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Thursday, March 29, 2012

Kentucky's General ASSembly Agrees On State Budget, Avoids Recurring ANNUAL "Special" Session.

Lawmakers reach deal on state budget shortly before 3 a.m. Thursday
By Beth Musgrave

FRANKFORT — House and Senate leaders agreed on a $19 billion, two-year state budget just before 3 a.m. Thursday, providing $3.5 million to help the Kentucky Horse Park and $2.5 million to start the redevelopment of Rupp Arena.

Lawmakers closed the deal just minutes before a self-imposed deadline, giving legislative staffers enough time to make requested changes in the bill before rank-and-file members must vote on it late Friday.

If there are no hiccups on Thursday or Friday, this will be the first state budget the General Assembly has approved on time in three years. Lawmakers would still have one day in mid April to override any line-item vetoes issued by Gov. Steve Beshear.

“We have white smoke,” said Senate President David Williams, R-Burkesville, shortly after the deal was inked. “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.

The agreed budget also includes money for a scholarship program for kids from the state’s 38 coal-producing counties, helping those 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 — were not that different. Both budgets kept key provisions of Gov. Steve 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 more social workers and $1 million for colon cancer screening.

The Senate plan included less new debt than Beshear and the Democratic House and relied less on one-time money to balance the books.

Much of the discussions late Wednesday night and into Thursday morning focused on debt and projects paid for by coal severance taxes. Portions of the taxes on severed coal go back to the coal-producing counties. The House had placed 68 pages of coal severance projects in the budget.

House Speaker Greg Stumbo, D-Prestonsburg, told Senate leaders during budget negotiations that he did not believe House members would approve the budget without the coal severance projects.

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 paid for using 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.

The House also had proposed using some coal severance money for a college scholarship program to encourage more Eastern Kentucky students to attend college. But the Senate argued that the scholarship program should be open to all 38 coal-producing counties, including those in Western Kentucky. The scholarships could be used at a university or a satellite of a university located in coal-producing counties.

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 allow $3.5 million to go to the Kentucky Horse Park out of funds that Beshear must find in the budget. Beshear had originally proposed giving additional funding to the Horse Park to offset a budget deficit of $3.6 million. However, both sides agreed that the Horse Park would have to provide a business plan to state leaders by June 30.

The two sides also agreed to give the city of Lexington $1.25 million in each year of the two-year budget for the downtown redevelopment project. The House and Beshear had originally budgeted $3.5 million for the project. But Stumbo said the two sides felt that the money should only go toward the renovation of Rupp Arena. The remaining aspects of a downtown revitalization should be paid for by the city, he said.

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 Kentucky Educational Television and $500,000 for a legal scholarship for minority law students.

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.

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