TheTimesTribune.com, Corbin, KY

State News

March 25, 2014

Senate sets budget with ‘wiggle room’

CORBIN — By Ronnie Ellis / CNHI News Service

It was no surprise the Republican-controlled Kentucky state Senate altered the $20 billion, two-year state budget approved by the Democratic-controlled House, but there may have been a few who were surprised by how little it was changed.

“It’s hard to react to something we haven’t seen in total,” said House Speaker Greg Stumbo, D-Prestonsburg, when asked his reaction to a Senate plan that removed the majority of bond-funded capital projects proposed by Gov. Steve Beshear and approved by the House.

“But I think there’s enough wiggle room on both sides (to work out a compromise),” Stumbo said, adding he thinks the legislature can agree on a budget before the 2014 General Assembly adjourns.

The Senate scaled back bond projects from the $1.07 billion in the House budget to $265 million. It also scaled back agency bonds – those which are paid for by universities using their own revenue sources – from $974 million to $270 million.

But in exchange, the Senate version restores a 2.5 percent cut in universities’ operating funds.

“We thought that was important to let the universities get their operating money up and hopefully reduce the potential for significant tuition increases,” said Senate budget chairman Bob Leeper, I-Paducah.

Leeper said the Senate wanted to lower the state’s debt ratio (6.2 percent versus the House plan’s 7.05 percent) and the structural imbalance in the budget (using one-time funds to pay for recurring expenses). The Senate plan makes fewer fund transfers from restricted funds to the General Fund.

Community colleges get to keep their construction projects which are to be paid for with 75 percent of the cost from their own revenue and 25 percent in local community fundraising. The colleges have said they’ll pay their part by adding a $4 student activity fee per credit hour in the first year and doubling it to $8 in the second.

But the Senate plan adds language with says money raised from student fees at one campus can only be used for construction at that campus and if any projects come in under budget, the difference is to be returned in reduced fees to the students on that campus.

The Senate budget also includes language prohibiting the use of General  Fund dollars to finance the Kentucky implementation of the Affordable Care Act. Gov. Steve Beshear has said no General Fund dollars are needed. But there was no effort by the Senate to reverse Beshear’s implementation of the law.

The Senate also kept the increase of $189 million in SEEK funding, the basic funding formula for elementary and secondary education. The House plan mandated salary increases of 2 percent in the first year and 1 percent in the second from that increase, but the Senate only “encourages” the raises.

Teacher pay raises aren’t as simple as increasing everyone’s salary by the same percentage because teachers’ salaries are established according to their level of post-graduate education and years of service. A teacher might move into a higher pay cell between this and next school year and the 2 percent increase would be applied to the new, higher salary – meaning more than  2 percent net increase for that particular teacher.

For some smaller districts, that might mean their increase in SEEK won’t be enough to cover all the raises – which is why the Senate removed the mandated levels of raises.

But the Senate kept the raises in the House budget for state employees. Those range from 5 percent in the lowest salary ranges, to 3 percent in the middle and 1 percent at the top in the first year with all employees receiving a 1 percent increase in the second year.

The Senate plan also uses different means to pay for technology upgrades in schools rather than issuing bonds as the House budget would.  It also reduces bonds for expanding broadband services by funding only the projects which are ready to be built.

The plan also uses $23 million in coal severance funds to establish a dual-credit high school at Morehead State University based on the success of the Gatton Academy at Western Kentucky University. That school enrolls gifted high school students who live on Western’s campus and take both high school and college level courses. It has twice been named the number one high school in the country by national publications.

The Senate also restores a 2.5 percent cut to Kentucky State Police and provides funding for 25 “Trooper R’s,” retired troopers who work on annual contracts. Those positions are year-to-year and provide experienced, trained troopers without the training costs.

Democrats complained they’d had no time to review the document and all but three passed. Democrats Julian Carroll, Ray Jones and Dennis Parrett voted for the budget.

Two Republicans voted against the budget: Sara Beth Gregory of Monticello and Carroll Gibson of Leitchfield. Gregory said she “has some concerns which I hope will be worked out in conference committee” between the two chambers but she declined to specify her concerns. Gibson said he disapproved of removing some infrastructure projects which ultimately would have produced revenue for the state.

The House isn’t likely to agree to the changes and each chamber will appoint members to a conference committee to work out a compromise.

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

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