Kentucky’s Senate State and Local Government Committee last week approved debt cap legislation.
Senate Bill 10, sponsored by committee chairman Joe Bowen, R-Owensboro, and Senate majority floor leader Damon Thayer, R-Georgetown, would prohibit the Legislature from appropriating more than 6% of general fund revenues to bond debt service.
Supporters of the legislation say that percentage is a generally accepted industry standard used by bond rating agencies.
The bill would reign in potentially high debt levels in the future and put Kentucky at the same policy levels as many other states, according to Bowen.
“Our general-fund debt ratio is not improving,” he said. “As a matter of fact, we continue to add more debt than we pay off.”
The measure excludes debt for universities, the Kentucky Housing Authority and other agencies not using the general fund.
It also allows the Legislature to exceed the 6% limit by a majority vote if the governor declared a state of emergency that requires additional funds.
The measure now goes to the full Senate for consideration.