Higher education faces smaller possible cuts

FRANKFORT, Ky. (AP) - Kentucky House leaders crafting a state spending blueprint have spared higher education from the full extent of a proposed budget cut, but public universities and colleges will likely face some reductions, House Speaker Greg Stumbo said Monday.
The budget writers also were looking at some changes to the state's tax code, including suspending some tax exemptions, to help balance the next two-year budget, Stumbo told reporters.
House Democratic leaders were putting the finishing touches Monday on the spending plan that will be presented to rank-and-file members.
Lawmakers are trying to plug a shortfall exceeding $1 billion
for the next two-year state budget cycle, which begins July 1. The shortfall was caused by the deep economic downturn.
"It appears we're probably going to be balanced and maybe with a little bit of change left over," said Stumbo, a Prestonsburg
The House leadership plan appears to rely on a combination of
targeted spending cuts, suspension of some tax loopholes and other
steps as its drafters look for a balanced budget.
Top House budget writers recently proposed cutting 2 percent of
state funding for public universities and colleges in the first
year of the next budget and continuing the reduced funding in the second year. The 2 percent cut would produce yearly savings of
about $20 million.
Gov. Steve Beshear, in his budget plan to lawmakers, proposed no
cuts for postsecondary institutions in the first year and a 2
percent cut in the second year. Beshear proposed restoring the cuts
to higher education if Kentucky gets more stimulus aid from
Stumbo said Monday that the spending plan by House leadership
would restore about $5 million to $6 million of the proposed cuts
for higher education in the first year. Another $10 million or so
would be restored to universities and colleges in the second year,
he said.
"So did they get fully restored? No," Stumbo said. "Did they
get more than what we had originally anticipated? Yes."
Stumbo said House leaders were looking at shifting some bonding
money Beshear included in his budget plan. The House leadership
plan was aimed at "redirecting that money probably into schools
and local projects that are spread out more across the state,"
Stumbo said.
House leaders also are looking at some tax code changes that,
Stumbo said, could be seen as the "first step in tax
modernization." The plan would not raise tax rates, he said.
One proposal would temporarily suspend tax write-offs for
businesses reporting losses. Those businesses would still be able
to eventually claim those losses for tax purposes.
Another proposal under review would lift the state income tax
exemption on the first $80,000 in income for nonmilitary Kentucky
residents working overseas.
Stumbo said the tax changes would not cause hardships for
individuals or businesses.
The Republican-led Senate will get its crack at the spending
plan after the House.
In another development, Stumbo accused a state agency of
stonewalling lawmakers who are seeking details about a Medicaid
managed care program that's been eyed for possible expansion.
Stumbo wrote to Cabinet for Health and Family Services Secretary
Janie Miller demanding details on whether the Passport Health Plan
is cost effective for the state. Passport serves about 165,000
members in Jefferson County - including Louisville - and 15 nearby
"For several weeks now, the cabinet has stonewalled on giving
the House the information it is entitled to have, but that needs to
stop now," Stumbo said in a release.
House leaders have sought information about Passport to
determine whether its extension could reap cost savings elsewhere
in Kentucky.
Miller responded that the cabinet has provided all requested
information in a "timely manner" during the legislative session.
She assured Stumbo he would receive responses to most of his
questions as early as Tuesday, with the other replies coming "as
soon as possible."
Medicaid - the state-federal health insurance program for the
poor and disabled - covers about 790,000 Kentuckians. Its rolls
have risen sharply amid the economic downturn.

(Copyright 2010 by The Associated Press. All Rights Reserved.)

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