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‘Confidential’: Hiding the cost of legislation from Kentuckians

The Kentucky Capitol
Ryan Van Velzer
/
KPR
One bill that passed into law with a hidden confidential fiscal note is House Bill 8 from 2022, which set up a process to incrementally cut the state’s individual income tax until it is eliminated.

Unlike most states, Kentucky does not require filed or advancing bills to be accompanied by a financial analysis. Sometimes lawmakers ask for them, and sometimes they are “confidential.”

Can a state analysis of how a bill moving through the Kentucky General Assembly would impact state finances be labeled “confidential” and hidden from the public?

While most state legislatures require bills affecting government finances to have such an analysis produced and be made public, the answer to that question in Kentucky is yes.

That answer came as a surprise to more than two dozen current and former state legislators asked by KPR, unaware that fiscal notes prepared for already filed bills could be marked confidential and hidden, instead of posted online with the bill. This includes six current committee chairs in the Republican supermajority, as well as one member of GOP leadership.

Fiscal note statements are the analyses prepared by the nonpartisan staff of the Legislative Research Commission (LRC), the administrative arm of the Kentucky General Assembly. The notes estimate how a bill will affect state government revenues and expenditures, but they are not required under Kentucky law or the rules of either chamber for a bill to advance — let alone required to be made public, when requested and produced.

Members of both parties and Kentucky policy advocates criticized this policy on the grounds that it is not just poor government transparency, but bad fiscal policy that could hide the true costs of legislation before it is passed into law.

One example of a bill that passed into law with a hidden confidential fiscal note in recent years is also one of the most impactful bills of the past decade in Kentucky — House Bill 8 from 2022, which set up a process to incrementally cut the state’s individual income tax until it is eliminated.

When HB 8 was before the House budget committee, there was already a fiscal note posted online for an outdated version of the bill, but not the significantly amended version they were voting on.

Former Democratic Rep. Angie Hatton of Whitesburg called for a motion to delay a vote on HB 8 until the fiscal note on the updated committee substitute was completed and attached to the bill, pursuant to chamber rules. Hatton’s motion was quickly defeated by a voice vote in the GOP-dominated committee, followed by the passage of the bill.

House Bill 8 would pass into law later that month, but the LRC never published the confidential fiscal note that was completed for the final version of the bill that same day, which detailed an estimated loss of $888 million of state revenue over the following two fiscal years.

KPR first discovered one of these confidential fiscal note statements — appearing just like normal ones, only labeled “CONFIDENTIAL” at the top and bottom in red ink — in June. We have subsequently obtained copies of more than 20 other fiscal notes marked confidential in the same format for bills that passed into law in 2021, 2022, 2023 and 2024, which were not posted on the bills’ webpages. There are likely many more, but the LRC denied open records requests for copies.

Among the wide range of critics of Kentucky’s current fiscal note policy is Andrew McNeil, president of the conservative Kentucky Forum for Rights, Economics & Education. He said it reflects “a growing institutional arrogance in the legislature,” as “constituents deserve to know how their money is going to be spent.”

“Any fiscal note prepared by the LRC should be a public document and posted with the bill when it’s introduced,” McNeil said. “Taxpayers pay legislators’ salaries and the salaries of the staff preparing these fiscal notes. They’re printed on paper and printers paid for by taxes levied by the government. The information is used by legislative members to decide how to move forward with a bill, but not made available to the public to decide what to think about it?”

But just how long has LRC policy allowed confidential fiscal notes for filed bills, and how often is this used? There’s a wide range of disagreement over whether this has quietly existed for decades or is more of a recent phenomenon, according to current and former legislators and LRC staff who worked in Frankfort dating back to the 1990s.

Just three of the 30-plus legislators asked said they had heard of confidential fiscal notes for filed bills, including Republican Senate President Robert Stivers. Serving in the Senate since 1997 and co-chairing the LRC’s statutory committee since 2013, Stivers says this is longstanding policy.

“That has always been the way it’s been,” Stivers said.

