Legislative Update 2/15/2021

Dear Friends,
As a longtime advocate for mental health, as a school board member representing the needs of  mostly high-poverty and racially re-segregated schools, and since the first moments of my first campaign for the Kentucky General Assembly, I’ve been clear about my commitment to finding new revenue for the Commonwealth.  I’ve spoken about new revenue, fought for new revenue, worked on tax policy, and filed revenue-generating legislation.   HB 356  would clean up Kentucky’s tax code of giveaways that benefit wealthy (mostly white) Kentuckians.  HB 356 would raise over $1 billion dollars in annual revenue to invest in Kentucky’s communities. 

We need revenue for life-saving, vital services, now more than ever.  COVID has largely spared, or even profited, high-income Kentuckians, while far too many hard-working and vulnerable Kentuckians have been devastated by the pandemic and its far-reaching economic consequences. 

Revenue was a major theme last week in the KY General Assembly. 

Revenue, and a missed opportunity…

Kentucky desperately needs new sources of revenue for its General Fund in order to move our state forward.  For years, Frankfort has drastically underfunded our public schools, while at the same time making it harder for school districts to raise the funds they need.  The pandemic has revealed years of underinvestment in our public health systems, community mental health, Kentucky’s antiquated and decimated unemployment system, and other vital safety net programs.  In short, health and wealth inequities, growing disparities, and the need for public investments to address them, have never been clearer. 

In a devastating move last week, the Kentucky General Assembly missed out on a rare opportunity to raise revenue, potentially guaranteeing $100 million+ of new annual revenue for the Commonwealth for years to come.  Because of pro- and anti-gambling factions within the Republican majority caucus, the Democratic micro-minority caucus had some real political leverage, and an opportunity to leave a lasting legacy for the Commonwealth if we had stood firm and insisted that the horse industry pay its fair share in taxes.   Sadly, we squandered that opportunity. 

Nearly a decade ago, Kentucky began to allow the horse industry to operate casino-style slot machines across the state. (These machines are known euphemistically as “historic horse racing,” although no horses or horseracing is involved.)  Casino corporations operate at tremendous profits, while paying a mere pittance to the state’s General Fund.  Last year, the handle on Kentucky slot machines was $2.2 billion dollars, while the industry paid just $15 million of their take into the state’s General Fund.  That amounts to a tax rate shockingly below what you and I pay the state in our individual taxes, and far below the rate for our local, small, and independent businesses. 

“Historical horse racing” slot machines have been in legal jeopardy since last September, when the Kentucky Supreme Court ruled against them.  Senate Bill 120 offered a potential solution to the legality of these slot machines, but did nothing to address the egregiously low tax rate.

I supported efforts to address the legality question in SB 120, but not at the ongoing expense to Kentucky’s General Fund, especially in the face of such devastating need in our communities.  I also filed HB 481, a new revenue bill, that would tax the industry fairly, and bring in new revenue to benefit Kentuckians for years to come.

Read our op ed, addressing support for the horse industry and our demand for fair taxation on slot machines, signed by 14 members of KY’s House Democratic caucus: https://www.courier-journal.com/story/opinion/2021/02/05/historic-horse-racing-kentucky-should-raise-tax-rate-machines/4412150001/

(HHR’s history in KY is further fleshed out in Joe Gerth’s opinion column: https://www.courier-journal.com/story/opinion/columnists/gerth/2021/02/10/historical-horse-racing-make-churchill-downs-pay-higher-taxes-slots/4466862001/ )  

The horseracing/casino industry’s tremendous profits and the current corporate giveaways granted by the state mean they are flush with cash.  They’ve invested a portion of their profits in a legion of highly-paid lobbying firms.  These firms were behind persuasive and sometimes misleading “action alerts” to constituents, and collectively exerted considerable political pressure on legislators to vote “yes” on SB 120, without making any changes to the bill that would have made it a better deal for the people of Kentucky. 

In the end, the Republican House majority split on SB 120, and only five Democrats voted against allowing these slot machines to continue under the current arrangement.  

Here are my public comments on SB 120, as they were read aloud on the House floor:

“I support Kentucky’s signature horse industry.  At the same time, I call on the horse industry to support Kentuckians by paying its fair share in taxes. 

