Kentucky House and Senate leaders produced a two-year, $21 billion spending plan for the state early Thursday morning that cuts university and college budgets by 4.5 percent over the next two years and provides more than $1 billion to cash-strapped public pension programs.
Most state agencies get cut by 9 percent over the next two years, as Gov. Matt Bevin requested, but the plan funds a new scholarship program for students seeking two-year college degrees and creates a path forward for a long-awaited $250 million expansion of the Lexington Convention Center.
Negotiators finished their work about 2:45 a.m.
House Speaker Greg Stumbo and Senate President Robert Stivers provided broad details of the compromise plan in an early-morning news conference but said they will give detailed information to their respective caucuses and chambers before releasing more information to the public.
“It is an adequate and effective blend of the priorities, I believe, contained in both the governor’s recommendation, the House budget and the Senate budget,” Stumbo said.
They said it provides more than $1 billion for state public pension programs, the most ever assigned to them. The programs have an unfunded liability of more than $30 billion.
It also contains the House’s “Work Ready” tuition aid program for students seeking two-year associate degrees at community colleges and four-year institutions and a component of the Senate’s performance-based funding formula for higher education.
The compromise calls for 4.5 percent cuts to universities over the next two years but does not address Bevin’s 4.5 percent cut to universities in the current fiscal year, which ends June 30. Stumbo and Stivers said Bevin’s cut will be left for the courts to decide. Attorney General Andy Beshear has filed suit against Bevin in Franklin Circuit Court, claiming he does not have the legal authority to make the cuts. Bevin disagrees.
Stumbo said Kentucky State University in Frankfort will be exempt from cuts and “will have a way forward.” He did not elaborate.
Lawmakers said the compromise contains no spending cuts for elementary and secondary education.
The compromise contains language that allows a $60 million bond issue for expansion of the Lexington Convention Center, but Stumbo and Stivers said it depends on the passage of House Bill 441, a measure to allow the city to raise its transient room tax.
Stivers said the House has passed the bill, and he thinks there are enough votes in the Senate to pass it Friday.
The spending plan also will give slightly more of the coal severance tax proceeds back to coal-producing counties. They now get 50 percent. Stivers said that will go up to about 60 percent.
State troopers will get a raise under the plan, which doesn’t contain any mention of repealing the state’s prevailing-wage law, lawmakers said.
It also raises fees paid by executive branch lobbyists to help fund the Executive Branch Ethics Commission. It does not cut public funding to Planned Parenthood clinics and fully funds Operation UNITE, a drug task force in Eastern Kentucky.
Lawmakers will not be able to override any line-item vetoes made by Bevin because time has expired.
Both Stivers and Stumbo said it would be left up to the governor to decide whether to veto any or all of the bill, but Stumbo said he would be surprised if Bevin has objections to it.
Bevin’s office released a statement thanking Stivers, Stumbo and other negotiators “for the hard work that was put into this budget agreement.”
“For the first time in decades, we can say that Kentucky is investing in our pension system in a meaningful way,” Bevin said. “We look forward to reviewing the details of the compromise and its final passage.”
Budget negotiations have been under way for three weeks. They were to resume at 11 a.m. Wednesday, but lawmakers didn’t begin meeting behind closed doors in a conference room in the Capitol Annex until 10 p.m.
Aides to Stumbo and Stivers said in the afternoon that leaders had been holding private meetings in their offices throughout the day and were making progress.
An impetus for them to craft a compromise was Bevin’s declaration Tuesday that he wouldn’t call lawmakers back into a costly special session if they fail to approve a budget during their regular session.