As for why so many legislators are unaware of the currently implemented fiscal policy rules, Stivers said “we brief them and tell them. Sometimes they may not understand it.”

Kentucky’s lack of required, public notes an outlier among states

While state law requires a public analysis of the financial impact filed bills will have on the state’s corrections system, pension plans, local governments and health insurance plans, it does not address fiscal notes relating to their overall impact on state government balances.

The rules passed by both chambers in recent years give bill sponsors or committee chairs the option of requesting a fiscal note for a bill, but only directs the LRC to return it to whomever requested the analysis — not publicly post it with the bill.

This lack of requirement for public fiscal notes makes the Kentucky General Assembly an outlier among other state legislatures, as was pointed out in a 2015 study by the Center on Budget and Policy Priorities. The think tank found Kentucky was one of just 12 states to not require fiscal notes for nearly all bills with a significant fiscal impact.

A decade after this study, Kentucky is even more of an outlier and all states surrounding it continue to require the posting of such fiscal notes — either for any filed bill, like Indiana, or for any bill to clear a committee or chamber, like Ohio — with the exception of Illinois.

Of the 212 bills passed into law in 2024, less than 10% had a public fiscal note at any point, and only 3% had a public fiscal note for its final version.

Stivers defended Kentucky’s outlier policy of not requiring fiscal notes for bills, saying that not only are they sometimes inaccurate or overly vague, but that they could create “quicksand” for bills leadership wants to move, “especially late in the session.”

“I don't want to create such a bureaucracy and to slow something down when we really need to get something moved,” Stivers said. “We'll get the best estimates we can or make sure we do a good job with the best information we have.”

The extent to which fiscal notes for introduced bills are labeled confidential and withheld from the public in Kentucky is still unclear, as the LRC denied an open records request for such documents from the 2024 legislative session and would not even reveal how many were being withheld. Greg Woosely, the general counsel of the LRC, wrote that “any confidential background or other research materials prepared by LRC staff for members of the General Assembly” are not public records under state law.

“As with any confidential legislative material, everything surrounding that material, including its existence, is confidential unless or until it is made public by the member of the General Assembly who has requested it,” Woosley said.

There is widespread knowledge among legislators that communications with LRC staff remain confidential during the process of drafting potential bills. However, many legislators assumed there was no confidentiality once a fiscal note was formally requested for a filed bill during the session.

While it is unclear how many fiscal note statements for filed bills were deemed confidential, it is possible they outnumber the ones that are public and posted online with their bills. Each fiscal note is numbered chronologically in the order requested, with the largest one in the 2024 session numbered 200 — though only 93 fiscal note statements are posted online.

GOP Rep. Savannah Maddox of Dry Ridge, who didn’t previously know about the confidential fiscal notes, said she plans to file a bill in the 2025 session to require public fiscal notes for legislation.

“Anything that we can do to increase transparency when it comes to spending taxpayer dollars is what we should be doing,” Maddox said. “Any step that we're taking to move back from that it's a step in the wrong direction.”

The "confidential" label and legislative rules

Kentucky Public Radio first discovered one of these confidential fiscal note statements in June, during a debate over whether a bill passed in this year’s legislative session had enough funding to be implemented.

Senate Bill 151 expanded foster care benefits for relative caregivers, but the administration of Gov. Andy Beshear said it previously warned the legislature it could not implement the new benefits unless they appropriated an additional $20 million.

The bill’s sponsor, GOP Sen. Julie Raque Adams of Louisville, countered it did not require specific funding, providing KPR a copy of a fiscal note she received from the LRC estimating it would come at no cost to the state. The note was labeled confidential at the top and bottom, while the online page for SB 151 shows it had no fiscal note statement.

This fiscal note was delivered to Adams just before she presented SB 151 to the Senate Families and Children committee on Feb. 6. She told committee members in the meeting that the fiscal note was in their packets, but it was never posted in the committee’s meeting materials page or posted on the bill’s page. The bill cleared both chambers the following month and was signed into law by Beshear in April.

