Finding money to replace aging schools

FRANKFORT — House leaders are looking at spending close to $500 million to replace some of the state's oldest and most inadequate school buildings as part of their proposed two-year $17.5 billion budget.

House Budget Chairman Rick Rand, D-Bedford, said Friday that the House budget plan included more than $500 million of what will likely be close to $1 billion in bonds issued for infrastructure projects such as schools, sewers and road projects.

Rand said that the $500 million will go toward replacing some of the worst schools — designated as Category 4 and 5 schools by the state Education Department. In October 2009, there were 165 schools in those two categories — those that are at least 30 years old or have gone that long without a major renovation.

Not all Category 4 and 5 schools would be replaced, Rand said. The list of aging schools to be replaced will be released on Tuesday, when the House Budget Committee is expected to vote on the House budget bill.

House leaders put finishing touches Friday on the two-year budget, which includes cuts of about 2 percent to many state agencies, trimming two instructional days and changing some business taxes to generate additional revenue.

Bluegrass Politics blog: Video of Senate President David Williams and House Speaker Greg Stumbo debating a constitutional amendment to expand gambling.

There are no new taxes, but also no money for raises for state employees or teachers.

Some university projects are included in that $500 million total, said House Speaker Greg Stumbo, D-Prestonsburg, including some money for the University of Kentucky to renovate the Reynolds Building, which houses the art department, and to finish a project at Western Kentucky University. UK has asked for $16.2 million for the Reynolds Building renovation, but it is unclear whether it will get the full amount.

Rand said Friday that higher education will be cut by 1.5 percent in the first year of the budget and 1.0 percent in the second year of the budget.

House leaders said that the borrowing money for such projects would not hurt the state's bond rating. Moreover, they said, with bond rates low, now is the time to borrow money and put more people back to work.

"For every $1 million you spend, you create about 18 jobs," Rand said. Stumbo has said that nearly $1 billion in capital projects could put 25,000 people to work.

The House plan has also restored some money to some programs including Kentucky Educational Television, which has suffered cuts of more than 30 percent over the past several years. KET will likely receive an additional $1 million in both years of the budget.

"We thought that they had been hit awfully hard," Rand said of KET.

Rand said that the House is also still looking at restoring some funding to the Cabinet for Health and Family Services for some programs that have been cut over the past few years.

But Stumbo said Friday that the House will include language in its budget that will allow the legislature to audit certain programs and then charge those cabinets or programs for that audit. Stumbo has publicly criticized the Cabinet for Health and Family Services for failing to provide timely information about the state Medicaid program — a state and federal program for the poor and disabled.

The plan also includes a $30 million cut from the Department of Corrections budget, which is predicated on a drop of about 1,500 prisoners from the state's current prison population. Stumbo said that the state's parole board already changed its regulations in January to make it mandatory that all non-violent or Class D offenders come before the board for a parole hearing.

Stumbo said that doesn't mean that prisoners will be released early or will not have supervision. The Department of Corrections and local judges could order electronic monitoring.

Jennifer Brislin, a spokeswoman for the Justice and Public Safety Cabinet, said that she could not comment on the plan because the department had not seen it.

Other provisions of the two-year budget include:

■ Cutting about $120 million for outside contractors.

■ Cutting two instructional days to save the state $68 million over two years.

■ Cutting about 125 non-merit employees in the executive branch to save about $5 million.

■ Tweaking state employee health insurance to save about $150 million over the two years.

■ Relying on about $90 million in accelerated sales tax collections in the second year of the budget.

■ Suspending deductions on net operating losses for businesses for two years to generate about $187 million.

■ Including $250 million in not-yet-approved federal stimulus dollars for the Medicaid program.

Rand said the tentative plan is to have the House Budget Committee vote on the proposal on Tuesday. The full House will vote on Wednesday.

But leaders in the Republican-controlled Senate have expressed concerns about the House's plan to change business taxes such as accelerating tax collections and suspending deductions for net operating losses.

Senate President David Williams, R-Burkesville, said Friday that he was worried that suspending the business tax would send the wrong message to the business community.

Senate Budget Chairman Bob Leeper, I-Paducah, said his committee will discuss House Bill 530 — which included the business tax proposals — on Tuesday. House Bill 530 was passed by the House on Thursday. Leeper said the Senate will discuss the bill but there will not be a vote.