LEGISLATIVE UPDATE
Representative Chris Freeland
The first week of the 2023 Regular Session is already behind us as members of the Kentucky House of Representatives convened at Noon on Tuesday, January 5 and left Frankfort after a busy, successful four days. We moved full speed ahead into the 157th Regular Session and accomplished several goals for this year, while laying the groundwork for the legislation we will take up when we return to Frankfort on February 7.
This session is a bit different from those of recent years because we have no massive legislative packages to consider. Over the past several sessions, the legislature has wrestled with budgets, redistricting, and providing resources for Kentuckians during the pandemic while addressing the executive branch’s overreach. This year, we have an opportunity to devote a great deal of attention to other important issues, including juvenile justice reform, growing our workforce, and learning loss caused by the state’s pandemic shutdown.
Of course, the legislature will also take some time to deal with administrative work, particularly since a quarter of the House is brand new, and several legislative committees are under new leadership. It goes without saying there will be a learning curve for all of us.
The first piece of legislation that came across our desks this week was HB 1, the next step in towards eliminating the state’s individual income tax to make our state more competitive and stop penalizing productivity and work. HB 1 lowers the state’s individual income tax to 4% in 2024. The measure comes just days after the tax was lowered to 4.5% on January 1. According to economists, this year’s tax cut is expected to leave approximately $625 million in the pockets of Kentucky taxpayers. Early estimates for the 2024 cut are not yet available but promise to provide additional relief for taxpayers. HB 1 now heads to the Senate for their consideration.
We were also able to take action on HB 2 and HB 11, a legislative package that appropriates $16.6 million in additional state funds towards construction of a veterans nursing home in Bowling Green. This center will provide long term, skilled nursing care to our state’s veterans in the western region of the commonwealth and create approximately 120 good-paying jobs. This is not new money nor do we have to pull from the state’s reserve account. Instead it will be reallocated from funds committed to build electric vehicle charging stations that are no longer necessary for that project. Because interest in the electric vehicle industry is growing, several private companies have poured investment dollars into charging stations, making the state’s investment unnecessary. The Senate is expected to take up both of these measures when we reconvene in February.
The last measure we tackled during the first week is aimed at providing additional time to allow companies that specialize in providing human resource services to work with the executive branch to ensure the changes are correctly implemented. This legislation, filed in the House as HB 1 and the Senate as SB 10, will delay the implementation of a new regulatory structure for Professional Employer Organizations (PEOs). PEOs are full-service outsourcing firms that provide human resource functions. In Kentucky alone, there are 60 PEO firms that serve more than 1,500 Kentucky employers and cover roughly 30,000 worksite employees. HB 506 gave PEOs a deadline of January 10, 2023. However, the state and PEO groups have been unable to reach a consensus on how to put the new structure into place without causing an increase in unemployment insurance and other employment costs. This legislation should give them the time they need and an opportunity to report back to the legislature if changes are necessary. The measure passed by large margins in both chambers, and now awaits the governor’s signature.
As we wrap up part one of this year’s legislative session, I believe the future is bright for Kentucky as we continue our work to create sound, responsible fiscal and social policy. As I mentioned earlier, we will return to Frankfort on February 7 to reconvene.
As always, I can be reached here at home anytime, or through the toll-free message line in Frankfort at 1-800-372-7181. Feel free to contact me via email at Chris.Freeland@lrc.ky.gov. If you would like more information, please visit the legislature’s website at www.legislature.ky.gov.