In a surprise move, the Senate on Wednesday abruptly dropped $60 million in bonds from the state budget that were meant to help pay for a long-awaited $250 million expansion of the Lexington Convention Center.
The Senate budget committee approved the budget bill shortly after noon with the convention center included. But that was a “clerical error,” said committee chairman Chris McDaniel, R-Taylor Mill. At a specially called meeting just off the Senate floor, the committee later voted to amend the budget and exclude the project. The Senate then voted 21 to 16 against the bonds.
Republican Senate leaders objected to Lexington increasing its local hotel room tax by 2.5 percentage points to help pay for the project, which would be accomplished by a House bill currently stalled in the Senate. They also didn’t like the proposed bond structuring for the project, which they said would leave the state of Kentucky subordinate to other lenders “in case something goes wrong.”
In a floor speech, Senate President Robert Stivers said Lexington has enjoyed budget surpluses of tens of millions of dollars over recent years, with recently announced plans to spend $12 million to renovate the old Fayette County courthouse on Main Street.
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“Tell me, when I add those totals up, why they need that (convention center bond) money, why they cannot finance it with their current revenue structure,” said Stivers, R-Manchester.
Several Lexington-area senators, Republican and Democrat, jumped to their feet to protest the move. They said Lexington would repay the $60 million over time, and they said its convention center must be expanded to remain competitive at attracting groups that otherwise would hold their meetings in other cities or states. They even name-dropped Republican Gov. Matt Bevin.
“The governor of our state put this in his original budget. He said this is a project worth having,” said Sen. Reginald Thomas, D-Lexington.
Bill Owen, CEO of the Lexington Center Corp., said after the vote that he will work with the Senate to answer their questions about the project. Lexington Center Corp. runs the convention center, Rupp Arena and the nearby Opera House.
“Today was just one step in a lengthy budget process, and we appreciate the Senate giving the convention center expansion project the attention it deserves,” Owen said. “We respect the questions the Senate raised, and we look forward to providing them the financing details, including the $10 million the city of Lexington has pledged toward the renovation.”
The $250 million renovation and expansion of the Lexington Convention Center would include a 100,000-square-foot exhibit hall, a 22,500-square foot ballroom and 30,000 more square feet of meeting and breakout space.
A 2014 effort to get state funding for a combined renovation of Rupp Arena and the attached convention center, led by Lexington Mayor Jim Gray, also met last-minute resistance in the state Senate.
The legislature approved a $57 million allocation to Louisville for an expansion of its convention center in 2014. It also approved a bill allowing an increase in Jefferson County’s hotel and motel tax for debt payments on bonds for that overhaul.