FRANKFORT — Gov. Steve Beshear on Wednesday set May 24 as the date to begin a special legislative session and offered a compromise two-year budget for House and Senate leaders to consider.
Beshear's $17.1 billion two-year budget proposal includes portions of both the House and Senate budget proposals that were passed earlier this year.
The governor proposed across-the-board cuts of 3.5 percent for the first year and 4.5 percent in the second year. But the plan also includes less severe cuts to key areas of the budget, including K-12 education, higher education, Medicaid, state police and prosecutors and public defenders.
The proposal would not cut the main funding formula for schools, but it would have school districts pick up the cost of one school day. The House had originally proposed cutting two school days but leaving intact the main funding formula for schools. The Senate had proposed across-the-board cuts to the main funding formula.
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Brad Hughes, a spokesman for the Kentucky School Boards Association, said it would be a financial hardship for some school districts to fund a school day.
Beshear's budget proposal also has a limited number of new capital projects and includes additional money to replace Category 5 schools, the worst schools in the state.
The House had included a host of school and other construction projects in its budget, but the Senate balked at the more than $1 billion price tag. The two sides haggled over the budget for weeks, but they were not able to pass it by the close of the legislative session on April 15.
The compromise proposal, unveiled at a news conference on Wednesday at the state Capitol, includes no new taxes and no raises for state workers.
Beshear urged legislators to start negotiations immediately on the proposal.
"Only the House and Senate can pass a budget under Kentucky law," Beshear said. "It is their responsibility to get the job done. And the citizens of Kentucky will neither forgive or forget a failure to do so."
Senate President David Williams, R-Burkesville, said Wednesday he and House Speaker Greg Stumbo, D-Prestonsburg, will begin negotiations Thursday. Williams said he has only seen an outline of the proposal, but he believes the proposal should re-start and re-energize negotiations.
"This is the sort of budget I think we can support," Williams said. Beshear said the compromise budget includes the least debt since 1996.
Stumbo, in a written statement, applauded Beshear for working to break the stalemate and said he was encouraged the governor included some capital construction projects that would provide much-needed jobs.
"By relying upon state-funded projects that are already in the pipeline, we can provide a much-needed boost for our families that are struggling financially, as the House has long proposed," Stumbo said.
A lot is at stake if the two sides can't come to an agreement during the last week of May.
If no budget deal is signed before June 1, the state could stand to lose about $113 million in potential savings from refinancing the debt. In addition, if there is no budget deal on July 1, the first day of the new fiscal year, a partial state government shutdown would result.
Beshear was also clear he did not want a one-year "continuation budget" or a budget that would allow the state to continue to operate but would require Beshear to make most of the cuts. The House had proposed such a budget at the end of the legislative session.
"Any sort of continuation budget is unacceptable," Beshear said. "And although these are tough decisions, making tough decisions in tough times is what the people of Kentucky elected us to do. We can't delay simply because it's an election year. This has to be a management decision and not a political decision."
All 100 members of the House and half of the 38 Senate members are up for re-election this year.
Beshear said he would like the authority to furlough state workers if he needs to. The budget also includes "efficiencies" of $126 million in the first year and $164 million in the second year. Those could come through reducing contract spending, cutting the number of political employees and selling excess property.
Williams said he believed Beshear should have the authority to furlough state workers — but the Democratic-controlled House has had problems with that provision in the past.
Only the budget
Beshear said he has no plans to add other issues to the session's agenda at this time.
Those that have been mentioned include a bill that would shore up the state's bankrupt unemployment insurance trust fund and a measure to allow charter schools in Kentucky.
Eric Gregory, president of the Kentucky Distillers' Association, said his group remains hopeful the House and Senate can agree on legislation to allow free samples of bourbon to be served at the Alltech FEI World Equestrian Games this fall at the Kentucky Horse Park in Fayette County.
If it does not become law, the state's bourbon industry has said it will withdraw its $100,000 support of a state exhibit at the Games.
"It's hard to imagine the Games without one of the state's signature industries," Gregory said.
In this year's regular session, both the House and Senate passed the so-called "bourbon tasting" legislation in separate bills. But no one tasting bill won approval by both chambers.
It will cost more than $63,000 a day for a special legislative session, which would last a minimum of five days.
In addition to a two-year executive branch budget, the General Assembly will also be asked to pass two-year and six-year road plans, which outline which road projects will be funded over the next several years.