$28 million in revenue added to state spending plan by House panel; gas-tax increase survives

jcheves@herald-leader.comMarch 11, 2014 

House Speaker Greg Stumbo, left and Kentucky Gov. Steve Beshear

FRANKFORT — The House budget committee on Tuesday approved $20.3 billion, two-year state revenue and spending plans over complaints by some lawmakers who said they didn't get time to read the complex package of four bills.

"We've got 252 pages presented in about eight minutes," said state Rep. Addia Wuchner, R-Florence, as she voted against House Bill 235, the executive branch budget. "I still find issue with the rapid fire with which we're delivered this document, given to review it and be prepared to vote on it."

Through a combination of taxes, fees and other measures, the House plan would raise $27.9 million a year more than Gov. Steve Beshear proposed in January for the state's general fund and restricted funds.

The House plan would put a 2 percent tax on "instant racing," or electronic gambling machines, retroactive to 2011; cap a film industry tax credit at $1 million annually; allow the Kentucky Lottery to advertise that its proceeds go to college scholarships; extend a $1 fee on waste tires; and authorize the state to sell abandoned securities in its possession. Additionally, the House would transfer $6.9 million more than Beshear proposed from the accounts of various agencies into the state's general fund.

Following on Beshear's recommendation, the House plan would increase Kentucky's gas tax 1.5 cents a gallon above the rate in effect for the first quarter of 2014 and prevent it from dropping below that level. Over the next three years, that would raise an estimated $125.7 million for road construction, legislative aides said. The gas tax is now 30.8 cents a gallon, according to the state Transportation Cabinet.

The House also would wade into an ongoing courtroom battle between local taxpayer groups and public libraries over how the libraries can raise taxes. The suits, which originated in Northern Kentucky but since have spread, potentially could drain much of the revenue from 83 percent of the state's 119 public libraries.

By dropping a few sentences into its revenue bill clarifying the libraries' taxing authority retroactive to 1979, the House hopes to end the legal challenges, said House budget chairman Rick Rand, D-Bedford.

The plan to apply retroactive tax language to instant racing and libraries could spell trouble when the bills reach the Republican-led Senate later this week.

"I have a lot of questions about that," said Senate President Robert Stivers, R-Manchester.

The full Democratic-led House is expected to vote on the package Wednesday. State Rep. Stan Lee, R-Lexington, has filed a floor amendment for the executive branch budget that would require Attorney General Jack Conway's office to pay for private lawyers hired to challenge a federal judge's order requiring Kentucky to recognize same-sex marriages from other states. Conway recently declined to pursue an appeal that Beshear wanted in the case.

Beshear raised no public objections Tuesday to revenue or budget changes made by the House.

"Overall, the governor is pleased that the committee agrees with his commitment to supporting education, job creation and better health for our citizens. We will continue to discuss these changes and any others made with both the House and Senate as the bill continues to move through the process," said Beshear spokeswoman Kerry Richardson.

Like Beshear's proposed budget, the House's version would boost the state's basic funding for K-12 schools by $189 million; give state workers their first pay raises in four years; and fully fund the required contributions to the struggling state pension system. To help pay for all of that, it would cut nearly $100 million from much of the rest of state government, including state universities.

The House plan would cut $20 million over two years from additional money that Beshear proposed to purchase textbooks at K-12 schools and extend preschool, but that still leaves $59.4 million over two years in additional money remaining for those items, House members said.

The House plan left intact the $65 million in bonds that Beshear requested for improvements to Rupp Arena and the Lexington Convention Center.

State Rep. Jim Wayne of Louisville was one of the few Democrats on the House committee to criticize the budget and vote against it. The General Assembly has refused to raise the taxes necessary to adequately fund state government, choosing instead to cut services and make college education unaffordable, Wayne said.

"There have been, especially in recent years, budget after budget that continue to erode the great commonwealth of Kentucky — the infrastructure of our state, the personnel of our state, the universities, the school systems," Wayne said. "Ladies and gentlemen, this is a good budget if you accept these limitations. I don't accept these limitations. I think we've failed to unleash our potential as leaders."

John Cheves: (859) 231-3266. Twitter: @BGPolitics. Blog: bluegrasspolitics.bloginky.com

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