Herald-Leader Editorial

UK, city should show us the numbers

April 1, 2014 

Finishing up a financing plan for a $328 million project like renovating Rupp Arena and the Lexington Convention Center is complicated, and we sure don't want to repeat the bad deal-making and miscalculations that turned Louisville's Yum Center into a heavier financial burden than promised.

But the University of Kentucky and Lexington Mayor Jim Gray just missed an important deadline by not laying out their numbers for the public and lawmakers in time for this waning session of the General Assembly.

Gov. Steve Beshear proposed and the Democratic House approved $65 million in bonds as the state's share in a project that will enliven downtown and make Lexington a stronger magnet for smart young people and new businesses.

But the Republican Senate balked, after receiving what Senate President Robert Stivers, R-Manchester, called "an embargoed copy of the financial plan."

"Before we could even see it," Stivers said, "we had to agree to an embargo and not release it to the public."

Nonetheless, the Senate agreed to make the initial funding on the $65 million bond available as early as next year, as soon as UK signs a lease and the financing plans are identified, secured and available to the public. The Rupp project also got $1.5 million for planning in a budget that was approved by both houses on Monday.

Almost a month ago, UK, which is Rupp's prime tenant, announced that it backs the project and will sign a long-term lease generating new revenue for UK sports.

From all indicators, UK is not demanding the kind of sweetheart deal the University of Louisville got, which put the Yum Center on such shaky financial footing.

Exactly why it's taking so long to firm up the details and publicize the financing plan is unclear.

UK President Eli Capilouto has reasonably insisted that UK's vast backlog of academic building needs should be ahead of Rupp in line for scarce state dollars — a position that's unassailable but gaining no traction in Frankfort.

Kentucky is now in a small minority of states still cutting higher education.

Beshear and the House supported $520 million in bonding for higher education building projects, including a desperately needed science building at UK and replacing the law school, as well as $50 million in Bucks for Brains of which UK would have gotten $33 million.

After the Senate succeeded in paring back borrowing, UK was given authorization to spend $310 million of its own money, raised from patients and students, to build out the hospital and refurbish the student center. The only capital investment the state is making in UK is $35 million for a new law school, to be matched by private fund-raising.

And there's no money for Bucks for Brains, which in the past has helped universities raise money by matching private donations with state funds.

The Senate provided more higher ed operating funding than the House, cutting it just 1.5 percent instead of Beshear's recommended 2.5 percent cut. That spares UK from $3 million in cuts, but UK, which has lost $55 million in state funding in recent years, still will lose an additional $4 million a year.

The Senate was less worried about going into debt for a project in downtown Louisville, agreeing to $56 million in state bonds for the renovation of the Kentucky International Convention Center.

The Senate approved a hotel-tax change for Louisville while refusing to consider Gray's request for a $3.5 million hotel tax increase in Lexington to help pay for the Rupp project.

Considering how much better Louisville appears to have fared than Lexington in this budget, UK and the city might want to try a united front next time.

And, until lawmakers raise enough revenue to meet the state's needs, university officials should follow Gray's lead by crashing future budget negotiations to plead for stronger support for education.

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