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House, Senate approve compromise state budget

March 30, 2012 | | Comments Comments

By Beth Musgrave
bmusgrave@herald-leader.com

FRANKFORT — The General Assembly gave its final approval Friday to a compromise two-year state budget that provides little money for new projects and cuts funding by 8.4 percent for many state agencies and 6.4 percent for state universities.

The Senate passed House 265, 36-1, while the House voted 81-7. The measure now heads to Gov. Steve Beshear’s desk for his approval. This is the first time since 2006 that the General Assembly has passed a two-year budget on time.

Friday was the 59th day of the 60-workday legislative session. The General Assembly is set to return April 12 for the final day of the session, which will be used to consider overriding any potential vetoes by Beshear.

House and Senate leaders said Friday they were still working on an agreement on the two-year road plan, another contentious piece of legislation. That means that the measure will be voted on by both chambers on April 12.

House Speaker Greg Stumbo, D-Prestonsburg, said said the $19 billion, two year budget “was the best budget that we could agree upon. Does that mean everybody liked it? No.”

But Stumbo said the austere two-year budget did have some bright spots — it included more than $21 million to hire 300 social workers and it increased funding for more community placements for people with intellectual disabilities. The House was able to find some additional funding for the Meals-on-Wheels program, which provides hot meals to the elderly.

Gov. Steve Beshear, in a written statement, said he was pleased that the legislature kept many key programs of his original budget proposal, unveiled in January. But noted that the cuts contained in the two-year budget will still hurt.

“As I said in January, this is the most difficult budget I have ever crafted, and it will be the most difficult for our state to endure,” Beshear said. “However, I am pleased that the state legislature has kept my budget proposal largely intact – a signal that our management decisions and investments in the health and education of Kentuckians are wise ones.”

The compromise budget includes an additional $3.5 million this fiscal year for the Kentucky Horse Park, which has struggled financially in recent several years. The budget also includes an additional $2.5 million to begin reworking Rupp Arena and nearby areas of downtown. The city must come up with $2.5 million in matching money.

The budget, which calls for spending more than $19 billion over the next two years, includes no pay raises for state employees and nixes a 1.5 percent cost-of-living increase for state retirees. It also does not cut the main funding formula for K-12 education.

House and Senate leaders negotiated the compromise budget early Thursday morning after three days of negotiations. Key points of contention between the Democratic House and Republican Senate over the two-year budget that begins July 1 included how much debt the state should incur and the funding of some projects paid for by coal severance taxes.

Senate budget committee Chairman Robert Leeper, I-Paducah, said the compromise budget includes less new debt and relies on less one-time money than previous budgets. It uses $217 million in one-time money to fund ongoing programs, down from $487 million in the two-year budget that ends June 30.

Using one-time money to balance the state’s books was part of the reason why Kentucky bond rating was downgraded last May.

The budget also returns $72 million to the state’s “Rainy Day” fund, another factor rating agencies consider when assessing the state’s ability to repay its debts.

House Bill 499, a companion piece of legislation to the two-year budget, was loaded down at the last minute on the Senate floor with an amendment that would stop the city of Corbin from collecting its own occupational sales tax, a contentious local issue. Senate Majority Leader Robert Stivers, R-Manchester, sponsored the amendment over the strong objections of Senate President David Williams, R-Burkesville.

Williams and Sen. Perry Clark, D-Louisville, were the only two senators to vote against HB 499.

In the House, there was also more debate on HB 499. Rep. Regina Bunch, R-Williamsburg, urged the House not to adopt the amendment. Bunch, whose district includes Corbin, said that the amendment would prohibit Corbin from collecting the occupational tax even though there has been a court ruling that says Corbin can collect it.

Rep. Jim Stewart,R-Flat Lick, said he supported the amendment. Stewart is from Knox County, which is fighting Corbin’s ability to collect is own occupational sales tax. Stewart said the amendment would allow the city and Knox County two years to work out the issue.

Stewart also added that the contentious local issue pitted Williams against Stivers, a rare split in the Republican Senate. If the House passed the amendment, “we’ll get to see them do it again in two years,” Stewart said, garnering applause and laughter in the House.

The House ultimately voted 45-34 to approve the amendment. The House ultimately voted 65-18 to pass HB 499.

There was no debate before the House gave final approval to HB 265.

Filed Under: KY General AssemblyState BudgetState Government

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