Analysis: School construction provision at center of budget confusion

05/28/2010 12:44 PM

Sen. Bob Leeper, a Paducah independent, presided over the Senate budget committee.

(UPDATED) FRANKFORT — Confusion spread across the Capitol Friday as lawmakers scrambled to understand a school construction provision the Senate inserted into the state’s two-year budget on Thursday night.

The new language raised hackles among House Democratic leaders. And Senate Republican leaders quickly moved to defend it but also to prevent negotiations from disintegrating.

So either unintended consequences from the Senate provision or the House’s misinterpretation of it — or a mix of both — appeared to threaten the passage of the $17.1 billion two-year spending bill.

Here’s what’s at issue:

School districts need to pass a five-cent tax per $100 worth of property that would be devoted to paying for the new school buildings. But because property values vary widely across the state, not all districts would be in  position to pay for multi-million-dollar buildings.

The House wanted a way to help all school districts with the most dilapidated schools pay for new buildings. But unable to find a way to allow equal funding opportunities for all of them, the House passed a budget bill Wednesday that tagged about $2.5 million to pay for a study of which ones truly had the greatest need, known as Category 5 schools, and how best to replace those buildings. The state currently tagged 15 new schools to replace those in the worst shape.

The Senate’s budget panel on Thursday night took a new approach.It gives a dual role to a $5.9 million fund that was created to “equalize” that nickel across districts, that vary greatly by property values. That fund seeks to match, in part, the counties income from the nickel.

The new function the Senate assigns that $5.9 million fund to be a back-up account to help any school districts that have gotten voters to approve the nickel property tax to make payments on new buildings. According to the Senate’s language, if the money from schools’ property tax nickel isn’t enough to cover bond payments for the schools, the state would tap that $5.9 million fund to cover the difference.

Those state payments “shall be provided for 20 years or until the bonds are retired, whichever is less,” the Senate’s provision said.

That raises some long-term questions, though, said Rep. Bill Farmer, a Lexington Republican.

“My concern with that is that depending on which school district you’re looking at, they could go out and build a really nice school because the state is carrying the balance on the debt service,” he said.

Rep. Wilson Stone, a Scottsville Democrat and former school board member, said there’s no guarantee the $5.9 million would be enough for all the school districts that would need new schools. And the Senate provision’s back-up plan was to tap into the governor’s $11 million fund for emergencies, known as Necessary Government Expenses.

Rep. Bob Damron, D-Nicholasville, said school districts would have a hard time trying to sell bonds on Wall Street to pay for the schools if part of their funding relied on state money that might not be there in future budgets — or might not be there in this two-year budget if Kentucky spends all of the Necessary Government Expense funds.

“We’ve already got a negative outlook on Wall Street,” Damron said.

Sen. Jimmy Higdon, a Republican from Lebanon, said when the state puts that funding in the budget, it’s making a commitment and will keep it in future budgets.

House Speaker Greg Stumbo, a Prestonsburg Democrat, slammed the Senate’s suggested measure first thing Friday morning. He said his staff’s analysis of it showed that it would give preference to two districts, Paducah Independent and Beechwood Independent in Northern Kentucky, that already had their voters approve the nickel tax. But would somehow leave out Clark County’s school district.

UPDATED 1:17 p.m.: The Senate budget committee reconvened to take up several changes, including one dealing with the school construction section. The panel approved language that clarified that districts that previously levied the five-cent tax for school buildings — Paducah Independent, Beechwood Independent and Clark County — are automatically eligible for the state matching funds.

Still, Stumbo’s comments seemed to annoy Senate President David Williams, a Burkesville Republican.

“We could finish our work if the House would stop and read the documents,” Williams said. “Their insults are rolling off our backs like water. No amount of insults (House Speaker Greg Stumbo) hurls will change that.”

Then the cross-Capitol finger-pointing picked up.

Williams said that the House was overreacting on many of the Senate’s proposals, including the budget amendments, the road plan and the unemployment bill.

And he accused the House of making threats without talking to Senate leadership and said that today shouldn’t be plagued with politics as usual.

“I don’t see any reason for politics to be involved in this,” he said. “If a budget isn’t passed today, it won’t be the Senate’s fault and it won’t be the governor’s fault.”

Stumbo said this blow-up wouldn’t have occurred and the General Assembly would be on pace for a smooth finish if the Senate didn’t make substantive changes to the budget Thursday night.

“I had been assured there would not be these type of changes in the budget bill,” Stumbo said. “It appears the facts have changed.”

— Ryan Alessi and Kenny Colston


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