Ky House Passes $19 Billion Budget

FRANKFORT, Ky. (AP) - The Kentucky House has given final passage to a $19 billion, two-year budget, which now goes to Gov. Steve Beshear.

The Senate passed the measure on a 35-3 vote, as lawmakers were pushing to meet a self-imposed midnight deadline to get the spending blueprint to Gov. Steve Beshear for consideration. House lawmakers were gearing up for a vote later Wednesday night.

"We're going to pass it," House Speaker Jody Richards, D-Bowling Green, promised as he left a two-hour closed budget meeting with his fellow Democrats. "We're going to pass this bill."

House and Senate budgeteers agreed on a final budget proposal Tuesday morning, following eight long days of tedious negotiations that started in full view of the public but ended with a 21-hour session behind closed doors.

Budget negotiators were racing to craft a budget to fund state government through the next two years, a span that economic forecasters have predicted will be grim for state coffers. Lawmakers were faced with a projected $900 million revenue shortfall, on top of a $434 million problem in the current fiscal year ending June 30.

Lawmakers wanted to pass the budget by Wednesday to preserve their authority to override any possible vetoes by Gov. Steve Beshear. By law, the legislature must adjourn by April 15.

Beshear had proposed an austere budget that included 12 percent cuts to education and government agencies. Beshear pushed for new state revenue through two different proposals that stalled during the General Assembly's 2008 regular session: gambling and a higher tax on cigarettes.

Beshear, a Democrat, wanted lawmakers to push through a proposed constitutional amendment to legalize casinos and eventually collect more than $500 in annual state revenue. The governor also proposed raising the state's tax on cigarettes by 70 cents a pack.

Neither plan gained traction.

The Democrat-led House, however, proposed raising the cigarette tax by a quarter and imposing the state's sales tax on various services. Lawmakers in the GOP-controlled Senate balked at raising taxes and pushed to grab about $110 million in extra money from the Kentucky Lottery.

Lawmakers instead agreed on a proposal to raise more than $300 million in new revenue over the next two years through various sources including a restructuring of some state debt, $14 million from the lottery and capitalizing on an anticipated flood of retiring state employees.

More than $30 million would be left in a "rainy day fund" for the state.

Among other things, a person convicted of nonviolent and non-sexual felonies could be released to home incarceration if he or she had less than six months left to serve.

The agreed budget calls for 3 percent cuts to public universities and would give public school teachers and state employees pay raises of 1 percent in each of the next two fiscal years. It would also put $60 million into Bucks for Brains, a program that provides state matching money for private donations to universities for research and other spending.

The measure would authorize funding to keep proposed bridges in Louisville on track and included language to allow for tolls.

Still, lawmakers have had mixed reactions as details have emerged regarding the proposed budget.

Richards said lawmakers would work on a plan to authorize about $150 million for water and sewers projects between now and the end of the session.

House Appropriations and Revenue chairman Harry Moberly, a Richmond Democrat who helped craft the proposal, said he did not agree with the negotiated version.

"I'm going to vote against it," Moberly told reporters.

Rep. Derrick Graham, D-Frankfort, said he disagreed with the crafting of the plan.

"This whole thing is dysfunctional," Graham said. "Somehow or another things have got to give. It's got to be a more open process."

Elements of the Kentucky General Assembly's agreed two-year, $19 billion state budget proposal:

- Limits public university funding cuts to 3 percent.

- $100 million for base realignment projects associated with Fort Knox expansion.

- $60 million for Bucks for Brains program, which matches public money with private donations to attract top researchers to Kentucky universities.

- Authorizes $200 million for Kentucky Infrastructure Authority bond pool for municipalities to apply for low-interest loans.

- $405 million authorized for university projects through bonding.

- 1 percent raises for public school teachers and employees and state workers in each of next two fiscal years.

- $10 million in bonds authorized for Kentucky Agriculture Heritage Center.

- $3 million for new National Guard Armory in Northern Kentucky.

- $2 million for Operation UNITE, an eastern Kentucky anti-illegal drug task force.

- Keeps proposed Louisville bridges project on track, allows for tolls.

- Estimates $31 million in savings through a home incarceration program for nonviolent, nonsexual felony offenders with less than six months to serve.

- Authorizes funding for reconstruction of Eastern State Hospital.

- $10.3 million in road funds for Kentucky Horse Park for FEI World Equestrian Championships.

- $6 million authorized for mine safety.

- $600,000 for parking infrastructure for the 2008 Ryder Cup.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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