That bill was one of two dozen Beshear highlighted in an April letter to legislators just before the final two days of the session, warning they would need additional appropriations in order to be implemented by the administration. In an accompanying spreadsheet, the administration singled out 17 bills they claimed had an “LRC request for fiscal note,” yet did not have a “Fiscal Note on LRC website.”

LRC staff typically consults with specific state agencies when crafting fiscal estimates for bills and cite those agencies as a data source in the note, though the one for SB 151 only cited LRC staff.

Asked why her fiscal note was marked confidential, Adams referred KPR to the LRC.

LRC spokesman Mike Wynn said the rules passed by each chamber only require fiscal notes be returned to the sponsor or committee chair who requested them, who “may choose to disseminate the fiscal note or keep it confidential.”

House and Senate rules regarding fiscal statements underwent a significant change at the start of the 2021 session, quickly passing through each chamber with little debate and remaining in place for subsequent sessions.

For nearly two decades, House rules specified that a fiscal statement “shall be considered a public document upon introduction of the bill or amendment for which it was prepared.” However, the House in 2021 quietly struck this entire line about public documents from their rules. The Senate also dropped a ruled provision that year allowing a member to hold up a bill from passing in the chamber unless a fiscal note is attached to it.

After denying KPR’s open records request for all confidential fiscal notes statements for filed bills in the 2024, the general counsel of the LRC also denied a follow up request for such notes on House bills in the 2020 session, when the chamber’s rules declared them public documents. Both denials were nearly identical, stating that “any confidential background or other research materials” prepared by LRC staff for legislators are not public records under Kentucky’s statutes and constitution.

Government transparency advocates in Kentucky criticized the open records denial and the practice of withholding fiscal notes for filed bills.

Michael Abate, a First Amendment attorney representing the Kentucky Press Association (and at times, Louisville Public Media), said confidential fiscal notes for filed bills that advance into law are “a terrible practice.”

“The public has every right to know how much bills that legislators are introducing will cost,” Abate said. “And if legislators are allowed to hide the costs of bills that are known to them, but not to the public, that is a recipe for terrible public policy and for us passing laws that will have devastating effects that the public is in the dark about.”

Amye Bensenhaver, co-director of the Kentucky Open Government Coalition, said she assumed through past reporting on SB 151 that the bill’s fiscal note not being posted online was a mere administrative error. She said the confidential policy is another example of the legislature’s “contempt for the public’s right to know.”

“It is a shocking example, because it is a pretty critical part of that kind of analysis that should go into enacting a law: What’s it going to cost the Commonwealth?’ Bensenhaver said. “It is disturbing.”

Bensenhaver added that the legislature has also insulated itself from open records request appeals thanks to a 2021 law it passed. Instead of appealing open records decisions to the attorney general, the LRC is the final arbiter of its own appeals, while blocking the ability of an appellant to challenge that opinion in circuit court.

Kentucky Public Radio has not yet been able to find any confidential fiscal notes predating the 2021 rules changes, but has located more than two dozen since that session.

Most of these are tucked away under the meeting materials webpage of the House and Senate budget committee. These include three confidential notes from the 2021 session — which combined to detail more than $1 billion of estimated state spending that wasn’t detailed in the bills’ public fiscal notes — and 22 from the 2023 session. Of the 2023 session confidential fiscal notes, more than half were requested by Rep. Jason Petrie, the GOP House budget committee chairman from Elkton.

Kentucky Public Radio asked GOP House leadership and Petrie a series of emailed questions on fiscal note policy, but only received a statement from their spokesperson saying requested notes “during the drafting process” of bills are confidential.

A disparity of confidential knowledge

In addition to Stivers, only two of the 30-plus current and former legislators asked by KPR had previously heard of confidential fiscal notes for already filed bills.

Sen. Max Wise, a GOP committee chair from Campbellsville, explained the policy in full, noting that “the word confidential would be stamped on it” until the requester of the fiscal note approved for it to be publicly released on the LRC website.

Sen. Chris McDaniel, the Republican chairman of the Senate budget committee from Ryland Heights, also recounted the fiscal note policy, though he said he usually requests preliminary notes from LRC staff instead of formal fiscal notes.

