10 key points of agreement as legislators reach budget deal in wee hours

03/30/2014 05:37 AM

Republican Senate President Robert Stivers and Democratic House Speaker Greg Stumbo outlined to reporters the details of the compromise version of the fiscal 2015-2016 budget that negotiators spent more than 17 hours finishing Saturday and Sunday, including 14 hours behind closed doors.

Here are major areas where the Senate and House negotiators had to resolve conflicts in their chambers’ version of the $20 billion two-year spending plan:

1. Projects

RESOLUTION: Finds “middle ground,” as Stivers puts it between the amount of debt proposed by the two versions. But Stivers said the list of projects and total debt is still being finalized.
CONFLICT: Republicans wanted to cut down the amount of debt Kentucky would have on the books over the next two years. They argued it would hamstring future General Assemblies and generations. Democrats wanted to take advantage of low interest rates on bonds and start needed construction projects, which they said would create jobs. Thus, the House version of the budget kept in tact the list of nearly $2 billion in projects the governor suggested with a total debt-to-revenue ratio of 7.05 percent. The Senate Republicans had cut many of the projects – down to $553 million — to a debt ratio of 6.26 percent.

2. Taxes

RESOLUTION: Not completely resolved. Lawmakers are returning Sunday afternoon to continue debating the revenue measure. They did agree to a flat 1.5 percent tax on proceeds from instant racing receipts, which is what the Senate proposed.
CONFLICT: The House version included an increase of up to 3.5 percent in receipts on instant racing taxes. But what to do with the gas tax was the biggest question. At stake is $45 million extra in revenue for road construction in 2015 and more than $60 million in 2016. The governor and the Democratic-controlled House wanted to return the tax on a gallon of gasoline to 2013 levels. The tax is tied to the average wholesale price of gasoline. It already is 1.5 cents lower than it was last year and is scheduled to drop April 1 by .7 cents per gallon. Senate Republicans have viewed a return to last year’s level as a tax increase.

3. Indigent health care and cancer screening programs

RESOLUTION: Keeps in full funding for cancer screening programs and provides money for the Quality Care Charity Trust in Louisville, although the funding is cobbled together through a combination of sources, including the Necessary Governmental Expense account that is largely used for emergency relief.
CONFLICT: The Senate Republicans argued that if the Affordable Care Act was working as advertised, low income Kentuckians would all be covered by either Medicaid or qualified health plans through the health exchanges so indigent health programs, like the Quality Charity Care Trust Fund in Louisville would be redundant. House Democrats countered that some Kentuckians would fall through the cracks even with the Affordable Care Act, therefore $20,000 for ovarian cancer screening were still needed.

4. Public universities

RESOLUTION: Essentially splitting the differences between the two budget bills, the compromise calls for a 1.5 percent cut to universities in the first year of the biennium and flat-line funding in the second year. (That restores about 1 percent funding from the governor’s recommendation). Universities also would be able to build their top priority construction project.
CONFLICT: The House version went along with the governor’s suggestion to cut universities’ operating funds by 2.5 percent but get new building projects. The Senate took out most higher education projects but restored the operating funds.

5. Kentucky Community and Technical College System

RESOLUTION: A 1.5 percent cut in the first year of the biennium and flat-line funding for the second year. Each campus can build a project and would have to make payments on it using fees collected only from students who attend that campus (as opposed to the KCTCS system pooling the fee income).
CONFLICT: The Senate version kept the 2.5 percent operating costs. And it allowed each of the 16 campuses to sell bonds for one building project on each campus – but with a stipulation. The Senate Republicans wanted to require that fees paid by a student to cover a project could only be used at the campus the student attends. The fee income couldn’t be shared across the system, as the governor and KCTCS leaders wanted.

6. Teacher raises and school technology

RESOLUTION: It will require teacher raises of 1 percent in 2015 and 2 percent in 2016 (which is flipped from the House and Senate versions). The language does allow for flexibility for cash-strapped districts, Stumbo said. For technology, the measure adopts the Senate’s proposal to spend money on bandwidth rather than bonding money for computers.
CONFLICT: The House version required teacher raises, the Senate version encouraged but didn’t mandate them. The House version included the sale of a $50 million bond to be paid back over 10 years to pay for education. The Senate version doesn’t approve the bond sale but uses the money for the annual payments to buy bandwidth for schools.

7. Preschool funding

RESOLUTION: Flat-lines funding at about $73 million in 2015 but expands funding to $91 million in 2016 to cover pay for children from families who earn less than 160 percent of the poverty rate.
CONFLICT: The House version of the budget adopted the governor’s recommendation to increase preschool funding to be able to pay for children from homes whose parents bring in salaries of up to 160 percent of the federal poverty rate. The Senate version cut back that level.

8. Childcare stipend

RESOLUTION: Adopts the Senate proposal to raise the threshold back up to cover families earning 125 percent of the poverty rate in 2015 and those earning less than 150 percent of the poverty rate in 2016.
CONFLICT: Gov. Steve Beshear and the House Democrats wanted to undo the cuts he made last year to the program that helps low-income parents afford daycare so they can work or attend college. While the House version of the budget took the program back up to cover those making 150 percent of the poverty rate, the Senate version did that more gradually, raising the threshold to 125 percent of poverty rate in 2015 and 150 percent in 2016.

9. Mine safety

RESOLUTION: Restored the required number of mine inspections to four and split the difference in funding for the Office of Mine Safety between the House and Senate versions.
CONFLICT: The Senate version of the budget cut the number of required inspections in half and reduced the amount of coal severance tax money that went back to the state’s Office of Mine Safety. The agency said it would force layoffs of 60 of the 145 employees, including mine inspectors.

10. Structural imbalance

RESOLUTION: Stivers said the final compromise greatly reduced the amount of money scooped out of various funds and accounts, mostly by slashing the House version’s amount of transferred money from each account in half.
CONFLICT: The House version of the budget relied more heavily on one-time monies, such as fund transfers and “sweeps” from accounts like the Underground Storage Tank Cleanup fund. The one-time monies and transfers totaled $377 million in the House version. The Senate version did none of that. Sen. Bob Leeper, the Senate budget chairman, said throughout the negotiations that one-time funds and the structural imbalance put Kentucky on shaky financial ground.

*Other issues: *

- includes about $1 million for the Kentucky State Police to hire back 15 retired troopers to help bolster the number of troopers on the road, which has shrunk to a 30-year low. – reduced the amount of bonded money for the construction of more “dark fiber” broadband lines to regions of the state because not all infrastructure improvements and right of way purchases have been made to lay the lines in some regions, particularly western Kentucky, Stivers said. – Includes a pilot program for a geriatric halfway house to transfer ill and elderly non-violent prisoners with parole board approval.


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