FRANKFORT — The state House is poised to pass a $17.1 billion budget Wednesday that axes state spending, tweaks health insurance for state employees and gives Gov. Steve Beshear the ability to furlough state workers.
The House Appropriations and Revenue Committee voted 24-2 Tuesday to pass House Bill 1, the budget bill. The panel also approved a revenue measure that would generate $88.4 million in savings over the next two years and a $4.2 billion, two-year road plan.
The measures will go to the full chamber for a vote on Wednesday, House Speaker Greg Stumbo, D-Prestonsburg, has said.
Rep. Fred Nesler, D-Mayfield, and Rep. Charlie Siler, R-Williamsburg, were the only members of the committee who voted against the budget bill.
Several other committee members said they regretted the budget did not protect key services but felt they had to pass a budget to avoid a partial government shutdown come July 1.
Rep. Harry Moberly, D-Richmond, voted for the measure but bemoaned cuts to education. The bill would preserve the state's main funding formula for schools but would cut higher education by 1.4 percent in fiscal year 2011 and 2.4 percent the following year.
Other areas of education, such as the state's gifted and talented program, also will get less money.
"This is not a good budget," Moberly said. "It does not move us forward."
The budget proposal includes a 3.5 percent cut in the first year of the budget and a 4.5 percent cut in the second year for most state agencies. Agencies receiving less onerous cuts include higher education, Medicaid, the Department of Corrections and prosecutors and public defenders, among others.
Rep. Derrick Graham, D-Frankfort, whose district includes many state employees, said he regretted voting for a budget with draconian cuts and possible furloughs.
"It will not only hurt state government, it will hurt my town," Graham said, referring to Frankfort.
The Tuesday committee vote came on the second day of a special legislative session to address the budget and a handful of other measures. House and Senate leaders could not come to an agreement on a budget before April 15, when the legislature adjourned its regular annual session.
Beshear had proposed a compromise budget after the two sides argued for weeks over their plans to address a projected shortfall of nearly $1.5 billion over the next two years.
Much of the discussion on Tuesday centered on how much debt the state will take on under the proposal and technical details regarding a possible furlough. Beshear has said he doesn't plan to furlough state employees but would like the flexibility to do so.
Under the proposal passed Tuesday, Beshear could only furlough rank-and-file employees, known as merit workers, for 24 hours in a six-month period. A merit employee could not be furloughed more than 20 percent of his or her scheduled work hours in any one week.
Most other employees would be subject to the furlough, including political appointees. Critical employees that could be exempt include health care workers and correctional officers as well as employees whose salaries are paid for by the federal government.
The proposal also would allow for the temporary closing of state offices to achieve furlough days.
House Budget Chairman Rick Rand, D-Bedford, said that provision would allow smaller government offices to close on a Friday if there was a holiday on a Monday to save the state money.
Rep. Brent Yonts, D-Greenville, said he was concerned only lower-paid employees would be subject to the furlough. Yonts said he may offer an amendment on Wednesday to make it clear even the highest-paid employees would have to be furloughed if a furlough is implemented.
Furloughs could occur between July 1, 2010, the beginning of the next fiscal year, and June 30, 2012, the end of the two-year budget cycle.
Some of the state's unions have protested the furlough plan, saying now is not the time to cut hours of state employees. Beshear has said state government's work force is the smallest in recent history.
"Kentucky has the highest rate of child abuse and neglect deaths in the nation and our state's social workers are carrying crushing caseloads," said David Warrick, executive director of the American Federation of State, County and Municipal Employees Council 62, in a written statement issued last week. "Can we really afford to furlough social workers who work tirelessly to prevent harm to children? Or those state employees who keep our communities safe and protected?"
Beshear on Tuesday defended the furlough provision, saying "expected cuts to state agencies will require us to be as flexible as possible in order to maintain services. Furlough language will give us some of that flexibility."
Rand said he did not believe the Republican-controlled Senate would have any major problems with changes the House made to the compromise budget that Beshear proposed earlier this month.
"I don't think we'll have a deadlock," Rand said. "I don't know what they intend to do. I think once they have a chance to review this bill, they will see that many of the things that we put in here are things that they have reviewed and agreed on, and I would hope that most of them would stay."
Senate President David Williams, R-Burkesville, said Tuesday he has not seen the changes the House has made to the budget and could not comment on them.
Those changes include allowing a state board to redesign state employee health insurance plans rather than including specific alterations to those plans in the budget bill. Changes to the health insurance plan would generate about $94 million in savings, Rand said.
The House also decided to eliminate about $5.6 million in state "equalization" funding to replace some of the state's worst schools.
Rand said the House decided to delete the provision because there was not enough money to replace all Category Five schools in Kentucky. Instead, part of that money will pay for a comprehensive study of the condition of the state's school buildings.
Also on Tuesday, the House Appropriations and Revenue Committee approved the Transportation Cabinet's two-year operating budget and a two-year and six-year road plan. However, the House and Senate could not come to an agreement on the state's two-year road plan before Tuesday's committee vote.
Rep. Sannie Overly, D-Paris, chairwoman of the House Budget Subcommittee on Transportation, said the House plan includes the Senate's list of priority projects but not necessarily all phases of those projects.
In Fayette County, the House plan includes $141 million in highway dollars for the next two fiscal years but only about $100 million is for construction. The remaining money is for design, engineering and acquisition of right-of-way.
House and Senate leaders have said they expect to conclude the legislative session by Friday.