While it is good for legislators to get feedback on what their bills cost, McDaniel said “once we start advancing legislation, it needs to be out there for the public to see.” He added that keeping such notes private is “not good policy.”

However, more than 10 GOP legislators said they had never heard of confidential fiscal notes for filed bills, including President Pro Tempore David Givens of Greensburg. Neither had House committee chairs Kim Moser, Samara Heavrin and Kevin Bratcher, as well as Senate committee chairs Whitney Westerfield, Stephen West and John Schickel. Bratcher and Schickel are retiring at the end of the year after a combined 44 years of service in Frankfort.

Republican Sen. Gex Williams of Vernora — who returned to the legislature last year after previously serving in the 1990s — said he had heard legislators could keep their fiscal note and not have it posted online. However, he always assumed such notes would be subject to open records requests and had never heard of any marked confidential.

Not a single Democratic legislator indicated they had heard of confidential fiscal notes for filed bills, but one learned that she had received two of them without requesting they be marked as such.

Though Wynn with the LRC said all requesters of fiscal notes are asked if they want them to be confidential, Sen. Cassie Chambers Armstrong of Louisville discovered that she was given such notes for her Senate Bill 240 and Senate Bill 67 — despite saying she never requested them to be marked confidential and was never asked by LRC if she wanted them to be confidential.

Armstrong had assumed her fiscal notes were public and posted on her bill’s webpage, but was surprised to go back and discover it wasn’t and that the copy she received from the LRC was marked confidential — a designation she had never heard of for filed bills.

House Minority Whip Rachel Roberts of Newport cast blame at the Republican supermajority for “an erosion of trust and transparency in the legislative process,” citing their elimination of the practice of posting pre-filed bills before the regular session, carving the General Assembly out of state open records law and increasingly rushing through bills at the last minute.

“When information is hoarded or held from the public, one must always ask why,” Roberts said. “Who benefits and who is harmed? While confidentiality between legislators and staff is appropriate during the draft stage, I believe the public deserves to know the entirety of a bill and its impact before votes are taken."

The history of confidential fiscal notes

Stivers says confidential fiscal notes for filed bills is long standing practice in Frankfort, but several former Democratic legislators who served there for decades said they had never heard of this.

Former House Speaker Greg Stumbo, who served in the Kentucky House all but four years between 1985 and his defeat in 2016, said he had no recollection of confidential notes for bills passed into law.

Former Rep. Rick Rand also served in the legislature for more than two decades, including four years as the Democratic chairman of the House budget committee. He also did not remember ever seeing such a fiscal note, adding it was often a calculation for legislators whether to request it, knowing that its results — good or bad — would become public.

“As budget chair, I would talk to (LRC) staff before I'd ask for a fiscal note,” Rand said. “I could usually say, ‘can you get me in the ballpark of where you think it's going to be? Is it going to be $10,000 or $10 million?’ And so then sometimes that would dictate whether I'd request a fiscal note. But once you requested a fiscal note, you had to kind of live and die by what was in it.”

Former Democratic House Minority Leader Joni Jenkins, who served nearly three decades in the chamber, remembered questioning the validity of certain fiscal notes, but not confidential fiscal notes for introduced bills passing into law.

“That’s cuckoo bananas,” Jenkins said. “If you have to keep something in the dark, you're trying to hide something. (It's) everybody's money and it just seems really, really bad practice that everybody in the room doesn't know what they're voting on.”

Also having no recollection of such fiscal notes were former Democratic legislative leaders Morgan McGarvey and Hatton, as well as former Republican House committee chair Adam Koenig.

Though one high-level former LRC nonpartisan staffer who worked there for three decades did not remember confidential fiscal notes for filed bills, other longtime former LRC staffers do recall the practice.

Pam Thomas worked as a budget committee staffer at the LRC for two decades, before retiring in 2016 and becoming a policy analyst for progressive think tank Kentucky Center for Economic Policy.

While it wasn’t always the case, Thomas remembers confidential fiscal notes being allowed at least a decade ago.

