House budget proposal: By the debt numbers
05/25/2010 03:19 PM
Kentucky’s debt level was a major point of contention when House Democrats and Senate Republicans failed to work out a deal this spring on the state’s more than $17 billion spending plan for 2011 and 2012.
The House version sought to sell bonds to cover more than $1 billion worth of construction projects, which Democratic leaders said would create jobs. Senate leaders took a hard line against borrowing, however. And that was one of the major squabbles that sunk legislators’ chances of passing a budget bill by April 15 when the General Assembly session expired.
The newly-introduced House budget bill version 2.0 contains less debt:
- $437 million in new general fund debt
- $122.5 million in road fund bonds, mostly for roads around Fort Knox, which is expanding.
- $390.3 million in university buildings covered by university funds
- $129 million in other bonds for which interest will be paid by agencies’ income
TOTAL: $956 million
Interest and principal payments on that would make up 6.88 percent of the state’s estimated revenue — the same amount suggested by the Senate in April. That’s down from the House’s initial proposal in March of 7.66 percent and from the 7.8 percent in the original budget draft Gov. Steve Beshear unveiled in January.
But Rep. Scott Brinkman, R-Louisville, pointed out that Kentucky borrowed more money that isn’t counted in that total. This spring, the General Assembly approved House Bill 540, which allowed the state to borrow $450 million to pay back into the state teachers’ retirement fund.
Including that $450 million, the total debt level would be about 7.2 percent.
Other key issues in the budget:
- Unlike the original House version, this bill doesn’t cut two school days from the calendar. But school districts will have to pick up the cost of one of them.
- Higher education will be cut 1.4 percent in 2011 and another 1 percent in 2012 (which would be a total loss of 2.4 percent in the second year from university funding levels in this fiscal year.)
For other details, read Tuesday’s coverage by the Herald-Leader and Courier-Journal.
- Ryan Alessi
Below the Fold
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