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House Democrats get plan for budget

FRANKFORT — House leaders presented a broad outline of a two-year state budget on Tuesday that they said would vanquish a $1.2 billion shortfall — with $75 million left to spare.

House Speaker Greg Stumbo, D-Prestonsburg, said there was "overwhelming" support for the plan after a nearly one-hour, closed-door meeting with the Democratic caucus Tuesday night.

The plan axes two school days, proposes cuts of about 2 percent for many state agencies, tweaks the health insurance plan for state employees and suspends a net operating loss tax deduction for companies.

Other cuts previously discussed include trimming the number of political appointees in state government and contracts with private industries that do the state's work.

There are no pay raises and no new taxes, House leaders said Tuesday.

Stumbo and House leaders offered few details Tuesday about how their proposal balances the budget. Stumbo and House Budget Chairman Rick Rand, D-Bedford, said they were still trying to minimize a 2 percent cut in higher education for both years of the budget.

The reaction from House members was cautiously supportive. House leaders declined to say whether there was a vote taken in the caucus meeting, but they said the majority of the caucus supported the plan.

Rep. Jim Wayne, D-Louisville, who has pushed for an overhaul of the state's tax structure for several years, said he did not support the plan.

"It's the shuffling of the furniture on a sinking ship," Wayne said. "There is no vision here. There is no leadership. There's nothing that says that we are actually going to progress as a state."

Rep. Jimmie Lee, D-Elizabethtown, who chairs a key budget subcommittee that oversees health and human services, said leaders only gave the Democratic caucus a broad outline of the budget. "We're waiting to see how that framework is filled out and what those details are," Lee said.

House leadership said they included a provision that would suspend the ability of businesses to offset their tax bill with net operating losses over the two years of the biennium. The suspension of that credit could generate more than $180 million over the two years.

Senate President David Williams, R-Burkesville, and Senate Budget Chairman Bob Leeper, I-Paducah, said Monday they are concerned that now is not the time to suspend a deduction for businesses that are struggling.

Stumbo said he believes the House budget addresses some Republican concerns. "I think that they will like the overall tone of the plan because we do reduce many areas in government," he said.

Rand said that there would be no cuts to social services and said it's possible that the $75 million surplus could be used to restore some previous cuts to social services or higher education. The money might also be put into the state's rainy day fund, which has been drained by repeated shortfalls over the past two years, he said.

It's likely that higher education will see a 1.5 percent cut in the first year of the budget, but the House is still trying to minimize the cut in the second year, Rand said.

Rand said Tuesday leaders hope to have a budget bill before the House Appropriations and Revenue Committee next Tuesday and possibly vote the budget bill out of the House by Wednesday of next week. The Senate would then have the rest of March to work on the budget.

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