FRANKFORT — The Kentucky House expects to approve a two-year state budget next week that largely reflects Gov. Steve Beshear's proposal from January, including spending cuts for higher education, House Speaker Greg Stumbo said Friday.
Without new revenue sources, there's little flexibility to adjust Beshear's $20.3 billion, two-year spending plan, Stumbo told reporters on the 41st day of the 60-workday legislative session. That means extra money for K-12 schools but additional cuts for nearly everything else, including the operational budgets of higher education, although state colleges and universities will get bonded debt for new campus buildings they want, Stumbo said.
House leaders "have desperately tried" to find money to restore higher education funding, which will have been cut 17 percent since 2008, but "unfortunately, there is not a way," said Stumbo, D-Prestonsburg.
"Every tuition hike, one can argue, is a tax increase on students," Stumbo said. "But it's really just the cost of doing business. I'm sorry it has to be that way."
The House budget committee expects to vote on the bill Tuesday, followed by a floor vote Wednesday in the Democratic-led House, Stumbo said. Then the bill goes to the Republican-led Senate.
Senate President Robert Stivers said Friday that his chamber is eager to get the budget and, like the House, it doesn't know of any new revenue sources.
Asked about higher education budget cuts, Stivers said he questions the way colleges and universities balance their books.
"I spoke with several of the (university) presidents, and they generally say their fixed costs rise at the rate of 3 to 4 percent a year while their tuitions increase 8, 9, 10, 11, sometime as high as 13 percent a year," Stivers said. "There's really no correlation there. I'm starting to wonder what is the differential."
There will be a few new items in the House version of the budget, Stumbo said, including:
■ Language in the revenue bill that would tax instant racing. Last month, the Kentucky Supreme Court ruled that the Kentucky Horse Racing Commission has the legal authority to regulate instant racing, but that the pari-mutuel tax, which applies only to live racing, cannot be used to collect state revenues from the games. With instant racing, bettors place wagers on previously run horse races that are presented on electronic gambling machines.
■ A "fix" for part of Beshear's budget plan that would have let county property valuation administrators charge new fees to special taxing districts, including libraries, fire departments and health departments. The fees could amount to millions of dollars a year, prompting the taxing districts to protest that state government is shifting its budget woes onto them.
Stivers said he wants to see how the House resolves the issue.
"Here's one thing I've heard they are going to do," Stivers said. "They moved $30 million around to take care of the PVAs. I can't say if that is true. We have not seen a document. I wonder where that $30 million got moved from. That would be the first thing we would want to know."
■ Possibly some reductions in the $370 million of "fund transfers" that Beshear proposed, which involves taking money from the special-purpose accounts of various state agencies and depositing it into the general fund.
In a few instances, Stumbo said, the fund transfers essentially would drain the accounts and make it impossible for them to achieve their goals. He cited as an example the Kentucky Aviation Economic Development Fund, which is money from a tax on jet fuel that goes to build and maintain public airports. Beshear's plan called for taking nearly $12 million from that fund.
The brightest spot in the House budget will be K-12 schools, Stumbo said. In Beshear's plan, the state's main school funding formula, known as SEEK, would go up by $189 million over two years, largely for long-awaited raises for teachers and other school employees of 2 percent in 2015 and 1 percent in 2016. An additional $95 million would be spent in the biennium to restore funding for other education needs, including textbooks, teacher training, after-school services and school safety.
"Next week, you'll see some shifting of some dollars. But along with that you'll see real flexibility for the school districts in how they get through these tough times," said state Rep. Kelly Flood, D-Lexington, chairwoman of the House budget subcommittee that oversees K-12 schools.
"In particular, in the area of school technology, I am hopeful that we are taking two strides forward in preparing ourselves for the technology that allows our students to take off in content online, and that's really something we've been needing to do," Flood said.