The Session of 2021 -- One for the History Books
When the short, 30-day 2021 Regular Session of the General Assembly gaveled in on January 5 some things were clear. It was clear that it would be a session unlike others under the cloud of the COVID-19 pandemic with very limited public access to the Capitol and rules that gave leadership more control over the movement of bills and allowed for remote voting under some circumstances.
It was also clear that the main item of business would be the unusual task of passing a budget in a short session and that the Republican supermajorities in each chamber were determined to reign in what they felt were excesses in executive use of emergency orders.
There was a widespread expectation that fewer bills might be considered and that committee meetings might be limited. This turned out not to be the case. There were more bill introductions than in past 30 days sessions, bills moved through committee at a rapid pace, and many bills -- a number of them very significant -- were enacted.
Along the way, there were twists that made 2021 a historic session to remember as one interrupted by flooding and ice storms, impeachment charges, record numbers of gubernatorial vetoes and overrides, and the cash infusion to state government from the American Rescue Plan Act.
The Budget and ARPA Appropriations
The 2020 session ended abruptly with the onset of the COVID-19 pandemic and legislators only adopted a one-year budget due to the many uncertainties about the economy and state revenues. So it was necessary to pass a budget in the 2021 session, and the budget process began with the Governors budget address during the first week of the session. The Governors proposed spending plan was promptly dismissed and legislative leadership moved quickly to name a free conference committee. The General Assemblys version of the executive budget, HB 192, was passed just before the veto recess and was fundamentally a continuation budget. Final passage of HB 192 came after Gov. Beshear line-item vetoed twenty items and the General Assembly overrode sixteen of these.
The budget, however, is only a part of the 2021 session spending that must be noted. The American Rescue Plan Act passed by Congress will infuse $2.4 billion of federal funds into Kentucky state government. The General Assembly took care in HB 192 to prevent the Governor from spending these funds, but in the final days of the session, the executive and legislative branches reached an agreement for the use of some of these funds. Supplemental appropriation bills, HB 382, SB 36, and HB 556 appropriate federal ARPA funds of roughly $1 billion for various uses such as $127 million for school construction, $58 million for Capitol renovation, $575 million to Unemployment Insurance Trust Fund, $50 million for broadband deployment, and $250 million for drinking water and wastewater projects.
Both the House and Senate filed priority legislation the first week in January, much of it focusing on the Governors actions on COVID-19 and to reign in executive power. These bills moved quickly. By Saturday, January 9, House Bills 1-5 and 10 and Senate Bills 1-3 and 9 were either on the Governors Desk or out of the originating chamber. For the first time since the advent of short, 30-day sessions in 2001, the legislature continued in session during the second week in January, completing the passage of many of the priority bills of the chambers.
Governor Beshear vetoed seven of the priority bills. On its return, the General Assembly wasted no time in overriding all the gubernatorial vetoes within a matter of hours. For his part, Governor Beshear wasted no time and by the close of business on the day of the overrides filed a lawsuit challenging the constitutionality of HB 1, SB 1 and SB 2. Following a hearing, Franklin Circuit Judge Phillip Shepherd issued a restraining order preventing the implementation of provisions of HB 1. Judge Shepherd has since temporarily enjoined HB 1, SB 1 and SB 2.
Bills of Note
Aside from legislation affecting executive powers, 2021 saw the passage of significant legislation. Some bills of note:
School Choice and All-Day Kindergarten - Passed over the Governors veto, HB 563 establishes education opportunity accounts for tax credits to be used for school expenses, including private schools in more populous counties and open borders between public schools. The politics of the passage of HB 563 became intertwined with all day Kindergarten and led to an appropriation of $140 million of general funds for all day Kindergarten.
Broadband Deployment - Significant strides were taken toward broadband deployment with HB 320 that appropriates $250 million for broadband and allows electric cooperatives to capitalize broadband affiliates to bring unserved and underserved areas of the state, as well as an additional $50 million appropriation of federal ARPA funds.
Unemployment Insurance reforms - The unemployment insurance trust fund deficit was partially addressed with an appropriation of $575 million of ARPA funds by HB 382. SB 7 waives UI overpayments and establishes a program integrity fund and HB 413 freezes employer UI tax rates in calendar year 2021 and suspends the employer surcharge.
Historical Horse Racing- SB 120, a bill to restore historical horse racing after the Supreme Court ruled it unconstitutional, was enacted with bipartisan support but only after lengthy and emotional debate in both chambers that revealed differences in the Republican supermajorities between urban legislators and their colleagues from rural, more socially conservative areas of the state.
