Compromise on state budget sticking points comes together overnight

03/29/2012 02:16 AM

FRANKFORT — House and Senate negotiators finally untied the knots of disagreement in the state budget bill shortly before 3 a.m., agreeing to funding levels for indigent care in Louisville, projects and a mandate to the governor to find $80 million more in efficiencies over the next two years.

The compromise budget didn’t include any additional money to help send more children to preschool, as Gov. Steve Beshear recommended, but it kept in the extra $21 million for hiring more social workers.

The discussions over the $19 billion two-year spending plan brought out several philosophical differences between the Republican Senate leaders and the House Democratic leaders. However, Senate President David Williams, R-Burkesville, said this round of negotiations was the most productive and cordial in which he’s taken part.

Throughout several rounds of counter-offers, House leaders wanted to take $36 million from the underground storage tank fund and bond it to free up that money in cash to be used in this two-year budget. But the Senate leaders said that practice, which has led to a “structural imbalance,” has to stop. They said the state would pay much more than that as it repays the bonds over the next 20 years.

“We do not agree that it’s good public policy, nor are we willing to issue bonds for the purpose” of paying for ongoing programs, said Senate President David Williams, R-Burkesville. The Senate’s position prevailed.

Shortly before 2 a.m. negotiations came down to $12.9 million worth of funding for a half dozen items: $2.4 million for Kentucky Educational Television, $3.5 million for the Lexington downtown development including Rupp Arena, $500,000 in need-based law scholarships in the name of the late Supreme Court Justice William McAnulty, $2 million for the Kentucky State Police, $3.5 million for the Kentucky Horse Park in the current budget year and $1 million for the Louisville Medical Examiner’s office.

Ultimately, they agreed on allowing the governor to use restricted funds to cover the $3.5 million for the Horse Park and allowed for $2.5 million in state funds to be used for the Rupp Arena project. The money just wasn’t there for the other items, said House Speaker Greg Stumbo, D-Prestonsburg.

The House and Senate did compromise on several other major sticking points:

Scholarships for students in coal producing counties

About $19 million in multi-county coal severance tax money will go toward providing scholarships for students in those counties, as laid out in the latest version of House Bill 260.

Students in coal-producing counties in the east and west — currently about 38 counties — would be eligible.

Indigent care in Louisville

The state budget will include a full $21 million for the Quality Charity Care Trust contingent on the city of Louisville kicking in $9 million to cover health care for the poor in Louisville and the surrounding area. For instance, if the city pays just $7 million of its share, the state would get $2 million back.

Rep. Larry Clark, D-Louisville, sent a letter signed by Jefferson County legislators to Louisville Mayor Greg Fischer urging him to pay the full $9 million.

Efficiencies to the executive branch

The Senate wanted the governor to shave $40 million in the first year and $58 million in the second year by reducing government contracts. The House counter offer called for $25 million each year in efficiencies and didn’t limit the governor to finding those savings just through contracts.

In the end, they settled on finding $40 million in efficiencies each of the next two years.

Coal severance tax projects

The Senate leaders wanted to ensure projects funded by coal severance taxes for counties had long-term economic effects, such as water and sewer projects. But the House wanted to give discretion to state representatives and senators to choose to spend that tax money how they see fit, as past budgets have allowed.

In the end, the Senate agreed.

“We’re willing to do that. We don’t think the single county money is being spent as efficiently as it could be,” Williams said. But he acknowledged that allowing the lawmakers to have discretion could help ensure votes in both chambers.

Other related bills

Leaders from both chambers also agreed in principle to pass several other key bills that have an effect on the budget, including House Bill 260 that would create scholarships for students in coal-producing counties, House Bill 50 related to debt payments and House Bill 499 that creates a tax amnesty program to bring in payments from delinquent tax filers without penalizing them.

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