Saying they want to be responsible stewards of taxpayer dollars, a majority of state Senators today voted in favor of capping Kentucky’s debt.
Known as Senate Bill 94, the legislation would limit general fund supported debt to 6 percent of general fund revenue, said Sen. Joe Bowen (R-Owensboro), who sponsored the bill with Sen. Christian McDaniel (R-Taylor Mill).
“John Adams said there were only two ways to conquer and enslave a nation: One is by the sword, and the other is by debt,” Bowen said. “Kentucky owes more than it owns.”
The road fund is not included, agency debt is not included and there is a provision allowing the governor to declare a state of emergency to go over the debt limit, he said.
A similar bill passed the state Senate two sessions ago by a 38-0 vote but did not become law.
“So what has changed since then?” Bowen said. “Certainly the sense of urgency has been amped up. We continue to add debt, and we continue to encumber future generations with the decisions we are making now as we acquire more debt.”
In state rankings, Bowen said, Kentucky is 48th in the nation in debt as a percentage of gross domestic product, 38th in debt per capita and 43rd in total debt when all unfunded liabilities are included.
“Every man, woman and child in this commonwealth owes $3,400 to the state of Kentucky,” he said. “We have leveraged ourselves to the extreme.”
He said Kentucky’s debt ratio is reported to be 6.7 percent, but it is actually 8.1 percent if you include the nearly $1 billion spent on new county courthouses built across the state in recent years. Bowen said the bonds to build the courthouses were issued in the names of Kentucky’s counties but the state still pays the interest on those bonds.
Bowen said the financial situation is made worse because of a structurally unbalanced biannual budget. He said nonrecurring revenues are routinely used to pay for reoccurring expenses.
“Senate Bill 94 builds in a structural safeguard,” he said. “It builds in a discipline that people all across the commonwealth appreciate. Our constituents want us to operate within certain confines. People want us to operate in a fiscally responsible manner.”
SB 94 passed with a 28-8 vote. Sen. Dorsey Ridley (D-Henderson) voted against the measure.
One of the legislators who spoke in opposition was Sen. Ray S. Jones (D-Pikeville). Among his objections to the bill was a provision that specifies how money saved by capping the debt ceiling is appropriated in the future.
“It is clearly unconstitutional for this General Assembly to specify how the General Assembly will spend money two years from now,” he said. “That is clearly an infringement upon future sessions of the General Assembly and their ability to appropriate money as allowed by the Constitution.”
SB 94 now goes to the state House for consideration.
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