Infrastructure Funding - Supporters of increased funding for transportation were disappointed when the General Assembly adjourned without addressing needed infrastructure improvement through new revenue in the Road Fund. The legislature did reduce the amount of road funding that is diverted to other areas of state government to the tune of approximately $50 million. Transportation needs, though, have eclipsed $1 billion and will only increase until further action is taken.
Executive vs Legislative...Gubernatorial Vetoes
Tensions between the Democrat Governor Andy Beshear and Republican supermajorities in each legislative chamber were prominent throughout the session. Press reports estimate that more than forty bills limiting executive powers were filed. Aside from the priority bills filed early in the session that focused mainly on emergency powers and orders, these bills sought to shift many duties and authority away from the Governor and to GOP statewide office holders. The Governor responded with his veto pen on these and other bills.
By the time of sine die adjournment, Governor Beshear had vetoed a total of thirty-five bills and one joint resolution in whole or in part by line item budget and appropriation vetoes. The Republican supermajorities of House and Senate had no trouble coming up with the constitutional majority needed for override and virtually all the vetoes were overridden. The only exception was HB 563, the school choice bill, which was overridden with the minimum fifty-one votes in the House.
The list of vetoed bills may grow as Governor Beshear will have the opportunity to veto bills passed on the last two days of the session and the General Assembly will have no chance to override these as it will not be in session.
Impeachment petitions were filed seeking the removal from office of Governor Andy Beshear, Rep. Robert Goforth and Attorney General Daniel Camron. An impeachment panel was formed and all petitions were eventually dismissed.
This was a particularly active session for issues of interest to KCFA and the three main bills we lobbied on were:
HB 259 - Was a bill pushed by One Main and some other larger consumer loan companies that would have amended the rating structure for our industry by moving the 36% band to loans up to $5000, create a new rate band of 28% for loans from $5000-$10,000, and allowing the rates to blended across all bands up to $15,000. In addition the loan processing fee would have been increased. KCFA members could support the bill except for the blended rate of which there was significant concerns with that provision. Ultimately we supported House Floor Amendment 1 to remove the blended rate, which was opposed by the proponents. With no agreement amongst the industry the House Leadership ultimately killed the bill and the amendment.
SB 5 - Along with the broader business community we advocated for the legislature to grant businesses relief from liability created by the COVID-19 pandemic. The bill ultimately passed, but not until after the veto recess meaning the Governor can veto the bill without the opportunity for the General Assembly to override that veto because they have already adjourned for the session.
Below we have provided a list of bills of interest, with high priority bills listed first. Please review and let us know if you have questions or concerns.
KCFA Priority Bills
SB5Provide liability protection for owners of premises during a declared emergencyR. Stivers03/30/21: delivered to GovernorNotes/Insights04/01/2021 - The legislature finally passed a COVID liability relief proposal before the end of the session, however it could still be vetoed, so we will wait and see if the Governor lets it stand. If it is vetoed, the legislature will not have an opportunity to override as they have adjourned.03/28/2021 - There was some conversation over the past week between the House and Senate about language changes that could be made for this bill to move in the final two days. It's not clear whether the House will take it up and if they do - the bill will be subject to a veto without the ability for the General Assembly to override.03/01/2021 - SB 5 passed the Senate by a vote of 24-11 with SFA 2, SFA 8, and SFA 902/28/2021 - Several amendments have been filed and the bill has been placed in the orders to be called for a floor vote for several days, however the Senate continues to pass over it for a vote. There are still no talks between the Chambers on a path forward.02/09/2021 - On 2/9, the Senate committee passed an amended version that limits the bill to the COVID pandemic, among other changes. The bill passed by a vote of 7-4.02/06/2021 - The Senate has been working on amended language but those changes have not been made public. We expect that the bill will be changed to only apply to the COVID emergency,01/15/2021 - SB 5 is the Senate priority bill to address liability relief during times of emergency. It is retroactive to March 6 but not specific to the only the current pandemic. If passed it will apply in any case of a declared state of emergencies. Because of this, the definition of "essential service" is intentionally broad, as what's essential will change based on the emergency itself. The bill does not preclude a workers compensation claim being filed. Section 1 of the bill provides premises liability relief and Section 2 allows relief for essential services through sovereign immunity .01/10/2021 - The Senate plans to work over the recess break on SB 5 and as we understand it, will be making some changes to the language.SB71Omnibus changes to towing and storage of vehicles including standards for rates and notification timeframesJ. Carpenter03/22/21: signed by Governor (Acts Ch. 74)Notes/Insights04/01/2021 - This bill should improve timelines and issues we have with unscrupulous towing companies. KCFA specifically lobbied for changes to the definition of auto club and the definition of owner to make sure lienholders were not over exposed. Both changes were achieved successfully.HB243Reduce payday loans for certain populations to 36% and additional restrictions including a cooling off period.M. Prunty01/09/21: to Committee on Committees (H)HB259Creates a blended rate cap for certain loans over $3,000M. Meredith03/11/21: recommitted to Appropriations & Revenue (H)Notes/Insights04/04/2021 - After hanging on the board in the House for a couple of weeks, the consumer loan bill pushed by One Main and KFSA was recommitted. House Leadership took this action after an agreement couldn't be reached on the floor amendment that would have removed the blended rate.SB243Requires electronic portal for recorded documentsJ. Howell03/01/21: returned to Judiciary (S)Notes/Insights04/04/2021 - This is a top priority for the KY Bankers Association and we expect it to be discussed in the interim and to be considered in the 2022 Session.
