FRANKFORT — House Speaker Greg Stumbo said Thursday that the Democratic-controlled House would not support the Senate's plan to make cuts to education, but left the door open for possible cuts to other parts of state government.
"We are not going to cut education," Stumbo said. "Not when there is a viable alternative. And there is a viable alternative."
Stumbo's comments came a day after the Republican-controlled Senate passed its version of House Bill 305. That version calls for cuts across state government, including cuts to higher education and K-12 education, to plug a hole in the Medicaid budget.
Now the Democratic-controlled House and the Republican-controlled Senate must hammer out an agreement in the waning days of the legislative session. House leaders said late Thursday that they expected negotiations on the budget to begin Friday and were hoping that an agreement could be reached either Friday or Monday.
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Under the Senate proposal, cuts in the first year would amount to 0.525 percent of spending and cuts in the second year would be about 2.26 percent of spending. Higher education and K-12 education would not be cut in the first year but would be cut in the second. However, the cut to K-12 education would be about 1.33 percent.
The House's version of House Bill 305 follows Gov. Steve Beshear's proposed budget fix, which included moving $166.5 million from the next fiscal year to the current fiscal year in the Medicaid budget. Beshear has said that he can generate enough savings in the Medicaid program to replace the $166.5 million in the second year.
But Republican senators were dubious about Beshear's claims that he could generate savings in the program through managed-care contracts, which the Beshear administration has not yet signed.
Stumbo said Thursday that he thought Beshear should be given the opportunity to manage the state budget, citing Beshear's track record.
"The evidence shows that over the past three years, the governor has been able to cut over $1 billion from government," Stumbo said. "So he has a pretty good track record."
Stumbo said a possible compromise would be to first allow Beshear to manage the state budget through savings. If he can't meet savings targets, then "we might outline some cuts that could be made."
But the legislature shouldn't tie Beshear's hands so he can't manage state government, Stumbo said.
Deeper cuts later?
Republican legislators said they feared that if the legislature does not enact cuts now, even deeper cuts would be required to correct the state's finances come January 2012.
Senate President David Williams, R-Burkesville, said Wednesday during floor debate on House Bill 305 that the hole in state government could grow to $300 million to $400 million if Beshear can't generate the savings.
Senate Majority Leader Robert Stivers, R-Manchester, said Thursday that the Senate's proposal is more fiscally responsible but that the Senate is open to hearing alternative proposals.
"If anybody has a good idea that we believe is adequate and can be verified, it is our obligation to look at it," Stivers said.
Beshear said Thursday that his staff is still examining the Senate budget proposal and may announce some alternatives Friday. But Beshear said he is confident that managed care plans will generate savings in the federal-state program for the poor and disabled.
That program has ballooned as the economy has tanked. Its expenditures are near $6 billion, and it serves more than 800,000 people.
"We are extremely confident, based upon the experience of other states and based upon some of our own experiences, that we can save more than enough money in the second year to offset any money that we moved up to the first year," Beshear said.
Other budget concerns
Meanwhile, there was growing concern that possible cuts to key programs — including public safety and the judiciary — could mean layoffs of prosecutors and public defenders. Beshear signed House Bill 463, an overhaul of the state's criminal code on Thursday. The measure is expected to generate millions of dollars in savings for state government in coming years.
But Kentucky Supreme Court Chief Justice John D. Minton, in a letter to legislative leaders, said that implementing some of the changes in that bill, including adding more pretrial officers and upgrading computer systems, would be difficult if the judiciary has to absorb yet another round of cuts.
If the Senate's proposal is enacted, the judicial branch will have undergone a 28.5 percent reduction over the past three years.
"I respectfully submit that while the judicial branch is willing to share in the state's collective sacrifice, the court system cannot absorb further cuts without severely curtailing our daily operations and preventing our ability to implement penal code reform," Minton said.
The judicial branch is the only branch in state government that has laid off employees. It has cut 235 employees through layoffs and attrition over the past several years.
The state's prosecutors and public defenders also would be hard hit by the proposed cuts, said Ed Monahan, of the Department of Public Advocacy, which oversees the state's 300 public defenders.
"We are on the edge right now of not being able to handle our case loads," Monahan said Thursday. The additional cuts in fiscal year 2012 would result in a total $1.7 million cut to the agency.
Stivers said he understands that cuts are tough but the state has to live within its means.