FRANKFORT — Kentucky's yearly law-making session began at noon Tuesday with a spotlight on three issues that will likely dominate much of the 60-workday gathering: expanded gambling, budget woes and domestic violence.
House Speaker Greg Stumbo, D-Prestonsburg, said he will file a bill to allow slot machines at racetracks early in the session — possibly Wednesday — that would raise more than $400 million to build schools and provide a tax break for the poor.
However, the measure would not help plug a potential $1.5 billion deficit in the next two-year state budget, which lawmakers must approve by April 15.
Senate President David Williams quickly called Stumbo's plan unconstitutional, saying it calls for the lottery commission to take on duties not allowed by the Kentucky Constitution.
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Williams, R-Burkesville, also said he does not think Stumbo could get the bill approved by the Democratic-dominated House. The House passed the measure last summer, but it died in a Senate committee. House membership has changed since then, and some members who voted for the bill face re-election this year.
Stumbo, who contends his bill would generate between $400 million and $500 million a year for the state, said he will not bring his bill to the House floor for a vote until he is assured that the full Senate will have an opportunity to vote on it.
"I don't know why we would want to do that if we know that it would just die in the Senate" Stumbo said.
Stumbo said he hopes Democratic Gov. Steve Beshear will not include potential revenue generated by the gambling bill in his budget proposal, which Beshear will present to lawmakers on Jan. 19. "I think that he recognizes that it would not be well received," Stumbo said.
Including gambling revenue in his budget would allow Beshear to highlight the money's potential uses and force lawmakers to publicly slash those proposals from the budget. Beshear spokeswoman Kerri Richardson said it's too early to say if the governor will include gambling revenue in his budget proposal.
Republican Sen. Damon Thayer of Georgetown, who has filed a constitutional amendment to allow slots in the seven counties with racetracks, agreed that it "would be a big mistake" for the governor to count on gambling proceeds in his budget proposal.
Still, Beshear and lawmakers must somehow come up with an extra $890 million over the next two years if they want to continue spending $9.1 billion a year from the General Fund. In addition, Beshear has warned that lawmakers will need $600 million more to fund new obligations, such as debt payments and the state's swelling Medicaid program.
Stumbo said lawmakers should consider overhauling the state's tax system and reviewing costly tax exemptions as they look for ways to raise revenue and cut costs.
The Herald-Leader reported earlier this week that the state will forgo about $2.4 billion in various sales tax exemptions this fiscal year. For example, tax breaks to encourage utility companies and manufacturers to install now-mandatory pollution control equipment are projected to cost the state $113 million over the next three years.
Stumbo said many lawmakers have a newfound interest in reviewing tax exemptions and retooling the tax code, "which I think is encouraging."
Meanwhile, House Minority Leader Jeff Hoover, R-Jamestown, said Republican House members will not support any broad-based tax increase and are studying ways to make cuts to state government less painful.
"One of our top priorities is no more cuts to education," Hoover said.
In the Senate, Williams repeated Tuesday his doubts about Beshear's budget predictions and called the situation manageable.
"I really don't accept the numbers," he said.
Senate Minority Leader Ed Worley, D-Richmond, said Senate Democrats are "not for allowing the state budget to deteriorate to the point that teachers and social workers are laid off.
"We believe that everything in this budget crisis is a viable option to consider, and we believe expanded gambling is one of a number of things that should be discussed. That includes a discussion on true tax reform to make our system more fair and broad-based."
Legislative leaders also are pondering whether the next two-year budget should include new building projects.
The state already is spending 6.43 percent of its revenue to pay down existing debt. Raising that percentage much beyond the traditional 6 percent cap could bring a costly downgrade from bond-rating agencies on Wall Street.
Still, Stumbo said low interest rates on bonds and a cost-conscious construction industry make this a good time to build. He noted that several state and university projects have been completed under budget in the past year.
However, Stumbo said that he doubts that either chamber would support a "spending spree" of any kind.
Williams said he understands Stumbo's argument but said he would advise the governor to issue bonds only for necessary projects. He said some school districts, such as Robertson County, need immediate help in school construction.
Although much of the talk in Frankfort on Tuesday was about the state budget, a group of advocates, prosecutors and law enforcement officials rallied just before the session began for changes to the state's domestic violence laws.
The group pledged support for a bill sponsored by Stumbo and named after Amanda Ross, who was allegedly killed by her former fiancé in September outside her Lexington home.
The bill would give judges the option of ordering a tracking device for the most dangerous people accused of stalking or trying to harm a loved one.
Sen. Kathy Stein, D-Lexington, said she thought the bill would pass despite the budget crisis. "One of the chief things that we are required to do is use our tax dollars for public safety," Stein said.