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House rejects Senate budget offer

FRANKFORT — State Senate budget negotiators offered on Friday to accept the House plan for funding various programs and eliminating two school days, but said no to new debt for construction projects and tax changes.

But House Speaker Greg Stumbo, D-Prestonsburg, said his chamber could not accept the Senate offer without a plan for new construction projects to create jobs.

That leaves the House and Senate at an impasse after days of budget negotiations.

Senate President David Williams, R-Burkesville, told reporters late Friday that he hopes the House will accept the Senate proposal, which goes along with the House plan for a one-year budget, so that state lawmakers can approve a spending plan Wednesday, when they reconvene to wrap up this year's legislative session.

Shortly afterward, Stumbo said in a statement that he was "disappointed that this latest Senate proposal again does not address the issue of jobs creation."

House budget negotiators initially proposed about $1 billion in bonded indebtedness for various construction projects to create jobs and had pared that amount to about $317 million—$169 million for water and sewer, $121.4 million for miscellaneous projects and $26.5 million for schools.

Stumbo said House leaders "spent all week in Frankfort with the hope that we could re-start budget negotiations as soon as possible, a request we made known to Senate leaders.

"When it became clear that this would not happen, we sent President Williams our proposal this afternoon. We did not get a response, however, until 5:35 p.m., well after we were gone."

Stumbo said he was glad that the Senate agrees that funding for schools and Medicaid needs to be protected.

"However, the House remains vigilant in its commitment to the Kentucky Jobs for Kentucky Families program, and on behalf of the working families of the state, we cannot accept any proposal that does not create a significant amount of jobs throughout the commonwealth to help Kentucky's working families through this terrible recession.

"All of the Senate proposals to date have failed to address the need for job creation, the centerpiece of the House budget."

The Democratic-controlled House and Republican-led Senate have been at an impasse over the final form of the state's spending plan for about two weeks.

If they cannot reach an agreement by midnight Thursday, Gov. Steve Beshear likely would have to call a special legislative session to produce a budget by the new fiscal year, which begins July 1.

If no budget is approved by then, certain non-essential state services could shut down.

The Senate offer on Friday accepted House proposals to capture about $16.8 million in new revenue. That included $5.5 million from attorney general settlement fees and $10 million from biodiesel and ethanol tax credits.

The Senate also agreed to maintain basic school funding at its current level and eliminate two instructional days from the state's school calendar.

The House and Senate budget negotiators have no scheduled meetings. Lawmakers are to return to the Capitol Wednesday.