KCFA Tracked Bills
These are the additional bills that we are monitoring.
HB1Provide relief to businesses and individuals during the COVID-19 state of emergency;, including:- guidelines for opening of businesses and schools- suspend interest on unpaid unemployment insurance contributions- provide guidelines for parental visitation- provide guidelines for visitation at long-term care facilitiesB. Rowland02/02/21: delivered to Secretary of State (Acts Ch. 3)HB3Establish the venue for constitutional challenges to statutes, executive orders, regulations, and other cabinet or department orders by establishing a panel of three Circuit Judges to hear challengesC. Massey02/02/21: delivered to Secretary of State (Acts Ch 2)HB4Amend the Constitution to remove the dates by which the General Assembly must adjourn and allow for the extension of 10 days upon 3/5 vote of each chamber.D. Osborne03/16/21: delivered to Secretary of State (Acts Ch. 27)HB5Removes the ability for the Executive Branch to do temporary reorganizations by executive orderM. Meredith02/02/21: delivered to Secretary of State (Acts Ch. 5)HB10Provides for relief for businesses and schools from COVID-19 exposures under limited circumstancesS. Sheldon02/24/21: to Economic Development, Tourism, & Labor (S)Notes/Insights03/14/2021 - It appears that SB 5, not HB 10, will be the vehicle for COVID liability relief this session.01/15/2021 - HB 10 is the House bill to provide for COVID-specific liability protection. We expect that legislators will work during the recess break on changes to this bill and SB 5, the Senate bill to address liability relief. The Senate bill provides relief during this current emergency and in all future emergencies.HB151Various changes to electronic recording statutesJ. Fischer02/09/21: to Local Government (H)Notes/Insights04/04/2021 - This was a recommended statute change from the Electronic Recording and Notary Task Force. Given that it didn't move we expect it to be back next session.HB152Changes to county clerk feesJ. Fischer02/22/21: posted in committeeNotes/Insights04/04/2021 - This was a recommended statute change from the Electronic Recording and Notary Task Force. Given that it didn't move we expect it to be back next session.HB192Executive Branch budgetJ. Petrie03/30/21: delivered to Secretary of StateNotes/Insights03/27/2021 - The Governor issued 20 line item vetoes on the budget. Most were language provisions that restricted his authority in some way or another. The biggest of those is probably related to the veto of language restricting the Governor from spending federal funds appropriated to the state for COVID-19 or the American Recovery Plan.03/14/2021 - As reported above, the FCCR on the executive branch budget was reported on Friday but has not yet been adopted. We are anticipating that a second appropriations bill dealing with the federal stimulus monies may be forthcoming before the veto recess. We expect floor action on the FCCR on 3/1503/06/2021 - The conference committee has scheduled public meetings on 3/8 and 3/9 to conduct some discussions in public. We have heard that the budget is done and that this will be the public unveiling of their agreement but their may be a few additional issues they want to discuss publicly before finalizing it. We expect floor action in both chambers on 3/11.02/06/2021 - Budget negotiations between each chamber's majority leadership are ongoing. The main points of conversation thus far are related to how far to diverge from a continuation budget and when to finalize their work.HB197Revises the electronic notary statutesJ. Fischer01/07/21: to Committee on Committees (H)Notes/Insights04/04/2021 - This was a recommended statute change from the Electronic Recording and Notary Task Force. Given that it didn't move we expect it to be back next session.HB248Create a civil cause of action for a victim who is injured, had property damaged, or had law enforcement summoned by another person because of a belief or perception of the victim's race, color, national origin, ancestry, gender, religion, religious practice, age, disability, or sexual orientation and allow recovery of