Politics & Government

Kentucky lawmakers approve borrowing $75 million for parks, economic development

Rep. Steven Rudy, R-Paducah, sponsored the budget and tax bill that was approved Thursday by the Kentucky House. “This is a stopgap,” Rudy said, pledging that comprehensive tax reform would follow.
Rep. Steven Rudy, R-Paducah, sponsored the budget and tax bill that was approved Thursday by the Kentucky House. “This is a stopgap,” Rudy said, pledging that comprehensive tax reform would follow.

The Kentucky General Assembly passed a budget adjustment bill Thursday that will allow Gov. Matt Bevin’s administration to borrow $75 million in the current two-year budget to pay for repairs at state parks and economic development projects.

The decision to borrow money is the latest of several decisions the legislature has passed in recent days that will put more pressure on a state budget already crushed by a $37 billion pension debt. On Wednesday, the legislature approved a tax bill that would cost the state around $105 million a year, with a tax break for Kentucky banks eating up about half that amount.

Meanwhile, the legislature is grappling with a bill that would provide relief from rapidly-growing pension costs at some universities and quasi-governmental agencies, such as mental health centers, but could add up to $1 billion in debt to the state’s struggling pension system.

Despite the state’s mounting fiscal woes — hundreds of teachers clad in red have wandered the Capitol in recent days to remind lawmakers about the importance of school and pension funding — the General Assembly approved a budget bill that will allow the Kentucky Department of Parks to borrow $50 million to pay for roof repairs, wastewater treatment fixes and infrastructure upgrades at state parks. The bill also allows the Cabinet for Economic Development to borrow $25 million to help recruit businesses to the state.

“In the short term this will be a hit, in the long term, they will both be gains,” said Sen. Chris McDaniel, R-Taylor Mill.

Both issues have been pillars of Bevin’s reelection campaign. In comments around the state he’s touted his administration’s economic development priorities and his goal of sprucing up Kentucky State Parks.

The state will have to pay about $3.1 million from its rainy day fund to issue the bonds. The rainy day fund is expected to have about $307 million in it when the current two-year budget period ends in June 2020, said Rep. Steve Rudy, R-Paducah,

“I think the balance sheet is still well intact,” Rudy said. “We invested more money in that than we have in a long, long time last year and we have that baked in and I don’t think it’s an issue. All these things are critical and needed to operate for the remainder of this biennium.”

The Senate had originally cut all borrowing from the bill, citing concern that the legislature should only spend money on emergencies after a budget has been passed. (The legislature only meets for 30 days in odd-numbered years and writes a two-year budget during 60-day sessions in even numbered years).

“We are not fans of doing things like this in a non-budget session. This is not what a short-session is designed for ...,” said Senate President Pro Tempore David Givens, R-Greensburg. “This is not something I like us doing, not because of the worth question, but because of the precedential nature of doing it.”

Senate leaders eventually acquiesced and granted money to the projects, saying the parks would only get worse if the repairs aren’t done as soon as possible.

“The cost of delay is probably even greater than the cost of action on these, and as somebody who deals with these issues regularly, the deterioration I know accelerates rapidly,” McDaniel said.

The Senate was successful in removing about $22 million that would have gone to the University of Kentucky, the University of Louisville and Somerset Community College for research facilities and a workforce and development program.

Rudy, who was the sponsor of the House version of the bill, said he thinks that funding is important and pledged to resurrect the proposal next year.

The tax and spending bills have gotten push-back from House Democrats, who are angered that Republican legislative leaders have found money for parks and Kentucky banks this year, but haven’t found money for school safety or additional education funding.

“My question to this body, my question to this commonwealth, my question to those school teachers is how is it that we can find $50 million for the banks of this state, but we can’t find a single dollar for our school systems,” said Rep. Rob Wiederstein, D-Henderson, in a fiery floor speech Wednesday night.