The Republican-controlled Senate did not include $65 million for the renovation of Rupp Arena and expansion of an attached convention center in its budget.
The Senate voted 25-2 on Monday approved a two-year, $20 billion budget. Eleven Democrats opted to "pass" on the bill rather than vote it up or down.
Mayor Jim Gray said he will continue to fight for funding for the home of University of Kentucky men's basketball as the House and Senate begin negotiations on a compromise budget, probably this week.
"We are going to work as hard in the corridors of Frankfort as the Cats work on the basketball court because this is an idea whose time has come," Gray said. "This project will announce to the nation that Kentucky is open for business. It will create good jobs for the long term — jobs grown through elevating, amplifying, lifting up the Kentucky brand, the Lexington brand and the UK brand."
Gov. Steve Beshear and the Democratic-controlled House included $65 million for the project.
The House passed its $20.3 billion, two-year budget earlier this month. In addition to Rupp Arena, the Senate yanked many capital projects from the House budget. The House and Senate will probably head to a conference committee to iron out differences between the two plans. But they must work quickly.
The General Assembly must pass a budget by early next week or risk not being able to override a governor's veto.
Senate President Robert Stivers, R-Manchester, said the Senate cut the bond money for Rupp Arena from the budget because the project doesn't seem ready to move during the next two years.
"It's not whether you're for it or against it," Stivers said. "It's whether you're ready to go. It's whether you have a plan that's been prepared and vetted."
Sen. Alice Forgy Kerr, R-Lexington, voted for the Senate's budget. She said Monday that she thought some of the funding for the Rupp project might be restored during negotiations between the two chambers.
Sen. Reginald Thomas, D-Lexington, opted not to vote on the budget, saying he needed more time to study the lengthy document. Thomas said he was disappointed that money for Rupp Arena was nixed in the Senate version. The renovation of the convention center and Rupp will spur economic development, he said.
"That project will provide over 3,000 jobs," Thomas said.
House Speaker Greg Stumbo, D-Prestonsburg, said late Monday that it was a "mistake" for the Senate not to include funding for the Rupp project.
The state gave $2.5 million of the $5.5 million spent on the design phase of the project. The remaining money came from the city and from tourism dollars.
The total project costs upwards of $328 million — $310 million for construction costs and $18 million to pay off the remaining bill for a 2004 convention center expansion.
Gray has not given details about the project's financial plan. But he has said that an increase in the hotel/motel tax is "critical" for the future of the project.
On Friday, the House passed HB 544, which would give the city authority to increase the Fayette County hotel/motel tax from 6 percent to 8.5 percent, netting an additional $3.5 million a year. The vote was 52-40.
Most House Republicans voted against the measure, saying it was an election-year tax increase. It has not yet been voted on in the Republican-controlled Senate.
Time is running out for the bill to clear both chambers. Tuesday is the 53rd day of the 60-day legislative session.
Other components of the Rupp financial plan include fan contributions and tax increment financing, which uses taxes generated from a project to pay off loans. Naming rights for the project also are part of the plan. But Rupp will always be part of the name, Gray has emphasized repeatedly.
Beth Musgrave: (859) 231-3205. Twitter: @HLCityhall.