupil public school spending at unprecedented levels, but does not reflect commensurate investments in higher education and other areas of state government. Tax reform places Kentucky on a more competitive footing with its peer states, but, as always, there are winners and losers any time substantial revisions to the code are made.

By passing a budget, the General Assembly appears to have headed off the need for a special session, although it is completely within the Governor’s purview to call one. It is also within the Governor’s ability to make budget reductions without legislative input if tax receipts do not meet their budgeted amounts, a scenario his office predicted while the floor debate on the revenue bill veto override was going on. Regardless of if a special session takes place, the legislature is setting the table for “tax reform 2.0” in 2019 by establishing a task force to review the voluminous tax breaks and incentives that may negatively impact overall general fund returns.