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Legislative Role

  • Kentucky's Constitution vests the exclusive power and duty to tax and spend the public's money in the General Assembly.
  • The only bills that a General Assembly must pass are the appropriations or biennial budget acts.
  • Enacting the budget is the most powerful and effective means for legislators to set public policies and priorities.
  • The budget is the state's financial plan for spending money for specific or general purposes from particular sources of public funds.

    An appropriation authorizes a state agency to spend a maximum sum of public funds for a purpose during a specific fiscal year.

    Annual appropriations are made in the biennial budget bills.

    The state fiscal year begins July 1 and extends to the following June 30.

    The budget covers two fiscal years.

Constitutional Authority

 

Provisions of the Constitution relating to the budget process
Section 46
Requires that all bills for appropriating money or creating debt receive the votes of the majority of members elected to the House and Senate.
Section 47
States that all bills to raise revenue must originate in the House and that the Senate may amend tax bills.
Section 49 and 50
Restrict the creation of debt, without requiring a vote of the electorate.
Section 88
Empowers the Governor to veto parts or items in appropriations bills; vetoed items may be overridden by majority votes of elected members in each chamber.
Section 171
Permits the levy and collection of taxes for public purposes only and by general laws. Requires the General Assembly to enact a balanced budget.
Section 230
Requires legislative appropriation of money withdrawn from the Treasury. Dedicates revenue from motor fuel and motor vehicle taxes and fees to highways and bridges, vehicle regulation, and administration purposes.

Statutory Authority

  • KRS (Kentucky Revised Statutes) Chapter 48 governs Kentucky's budget process by:

    Prescribing functions and duties for each branch of government during the development, enactment, and implementation of the state's budget.
  • KRS 7.310 to 7.380 directs the Legislative Research Commission (LRC) to:

    Study and examine the expenditures of state agencies; and

    Provide information which will enable members of the Legislature to determine the fiscal needs of state agencies and the effectiveness of their programs.
Provisions of Selected Statutes
KRS 48.040
Directs LRC to prescribe uniform budget preparation instructions, forms and records which must be used by all state agencies in formulating their budget requests.
KRS 48.050
Provides that biennial budget requests, upon submission to the branch head, be transmitted by state agencies to the LRC.
KRS 48.060
The governor-elect and designated persons are entitled to participate in the budget- making process for the Executive Branch.
KRS 48.115
The Consensus Revenue Forecast is prepared by the Consensus Revenue Group who are jointly appointed by the State Budget Director and the LRC. Either the State Budget Director or the LRC may request a revision to the official estimate. The LRC provides staff to the Group.
KRS 48.140
Authorizes the passage of a General Fund or Road Fund Surplus Expenditure Plan that is triggered when tax receipts exceed the level anticipated in the enacted budget.
KRS 48.130 and 48.600
Provide for enacting and executing General Fund and Road Fund Budget Reduction Plans, which are triggered if final revenue estimates on which the budget is enacted fail to materialize.
KRS 48.300
Directs the General Assembly to prepare a budget memorandum which enumerates and explains changes made by the legislature to branch budget recommendations in sufficient detail to convey legislative intent.
KRS 48.400 to 48.630
Directs that the Interim Joint Committee on Appropriations and Revenue receive information on interim budget revisions, to review and approve interpretations of items in branch budget bills based upon the statutory budget memorandum, and to act upon interim appropriations increases which may be recommended by the state budget director for agencies in the Executive Branch.
KRS 48.705
Creates a Budget Reserve Trust Fund Account in the General Fund to receive direct appropriations or shares of surplus revenue receipts or certain unexpended balances of appropriations.

Fifty percent of the excess unappropriated General Fund revenue receipts in a fiscal year, as well as fifty percent of the unobligated balances of appropriations at the close of the fiscal year, are dedicated to the fund account.

Moneys in the reserve fund may be appropriated by the General Assembly as part of any Budget Reduction Plan or if actual General Fund receipts are not sufficient to meet total appropriated spending.
KRS 7A.010 to 7A.170
Addresses the long-term capital planning and programming process for state government.

State agencies prepare six-year capital improvement plans, based upon agency policy issues and projected program needs, for capital projects and capital financial assistance programs costing $400,000 or more, equipment items costing $100,000 or more, computer or telecommunications systems costing $400,000 or more, new or expanded leases of real property, state use payments for local court facilities, and a six-year highway development plan.
KRS 7B.060
Directs the Kentucky Long-Term Policy Research Center Board to prepare a biennial report on long-term societal, economic, and demographic trends in Kentucky and their related implications for public policy-making.

The Biennial Trends Report is issued in December prior to the beginning of the budget preparation process of even-numbered years, and is submitted to the Governor, the General Assembly, state agencies, and the public.

LRC budget forms and instructions require agencies to explain how their budget priorities address these trends and long-term policy implications.
KRS 56.870
Requires the General Assembly to approve the issuance of revenue bonds to finance capital projects which rely on state appropriations to retire the debt. Bond projects must be specifically identified in the budget bill or an act, along with the associated debt service funding.
KRS 45.245 to 45.247 and KRS 176.419 to 176.440
Establishes a long-term highway development and construction program for the Commonwealth.

Based upon information submitted by the Transportation Cabinet, a two-year highway construction program for itemized projects commencing during the ensuing fiscal biennium and an additional four-year construction plan must be submitted to the General Assembly.

The Governor recommends and the Highway Department submits the biennial highway construction program and proposed funding within ten working days after submission of the Executive Branch Budget Recommendation.

The General Assembly adopts and may amend the biennial highway construction program and plan.