By Beth Musgrave
FRANKFORT — The Kentucky General Assembly is poised to vote Friday on a $19 billion, two-year state budget that provides $3.5 million to help the Kentucky Horse Park and $2.5 million to start the redevelopment of Rupp Arena.
Leading lawmakers closed agreed on a compromise budget just minutes before a self-imposed deadline of 3 a.m. Thursday, giving legislative staffers enough time to make requested changes in the bill before rank-and-file members vote on it Friday.
Later Thursday, legislators were scrambling to get an agreement on a two-year road plan, which outlines funding for key road projects throughout the state, and House Bill 499, a revenue bill that contains a tax amnesty program designed to raise millions of dollars.
If there are no hiccups on Friday, this will be the first two-year budget the General Assembly has approved on time since 2006. Lawmakers plan to use April 12, the final day of this year’s 60-workday session, to override any line-item vetoes issued by Gov. Steve Beshear during the next two weeks.
“We have white smoke,” Senate President David Williams, R-Burkesville, said shortly after the deal was inked early Thursday morning. “They gave us until 3 o’clock in the morning and I want everyone to know that we finished five minutes early.”
The budget includes $2.5 million for Rupp Arena, less than the $3.5 million Lexington had hoped it would get to start planning the redevelopment of Rupp Arena and the surrounding area. To get the money, Lexington must come up with $2.5 million in matching money, about $1 million more than the city had planned to contribute, and the state’s funds can only be used for the Rupp Arena portion of the project.
Lexington Mayor Jim Gray thanked legislators on Thursday for their support of the project.
“This is an investment in a powerful brand that reaches out far beyond our city limits to elevate Lexington and Kentucky, allowing us to create jobs and opportunity for the future generations,” he said.
The agreed budget also includes money for a scholarship program for kids from the state’s 38 coal-producing counties, which would help students attend private colleges or satellites campuses of state universities that are located in coal-producing counties.
The budget deal also tells Gov. Steve Beshear to find $80 million in additional savings in order to make the state’s books balance.
The deal came after three days of negotiations.
The House and Senate versions of the budget — approved earlier this month — contained few major differences. Both budgets kept key provisions of Beshear’s original budget proposal, including 8.4 percent cuts to many state agencies, no change in the main funding formula for K-12 schools and no pay raises for state employees. Both chambers also included an additional $21 million to hire 300 additional social workers and $1 million for colon cancer screening.
The agreed budget also cut higher education spending by 6.4 percent and cut more than $450 million in bonds proposed by Beshear that would have been paid for using revenues generated by the universities.
University of Kentucky President Eli Capilouto, in an email message to staff and students Thursday, said the 6.4 percent cut will translate to a loss of about $20 million at UK. Capilouto said he was deeply disappointed that UK was not allowed to use $200 million in agency bonds for capital projects.
“With construction and borrowing costs at virtually historic lows, agency bonding authority represents a creative and prudent public policy approach — one that would allow UK to earn its way during a difficult economy,” Capilouto said. “It’s deeply disappointing that we were not granted the authority to spend money we generate to make UK and Kentucky better.”
Much of the discussions late Wednesday night and into Thursday morning between House and Senate leaders focused on debt and projects funded by coal severance taxes.
Portions of the state tax on severed coal go back to coal-producing counties. The House had placed 68 pages of projects in the budget that would be funded with that money.
House Speaker Greg Stumbo told Senate leaders during budget negotiations that he did not believe some members of the House would vote on the agreed budget if the coal severance projects were not included.
Williams said Republicans did not believe coal severance taxes — which are supposed to be used for capital projects and economic development in coal counties — should be used for re-occurring expenses. The projects funded with coal severance money include everything from Little League baseball equipment to fire trucks.
“We don’t think the single-county money is being spent as efficiently as it should be,” Williams said.
The Senate eventually agreed to allow the coal severance projects, but Senate leaders asked that language be include in the budget to make it clear that the money was for limited purposes. If a House member and Senate member from the same geographic area do not agree on a coal severance project in that area, no project will be listed in the budget. The coal-producing county might still receive the funding, but would have to apply for it through Beshear’s administration.
After hours of going back and forth on Wednesday night, House and Senate leaders were separated by $12.9 million in projects the House wanted.
To close that gap, the Senate agreed to give $3.5 million to the Kentucky Horse Park out of funds Beshear must save in the budget. Beshear had originally proposed giving additional funding to the Horse Park to offset a budget deficit of $3.6 million. Leaders also agreed to require the Horse Park to provide a business plan to state leaders by June 30.
John Nicholson, executive director of the Horse Park, said he has not yet seen the specific language of the compromise budget but he understands the money will keep the park operating.
He said the park will start “extensive work” on a business plan to look at its various options to find new revenue sources and to maximize existing funds.
The budget did not include an additional $7.5 million to expand the state’s preschool programs, a provision in the House budget. Beshear had originally proposed $15 million over two years for the expansion of preschools. Also not included was additional funding for a new medical examiner’s office in downtown Louisville and additional money for Kentucky Educational Television.
Typically, budget negotiations take place behind closed doors. This year, the budget negotiations were broadcast on Kentucky Educational Television, giving the public a rare glimpse of how the final decisions on the state’s two-year budget are made.
“I’ve served on many conference committees and free conference committees and I think this was the most productive and cordial conference committee I’ve ever seen,” Williams said.