 “The current rate on Historic Horse Racing slot machines is far too low.  We know that new revenue is desperately needed to support seniors, working families, Kentucky’s  children, including those in foster care, our public schools… and to modernize and properly staff the state’s broken unemployment system.  We simply cannot afford to leave money on the table through corporate giveaways for any industry.

 “No other state that allows these casino-style machines does so, with so little coming back to benefit its people.   That’s why I’ve filed HB 481.  This bill would raise $100 million from slot machine gambling, for years to come.   This is new revenue that we can invest in Kentucky’s future! 

 “When we come back together for next year’s budget session, I look forward to working with all of you to fix the woefully inadequate taxation on KY slot machines.  Just imagine all the good we’d be able to do together. 

 “Until then, I vote NO.  Kentucky cannot afford to keep missing out on critical revenue by maintaining the status quo.”

In the midst of a pandemic, far too many Kentuckians are clinging to their lives, dependent on state resources that are altogether insufficient to meet even basic needs.  While the horse industry says that it will come to the table to negotiate a more favorable tax rate for Kentuckians in the future, these verbal assurances do not assure me, as they did some of my colleagues.  Meanwhile, our moment of leverage and guaranteed new revenue for Kentuckians has passed. 

While SB 120 passed with no new benefits for Kentuckians, I will not be discouraged. The need for new revenue is clearer than ever before, and this is a fight worth continuing to fight. 

(A shout-out to my colleagues who’ve been with me on the front lines: Representatives Jeff Donohue, Nima Kulkarni, Attica Scott, and Ashley Tackett-Laferty.) 

Other bills, better news…
The casino slot machine issue dominated last week in Frankfort, and has certainly dominated my extra-lengthy wrap-up of the legislative week!  But it’s certainly not the only issue the legislature addressed, and not all the news out of last week’s General Assembly is troubling:

HB 38 – The interstate compact for psychological practice would grant an expanded opportunity for practice across state lines.  The compact is a win for workforce development in the state, and addresses unmet needs for services, particularly in underserved areas.  When it comes to mental health services, the unmet needs are tremendous.  HB 38 allows for continuity of psychological care via telehealth in general, and meets the needs of psychologists in the military, as well as the patients they serve: active and retired military, and military families. 

I’m honored to co-sponsor the bill along with Rep. Walker Thomas.  The bill passed the House without a single “no” vote  — no small achievement in a divisive climate! —  and is headed to a committee hearing in the Senate. 

HB 140 would extend the removal of barriers in the practice of telehealth across the state.  Many barriers to telehealth practice were lifted in the 2020 legislature in response to the COVID-19 pandemic.  Since then, there has been bipartisan support for making these changes permanent in efforts to improve access to healthcare.  By far, the largest benefit of removing these barriers has been in the delivery of mental health and substance abuse services.  HB 140 passed out of the House Health and Family Services Committee, and is in the queue for a full vote on the House floor. 

HB 50 would bring more mental health parity to health insurance coverage, closing loopholes that allow insurers to reimburse for mental health disorders differently from their reimbursement for other health issues.   HB 7 would help communities become “recovery ready” so they are better able to implement and support substance abuse prevention, treatment and recovery programs.

HB 240 partially addresses the state’s current Unemployment Insurance crisis.  Representative Nima Kulkarni and I filed this bill early in the session to address the fact that Kentucky – unlike almost every other state – has no current statutory protection to allow for the waiver of overpaypment of benefits when the claimant is not at fault.  The lack of statutory clarity on this issue has led to chaos and hardship for many Kentuckians throughout the pandemic.  While the bill has yet to have a hearing, bipartisan support for this initiative is continuing to grow.   

Back to Frankfort…

The weather is causing some uncertainties in the schedule, but the General Assembly should reach its halfway point of the 2021 legislative session this week.  While several bills have cleared the House and Senate, most are still unresolved.

As always, you can email me at Lisa.Willner@lrc.ky.gov, and the toll-free message line for all legislators is 800-372-7181.  This is available during normal business hours each weekday.

You can read the bills I’ve mentioned and check on votes by visiting the General Assembly’s webpage at legislature.ky.gov. You can also watch legislative meetings on KET or through the legislature’s YouTube page.  Search for “Kentucky legislative streaming” to find those resources.                                                                                     

Stay well, be safe,
Lisa