“When I first started, the rule was if there was a fiscal note requested, it had to be public,” Thomas said. “I think it was that way back in the early 90s. And somewhere along the way, that changed and the wording changed.”

Thomas thinks this changed sometime in the late 2000s, remembering that former Democratic House budget committee chair Harry Moberly — who led the committee for a decade, until 2012 — used confidential fiscal notes “quite a bit.”

Thomas said she tried to avoid preparing formal confidential fiscal notes for filed bills, instead passing along confidential information about legislation through informal memos.

“It's a political calculation about whether they want to make it public or not,” Thomas said. “But if they want to know, they don't have another way, really, to find out — other than from lobbyists, from an independent source — unless they ask staff.”

A second former LRC nonpartisan staffer who worked on fiscal notes for decades confirmed the account of Thomas.

Understanding the process

Thomas noted that most state legislatures require bills to have fiscal notes before they can be voted on, making Kentucky “a little bit unusual in that.” She says public policy overall would likely benefit from joining them.

“I think it would serve the entire General Assembly and the general public well if fiscal notes were automatically prepared on all of the bills that had a potential and fiscal impact, just like corrections impact statements are prepared and local mandates are prepared,” Thomas said.

She said that fiscal notes used to be quite common in the 1990s, but have become less and less available in the following decades, especially since the Republicans gained a supermajority of both chambers in 2017.

“They almost never have fiscal notes on things, as you’ve probably noticed,” Thomas said.

GOP Sen. Williams also remembered fiscal notes being much more common when he served in the 1990s, adding that “it was common for bills to get hung up because of their lack of a fiscal note.”

Whether it comes through a change in statute or chamber rules, Williams said “fiscal notes are something that we really need to get out there more often,” especially for bills that are advancing.

Looking back at legislation from the 1990s, the numbers reflect the recollections of Thomas and Williams.

While only 3% of the bills that passed into law in the 2024 session had a public fiscal note for the final version of the legislation, this figure was 19% in 1998 — the earliest year that legislation is available on the LRC website.

While noting his concern that bills would get stuck in “quicksand” if a public fiscal note was required, Stivers added that their rules still allow for committees and each chamber to require a fiscal note to be attached to a bill before it can advance, should a majority vote for such a requirement.

This is a feature of the rules in each chamber, though — much like Rep. Hatton’s failed attempt to delay HB 8 in 2022 — it is rarely attempted and almost never is successful.

Both Thomas and Westerfield bemoaned the lack of timely and detailed fiscal analysis during the 2024 session on House Bill 5, the wide-ranging anti-crime bill that passed into law.

The only public fiscal note for HB 5 was not prepared until Westerfield requested it when it was assigned to the Senate Judiciary committee he chairs, and the resulting note only said the state cost was “indeterminable.” Likewise, the statutorily required corrections impact statement for the bill was not produced until late March, the day before it passed into law.

Westerfield said he was frustrated by the delay in the fiscal analysis of the bill, which he ultimately voted against. Responding to GOP senators who were saying they didn’t care what the price tag of HB 5 was because it was so important, Westfield said “well, if you don’t care, put it out there. Own it. And when the bill comes due, pay it.”

“I'm not always confident in the figures provided that go into a fiscal note, and I don't always agree with the accuracy of a fiscal note, but it ought to be something that the public can see,” Westerfield said.

As for why so many legislators were unaware of the confidential fiscal note process, Stivers said it’s possible he and other legislative leaders should have done a better job communicating.

“Maybe that's incumbent on me to educate them more,” Stivers said. “Because that really should be my role, to make sure everybody knows what the process is.”

Kentucky Public Radio Reporters Justin Hicks and Sylvia Goodman contributed to this story.

State government and politics reporting is supported in part by the Corporation for Public Broadcasting.

Joe is the enterprise statehouse reporter for Kentucky Public Radio, a collaboration including Louisville Public Media, WEKU-Lexington, WKU Public Radio and WKMS-Murray. Email Joe at jsonka@lpm.org.

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