House leaders: We’ve hammered out budget plan

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Ed Reinke

March 5, 2010

By RONNIE ELLIS, CNHI News Service The Commonwealth Journal Fri Mar 05, 2010, 09:41 PM EST

General Assembly ended Friday with House leaders saying they have a $17.5 billion, two-year budget plan.

House Speaker Greg Stumbo, D-Prestonsburg, and budget chairman Rick Rand, D-Bedford, said Friday afternoon they hope to have a written budget document sometime Monday afternoon and expect the House to vote on it Tuesday. The plan would then go to the Republican controlled Senate where changes are likely to occur.

The plan covers a $1.3 billion gap between current spending and anticipated revenues for the next biennium, according to Rand, mostly through a reduction of two days in the school calendar; a 1.5 percent cut to higher education in the first year and a 1 percent cut the second; savings on employee health insurance; Medicaid savings; and cutting back on the number of political hires and the use of outside, personal service contracts for state services.

But it includes about “half a billion” in bonding for new projects, Rand said, including construction of new schools, water and sewer projects and roads, said Rand and Stumbo. Rand said the plan will replace some – but not all – of the category five schools (those in worst repair) and some category four schools (the next worst category).

Most human services were not cut beyond the recommendations of Gov. Steve Beshear in his budget proposal and some state agencies will see a 2 percent reduction, just as the governor proposed. The public school funding formula SEEK won’t be cut and the plan envisions a $25 million surplus at the end of the two years. The plan does roll about $35 million in excess SEEK funds from the current year back into the general fund.

The plan assumes a $250-million extension of federal assistance for Medicaid and relies on a suspension of a popular business tax write-off for two years and accelerating the collection of some sales taxes from larger retailers to boost revenues by about $370 million, some of which will be realized in the current year but carried forward into the next budget.

“It’s hard to say there’s any winners when you cut $1.3 billion out of your budget,” Rand said, “but we’re trying to be fair.”

The budget plan won’t be fully disclosed until it’s put into writing which should be complete by sometime Monday. Stum-bo and Rand said they will brief members on the budget that day and schedule a vote for Tuesday, after which it will go to the Senate if it passed the House.

It’s likely to undergo changes in the Senate. Senate President David Williams, R-Burkesville, has said he can’t comment on the budget until he sees the language but he and Senate budget chairman Bob Leeper, I-Paducah, have expressed concerns about the business tax changes in the middle of a recession.

“Philosophically, Repub-licans are usually more reticent to support higher taxes,” Williams said Friday. He said he believes Kentucky’s infrastructure needs attention but he would not commit to supporting the construc-tion House leaders want to include in their budget proposal and refer to as a “jobs creation bill.”

“If we have an additional $370 million gap we have to fill if we can’t agree on the revenue package, then I think it casts some doubts on our ability to do very much capital construction in this session,” Williams said.

In other business this week, the Senate passed an ethics bill which would prohibit state contractors from contributing to state campaigns and place additional contribution restrictions on lobbyists. It would also require state officials’ financial disclosure forms to be published online. And the House passed a bill to raise the high school drop-out age to 18 in three years.

Another bill would allow juveniles charged with “sexting,” sending nude or obscene images over personal communications devices, to pay a $100 fine and perform community service for a first offense. All three bills must now go to the other chamber.

Ronnie Ellis writes for CNHI News Service and is based in Frankfort, Ky. He may be contacted by email at rellis@cnhi.com.

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