Senate Committee Passes Bill to Prohibit Unfunded Mandates

Posted on January 30, 2018

     An effort to protect cities from unfunded mandates got its first vote of approval Wednesday. The Senate Committee on State and Local Government unanimously passed Senate Bill 88. The bill, sponsored by Senator Paul Hornback (R-Shelbyville), prohibits the General Assembly from imposing any requirement on cities that uses city expenditures or tax levies unless the mandate is fully funded by the state or approved by the city’s legislative body. The effort to stop unfunded mandates is a top legislative priority for the Kentucky League of Cities this session.

     Senator Hornback filed the bill last session, but it did not pass the House. This year, with more days on the calendar, he is hopeful legislators will get an opportunity to send the bill to the governor. Hornback told members of the Senate committee most lawmakers are against the concept of unfunded mandates. He stressed the timing for the bill couldn’t be better. “Right now, we have a strapped financial time, and a lot of times it’s easy to try to push stuff off that we, maybe, have paid for in the past and try to push it off to a city or some municipality and let them pay for the cost,” he warned his fellow senators. Passing Senate Bill 88 ensures there is no temptation to force local governments to pay for programs that don’t receive appropriations from the state.

     The bill would not set the provision in the constitution, as some states have done, but would put the mandate prohibition in statute instead. That would allow the General Assembly to still pass emergency legislation if language is used that states “notwithstanding” the statute. Senator Hornback said this protects the legislature “for those unforeseen times when we do have to pass off some costs.” Unfunded mandates can result in tax increases on the local level, even though they are not viewed that way when the legislature votes on the issue. Requiring the language in future bills that do result in mandates would highlight the fact that the legislation being passed could have an impact on local taxpayers.

     Questions were raised at Wednesday’s hearing by Senator Chris McDaniel (R-Taylor Mill) and Senate Majority Floor Leader Damon Thayer (R-Georgetown) about the possible impact Senate Bill 88 could have on cities paying increased employer contribution rates for the County Employees Retirement System (CERS). KLC Deputy Executive Director J.D. Chaney assured members of the committee the bill would have no impact on pension contribution payments. “This legislation would not impact the ability of a local body to make a decision to deviate from that which you mandated by statute that we pay to the ARC (actuarially required contribution),” he said.

     Chaney reminded senators that local employers have never shirked their pension responsibility. “We’ve been a hundred percent faithful at 100 percent of our contribution rates that’s been determined by the legislature in the state-managed system, providing 100 percent of the contribution rate 100 percent of the time.” Chaney emphasized pension contribution rates are set by the Kentucky Retirement Systems (KRS) Board of Trustees and not the General Assembly. He pointed out Senate Bill 88 “would only apply to requirements the General Assembly directly imposes on cities.”

     Senator Hornback agreed to a floor amendment that specifically states pensions are not subject to the unfunded mandate prohibition to assuage any concerns. The bill, with the amendment, will now go to the full Senate.