FRANKFORT — Gov. Steve Beshear couldn't find more money to hire social workers or give teachers a raise, but he was able to scrounge up enough money to finance $1.8 billion worth of construction over the next two years.
About half of the proposed capital construction spending would go to universities, including $205.9 million for a science research building at the University of Kentucky.
Other large Central Kentucky projects include $129 million to replace Eastern State Hospital in Lexington, $65 million for Eastern Kentucky University to construct a science building and $10.8 million to rebuild the Northpoint Training Center near Danville, which was damaged last summer in a riot.
Statewide, Beshear wants to spend $150 million for new K-12 school buildings, $300 million for roads and another $112 million for road work in the Ft. Knox area, which is rapidly expanding because of the addition of 5,000 jobs at the base.
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Beshear justified the construction projects by saying they will "create jobs in the short-term and invest in the long-term future of the commonwealth."
About $1.06 billion of the proposed projects would be paid for out of the General Fund. The debt service on those projects would cost $26 million in the first year of the budget and $96 million in the second year.
The $412 million in proposed road projects would be paid for out of the state Road Fund and an additional $327 million worth of projects, mostly at universities, would be paid for with funds produced by the individual agencies. For example, UK would use housing revenue to fund a $30 million dorm project.
In all, about 7.6 percent of the state's General Fund would go toward paying down the state's debts over the next two years. If there were no new construction projects, 6.1 percent of the General Fund would go to debt service.
Traditionally, lawmakers have tried to cap debt at 6 percent of revenue to avoid the ire of Wall Street analysts who rate the state's debt. A lower rating would mean a costly increase in interest rates for the state.
State Budget Director Mary Lassiter said Tuesday that the state's debt level "is not the most important factor" in rating bonds and noted that financing terms are particularly attractive for states at the moment.