punitive damagesJ. Raymond01/11/21: to Committee on Committees (H)HB262Additions to Trade Practices Act related to consumer products that have automatic renewal provisionsS. Westrom01/13/21: to Committee on Committees (H)HB269Repeal and reenact KRS 186A.195 to set forth procedures for the filing of title lien statements and the distribution of feesJ. Fischer01/13/21: to Committee on Committees (H)Notes/Insights04/04/2021 - This is an effort to try and get a statewide centralized lien filing system. The county clerks and the Auto Dealers continue to discuss this proposal and we expect it to be discussed in the interim.HB274Clarify that the "rough trade-in" value or "clean trade-in" value shall not be used to determine the standard value of a motor vehicleP. Flannery01/13/21: to Committee on Committees (H)HB312Omnibus changes to open records lawsB. Rowland03/29/21: delivered to Secretary of State (Acts Ch. 160)HB407Prohibit auto dealers from charging a fee or receiving compensation for providing, procuring, or arranging financing through a third-party lender unless certain notifications to the consumer are made.L. Willner02/09/21: to Committee on Committees (H)HB408Requirements for businesses that collect and sell consumer informationL. Willner02/09/21: to Committee on Committees (H)HB412Amend KRS 75.130 to include gender-neutral language and to correct minor grammatical errors.R. Webber02/09/21: to Committee on Committees (H)HB447Allow for the disposal of involuntarily towed vehicles by a towing and storage company.D. Hale02/09/21: to Committee on Committees (H)HB482Public Protection Cabinet ReorganizationC. Freeland03/04/21: to Banking & Insurance (S)Notes/Insights04/04/2021 - This bill contains the DOI reorganization of the Life-Health and Property-Casualty divisions that passed in HB 509HB593Provide criminal sanctions for fraudulent unemployment claims related to the COVID-19 pandemic.M. Dossett02/23/21: to Committee on Committees (H)SB1Limitations to Executive Authority during times of emergencyM. Castlen02/02/21: delivered to Secretary of State (Acts Ch. 6)SB72Relating to the Revised Uniform Fiduciary Access to Digital Assets Act and the procedure for disclosing digital assets, to clarify that a custodian can assess a reasonable administrative charge except in cases in which the user would have had access to the digital assets for free or for no additional chargeW. Westerfield03/23/21: signed by Governor (Acts Ch. 93)SB134DFI Housekeeping bill dealing with virtual currency and money transmittersT. Buford03/15/21: placed in the Orders of the Day for Tuesday, March 16, 2021Notes/Insights04/04/2021 - This DFI agency bill fell short of the finish line running out of time before the gavel fell on the 2021 Session. We would expect the bill to be back in the 2022 Session.SB177Amendments to the Uniform Commercial Code related to digital assetsB. Smith02/04/21: to Committee on Committees (S)SB178Establish special purpose depository institutions that engage in a nonlending banking businessB. Smith02/04/21: to Committee on Committees (S)SB183Amend KRS 286.3-380 to include gender-neutral language.D. Thayer02/10/21: to Banking & Insurance (S)SB215The bill establishes the Secretary's Office of Safety within the Transportation Cabinet, but it also added the Off Highway Vehicle pilot program provisions from SB 75, and renamed the Nunn ParkwayB. Storm03/30/21: enrolled, signed by Speaker of the HouseSB255Relating to commercial mining of cryptocurrencyB. Smith03/25/21: signed by Governor (Acts Ch. 141)SB269Statewide fairness law that extends to financial services, insurance sales, etc.M. McGarvey02/24/21: to Judiciary (S)
These are the additional resolutions that we are monitoring.
SJr38Direct the creation of the Public Bank Task Force to study the establishment of one or more public banks in Kentucky; outline task force duties and members; require the task force to meet monthly during the 2021 Interim and to submit findings and recommendations to the Legislative Research Commission by December 1, 2021; require the executive branch to assist the task force.A. Southworth01/13/21: to Committee on Committees (S)