FRANKFORT — Leaders of the House and Senate abruptly halted negotiations on a state budget Wednesday after coming to a stalemate on funding for construction of schools and roads.
The deadlock puts at risk the passage of a two-year state budget during this year's legislative session, which the Kentucky Constitution says must end by midnight April 15.
Senate President David Williams, R-Burkesville, and House Speaker Greg Stumbo, D-Prestonsburg, said after a frantic Wednesday afternoon they would be willing to continue negotiations.
Still, short of a last-minute agreement early Thursday, lawmakers will not have time to pass a budget by Friday night, the deadline to approve a budget and still have time to override any line-item vetoes by Gov. Steve Beshear.
The impasse came on the seventh day of negotiations. Both sides said they were making headway on key issues such as education funding and cuts to Medicaid, the state-federal program for the poor and disabled, before they left the bargaining table shortly before noon.
Beshear, in a written statement, urged the legislature to come to an agreement soon.
"Passing a balanced, responsible budget is the number one job of the General Assembly," said Beshear. "They have until April 15 to pass such a budget. The taxpayers and I both fully expect the General Assembly to work as many hours as it takes to meet that responsibility by that date."
Williams and Stumbo said the Republican-controlled Senate was unwilling to issue $1.2 billion in additional debt for construction projects and make changes in business taxes to raise $300 million. Both proposals were included in the House budget.
Williams said he thought the House-Senate budget conference committee had reached an accord on those issues in the past few days. "Finally the House said there would be no budget if there wasn't about an extra $1 billion for debt service," he said.
But Stumbo said Wednesday the House was willing to look at cutting the amount of projects in half, to a little more than $600 million. "We stand ready to move forward at any time," he said during a news conference.
Senate leaders were not willing to budge, saying they did not want to drag the state deeper into debt.
If there is no budget this session, Williams said, voters will decide in November whether they favor fiscal conservatives or those who want to spend more.
Stumbo countered that the state lost 100,000 jobs last year and that the construction projects could retain or create up to 25,000 jobs.
"What the state needs is a jobs program," Stumbo said. "The Republicans have proven that they know little about the economy. They've not only forced the country into a recession, they forced the entire world into a recession. So I don't believe that people are going to drink that Kool-Aid again."
Even if lawmakers come to an agreement on a budget before April 15, they would have no way to reject line-item vetoes made by Beshear. The last time lawmakers failed to pass a veto-proof budget, in 2006, former Republican Gov. Ernie Fletcher vetoed millions of dollars in projects.
The General Assembly has three days left in its 60-day session, but the Constitution requires lawmakers to give Beshear 10 days, not counting Sundays, to veto any legislation. That means lawmakers can't override vetoes on any bills approved after Friday and still meet the April 15 deadline.
The legislature has left Frankfort without a budget three times since 1994. In 2004, the last time it could not agree on a budget, a lawsuit was filed. The state Supreme Court ruled in 2005 that a governor can spend money without a budget, but only on items directly mentioned in the Constitution and state statutes.
Stumbo, who was attorney general at the time and was party to the suit, said the ruling means only critical functions of government could be funded.
"There will be parks closed," he said. "There will be in many areas of state government a visible stopping of the programs and the services that the state provides."
If no budget is passed, Beshear could order the legislature to return for a special session — a move that could cost taxpayers upwards of $60,000 a day.
House Democrats also balked at negotiating over road projects in the presence of Bill Nighbert, a former state transportation secretary for Fletcher who is advising Senate Republicans after being acquitted earlier this year in federal court of charges related to bid rigging.
"Some of our members had a concern, and we respected that concern, and I communicated that to Senator Williams," Stumbo said. "He should have respected those concerns."
Williams called the Nighbert issue "a red herring."
Nighbert previously advised Williams and the Senate on transportation matters after his stint as transportation secretary and before he was charged with conspiring to help steer construction projects to a Kentucky road contractor.
Williams has said Nighbert is being paid by the Republican Senate Campaign Caucus Committee, which collects and spends money on behalf of Republican candidates for the Senate.