Rating:

3.0 (3 votes)

FRANKFORT AP) - The Kentucky House passed a $17.5 billion two-year state budget plan Wednesday that divided lawmakers along mostly party lines in a debate focusing on its use of revenue enhancements and a jobs creation component that would pile up more state debt.

The spending blueprint for the budget cycle beginning July 1 features about $2.2 billion in borrowing for a flurry of projects to build schools, roads and waterlines.

Supporters said state government should step up to help stimulate job creation at a time of anemic job growth by the private sector - reflected by the state's high unemployment rate.

"It's not our responsibility to come down and say that because people are hurting ... we just need to hunker down and don't do anything to change this," said Rep. Harry Moberly, D-Richmond, predicting that ratcheting up construction projects could produce 25,000 jobs.

House Minority Floor Leader Jeff Hoover, a Jamestown Republican, said the proposed budget's overriding theme was the increased debt level that taxpayers would shoulder for years.

"It should make every one of us sick in the pit of our stomach of what we're doing for our future and our kids and grandkids with this debt," Hoover said.

After more than three hours of debate, House Democrats voted in lockstep for the bill with one exception - Jim Wayne of Louisville. Republicans were united against it other than Rep. Jim Stewart of Flat Lick. Two GOP members didn't vote.

The proposal relies on budget cuts and other steps, plus more than $300 million in revenue enhancements, to plug a more than $1 billion shortfall looming over the next budget.

The measure passed on a 65-33 vote. It now goes to the Republican-led Senate, which will put its imprint on the plan.

Under the House-passed plan, public universities and colleges would take a 1 1/2 percent spending cut in the first year and a 1 percent reduction in the second year.

The basic funding formula for public elementary and secondary schools was spared, but the proposal would cut two instructional days for those schools in a move projected to save about $36 million each year. School districts could preserve the days but would pick up the tab.

The plan calls for increased use of parole for certain nonviolent offenders, with a goal of decreasing the state's prison population by 1,000. The projected savings is about $15 million. The measure calls for use of home incarceration as among the alternatives.

State employees would go without pay raises. The plan would revise state health insurance offerings to save a projected $150 million in the two years. It calls for reductions in government contracts and non-merit positions across state government.

Also included was extra funding for adult and family protection services, much of which would go to improve safety for social workers.

Social workers have called on lawmakers to fully fund the "Boni Bill," which passed following the murder of social worker Boni Frederick during a welfare check in 2006.

The House spending plan relies on a package of revenue enhancements aimed at generating an extra $371 million in the coming two years to help balance the next budget.

The proposed tax changes include temporarily suspending tax write-offs for businesses reporting losses and accelerating collection of sales taxes. It would not raise tax rates.

Opponents said the suspension of the tax write-off amounted to a tax increase. The bill's supporters said businesses could still eventually claim those losses for tax purposes.

Republican Rep. Brad Montell of Shelbyville said the plan relies on too much spending, taxing and borrowing.
"In these times, we need a budget that is prudent - very little borrowing, very few general fund projects, living within our means, finding efficiencies in government and no new taxes," Montell said. "That's what our people expect, and that's what we should deliver."

Rep. Keith Hall, D-Phelps, said he was willing to stake his political future on the bill.

He said it seeks to preserve Medicaid programs while bringing construction jobs to districts like his in eastern Kentucky. Medicaid is the state-federal health insurance program that covers about 790,000 low-income and disabled Kentuckians.

"I didn't come to Frankfort to lay off people. ... I didn't come to Frankfort to cut people off Medicaid. I came here to help," Hall said.

The bill's supporters pointed to a state report last week showing that Kentucky's annual unemployment rate for 2009 jumped to a 26-year high of 10.5 percent.

Republicans complained that GOP-held districts were left off the list of school construction projects, which they said was punishment for their opposition to the revenue enhancements. The proposal seeks to replace some of the state's oldest school buildings.

In another development, the state budget office said Wednesday that Kentucky's general fund receipts dropped 0.6 percent in February compared with the previous year.

It said total revenues for the month were $525 million - $3.4 million less than state government took in during the same month in 2009.

Receipts have now fallen 4 percent for the first eight months of the fiscal year, it said.

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