Lawmakers Give Final Passage To Lean State Budget

Mar 30, 2012

FRANKFORT, Ky.  -- A slow economic rebound led to a lean state budget for Kentucky, one that forces sharp cuts on most government agencies, leaves employees without pay raises again, and erases a planned cost-of-living increase from the monthly pension checks of retirees.

The House voted 81-7 late Friday for final passage of the bare-bones two-year, $19 billion state budget that now goes to Gov. Steve Beshear to be signed into law.

"As I said in January, this is the most difficult budget I have ever crafted, and it will be the most difficult for our state to endure," Beshear said in a statement. "However, I am pleased that the state legislature has kept my budget proposal largely intact - a signal that our management decisions and investments in the health and education of Kentuckians are wise ones."

House Speaker Greg Stumbo said it could have been worse, considering Kentucky has avoided the massive layoffs of government employees that some other states have experienced.

"It was the budget that we could agree upon," Stumbo said. "Does that mean that everyone liked it? No."

The measure calls for 8.4 percent cuts to most government agencies and programs because of lingering financial woes brought on by the recession that hit Kentucky in 2008. Those cuts will account for nearly $300 million in savings.

Under the budget, more than 30,000 government workers will go without pay raises and some 200,000 retirees won't get cost-of-living increases in their monthly pension checks.

"The bottom line is we've got to figure out a way to try to help our state workers," said House Republican Floor Leader Jeff Hoover of Jamestown. "This will be the second budget now with no raises, but, in reality, many of us in the private sector have had no raises, either. We're all struggling the same. But we're not turning a deaf ear to how important it is to compensate our employees and to give them cost of living adjustments."

The latest budget will be especially difficult for agencies that have already trimmed their budgets by more than 30 percent over the past four years.

Beshear has line-item veto power, but he hasn't said whether there are provisions he intends to strike.

The governor said he was pleased that education, Medicaid and corrections were spared from major cuts.

"Perhaps most importantly, legislators recognized the significance of making key investments in our future," Beshear said. "Legislators approved my plan to reduce crushing social worker caseloads by hiring more staff in the area of child abuse and neglect, and funded my proposal to provide colon cancer screenings to some 4,000 uninsured Kentuckians."

The Kentucky Senate had voted 36-1 earlier Friday for the budget proposal.

Senate Democratic Floor Leader R.J. Palmer II praised the proposed budget, saying it "protects state priorities" while "shrinking state government."

In tough financial times, more than 30,000 government workers will go without pay raises and some 200,000 retirees won't get even meager cost-of-living increases.

Three days of intense budget negotiations ended early Thursday morning when legislative leaders exited a conference room with a tentative deal that the Senate accepted with little discussion.

Lawmakers still haven't worked out differences in $3.5 million worth of road construction projects for the next two years.

Senate Transportation Committee Chairman Ernie Harris said lawmakers will continue talks over an upcoming legislative break and return for a vote on April 12, the final day of the session.

Harris said substantial differences remain on what projects to fund in fiscal years 2013 and 2014.

"We have had and will have some substantial disagreements, but nothing that anyone's raising their voices over," Harris said. "We're just trying to figure how to get it done so that we can come back with a road plan that satisfies the members."

Lawmakers scraped up funding for some high priority projects, including $2.5 million to begin design work on a proposed renovation of Rupp Arena, home of the University of Kentucky basketball team that will be playing the University of Louisville Saturday in the Final Four of the NCAA Tournament. They also agreed to pony up $3.5 million for improvements at the Kentucky Horse Park north of Lexington.

Lawmakers also passed Beshear's tax amnesty plan that he believes could collect a badly needed $55 million over the next two years. It would be the state's first offer of tax amnesty in a decade, and would forgive some penalties if people come forward and pay their taxes.

"As the economy continues to recover," Beshear said, "we believe the steps we have taken over the past several years to manage our budget wisely will position us well for job growth and economic opportunities."