The state has $2.7 billion in savings. How much will legislature use to help Eastern Ky.?

Ryan C. Hermens/rhermens@herald-leader.com
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·5 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

The state of Kentucky recently received some of the best economic news it’s gotten: a record budget surplus report of $945 million. That came one year after a reported $1.1 billion surplus.

These figures, combined with budget decisions from savings-minded members of the legislature, have led to the state’s Budget Reserve Trust Fund ballooning to a record $2.7 billion.

With much of Eastern Kentucky reeling from historic floods that cost dozens of lives and an untold amount of property damage, it begs the question: how much of that money will be spent to help the region recover, and how will it be spent?

The state’s purse strings are in Republican hands, with the party dominating both chambers of the legislature. Senate President and Eastern Kentuckian Robert Stivers, R-Manchester, held a press conference on Wednesday addressing the question of what was needed.

Stivers said on Wednesday that using some funds from the budget surplus for flood relief was brought up in a meeting with Gov. Andy Beshear. Both Beshear and Stivers have expressed interest in a special session to allocate funds to Eastern Kentucky. Stivers added that it was too too early to tell when the special session would be called.

House GOP Majority Floor Leader Steven Rudy, R-Paducah, told the Herald-Leader that he hadn’t had a discussion about holding a special session, but that he was open to one given the situation.

Stivers, whose home of Clay County lost two residents to an isolated flooding incident, mentioned that such a package could be similar to Senate Bill 150, which made $200 million available from the state’s General Fund to fund relief in Western Kentucky after tornadoes and severe storms killed 80 people. $45 million of that was appropriated immediately.

Stivers said he reached out on Wednesday to Appropriations & Revenue Committee members and staffers to “start looking at draft legislation.”

Sen. Johnnie Turner, R-Harlan, represents two of the handful of counties hardest hit in Knott and Letcher. He suggested that the financial needs in the wake of the Eastern Kentucky floods might tally higher than that of Western Kentucky due to the challenges presented by the topography. He said that the volume of structures destroyed and the likelihood of severe damage to water and sewer systems could be unique to the havoc caused by floodwater funneling through several valleys.

Stivers and the GOP legislators gathered at the press conference, including Turner and Sen. Brandon Smith, R-Hazard, seemed willing to help with state funds, but emphasized that an assessment of the damage would need to take place before they begin to put a dollar figure on a rebuild.

“We’re not ready. We don’t have the figures. We couldn’t tell you what it is that we need to do,” Stivers said.

An Eastern Kentucky House member from the other side of the aisle, Rep. Angie Hatton, D-Whitesburg, said that money from the Budget Reserve Trust Fund, also known as the Rainy Day Fund, should be unloaded to help fund relief in the region.

“I, for one, will never forgive the leaders of the General Assembly if this isn’t the rainy day that we saved that money for,” Hatton said. “I’m so glad we saved a lot of it and now is the time to spend it.”

Hatton’s Letcher County was one of the hardest hit areas – along with parts of Knott, Perry and Breathitt counties – in the flooding.

A new dynamic when discussing the Budget Reserve Trust Fund is one of the GOP’s big ticket items from last session: House Bill 8, which sets Kentucky on a path to get from five percent to zero income tax in half-percent increments.

The more money taken out of the fund, the less likely it is that Kentuckians’ income tax will drop. The bill requires that the state maintain a Budget Reserve Trust Fund equivalent to 10% of the actual revenue drawn in a given fiscal year for the personal income tax rate to drop by half a percentage point. The most recent revenue figure for this past fiscal year was $14.7 billion, so the current Budget Reserve Trust Fund of $2.7 billion clears that figure by well over $1 billion.

As for potential relief package uses, Stivers said that one could be fronting money to local governments and individuals that may be covered by FEMA or insurance later.

And much of the relief package’s composition depends on which needs federal agencies like FEMA fill, and which they don’t.

Flood mitigation projects of epic proportions, Stivers said, were more likely to be handled by the federal government. The U.S. Army Corps of Engineers spent over $1 billion in inflation-adjusted dollars to literally move a river in Pikeville because of flooding concerns.

Eastern Kentucky Republican Congressman Hal Rogers touted in a press release that he’s previously secured $800 million in flood control projects for the region.

“After seeing an aerial view of the widespread damage, it is clear that this flash flood was a natural disaster of epic proportions that we haven’t met in our lifetime,” Rogers said. “The work to rebuild must be well funded, well orchestrated and long-lasting.”

Stivers also said, when asked about the role of climate change in the havoc, that he wasn’t sure anything could be done on that front at the state level.

“That is not an area that I have expertise in. Have there been changes? I’ve never seen this in my 60 years… I don’t know without looking at data or having that type of background that I can comment on it,” Stivers said.