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Stumbo: House likely will block higher ed cuts

FRANKFORT — House Speaker Greg Stumbo expressed optimism Sunday that the state two-year spending plan put together by the House will block some, if not all, of funding cuts to higher education.

"There's a growing chance that we might be able to — in some way — help offset some of the cuts" for public universities and colleges, said Stumbo, during a break from working on the final touches on the House budget proposal.

House leaders worked through the weekend to come up with a plan to address a $1.2 billion state budget shortfall over the next two years.

Stumbo, D-Prestonsburg, said an outline of the House budget plan may be ready by Monday. To prevent the cuts, House leaders must find an additional $20 million a year.

Democratic Gov. Steve Beshear, in the budget proposal he presented in January, provided no new funding in the first year for universities and colleges and cut them by 2 percent in the second year.

House leaders originally planned cutting higher education 2 percent in both years of the budget.

Stumbo said a bipartisan group of House were reviewing some tax loopholes that could be closed. He said they included suspending for two years a tax provision that allows businesses to carry forward losses for tax purposes. The suspension could produce $82 million in the first year of the budget and $100 million in the second year.

Companies now can spread one year of financial loss over 20 years. The House proposal does not alter the 20-year timeframe, but does suspend it for two years.

House leaders maintain that this is not a tax increase because companies still will get to off-set all losses, just over a longer period of time.

Stumbo said no decision has yet been made on taxing visitors who stay at hotels and motels for more than 30 days.

He said Delta and UPS have "some concerns about that" because they reserve blocks of rooms for long periods of time. Now, visitors staying less than 30 days have to pay a room tax on each day. Those staying 31 consecutive days do not pay a room tax at all on any of the days. A change would generate $6.6 million over two years.

The House leader also said a tax exemption for non-military Kentuckians working out of the country "still is on the table." Kentucky residents who work out of the country do not pay income taxes on their first $80,000 in income. Taxing them the same way as Kentuckians who live and work in the state would generate $24 million over two years.

House leaders also are looking at requiring businesses to submit sales tax collections sooner than the current deadline.

They say this would not alter any taxes paid by companies, and produce $90 million over two years.

The extra money would be a one-time benefit gained when the collection date is changed, they say.

Stumbo emphasized that the House plan, like Beshear's, will not raise taxes and will not provide pay raises to state workers and teachers. He said there will no layoffs but will be a reduction in non-merit, or politically appointed, positions in state government.

Unlike the governor's, the House plan does not assume any revenue from expanded gambling but assumes more federal stimulus dollars.

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