Bill opponents to miss out on school projects

State News

March 9, 2010

Bruce Schreiner Associated Press Tue Mar 09, 2010, 09:03 AM EST

FRANKFORT — Kentucky House members who opposed a revenue measure linked to balancing the next state budget will be empty-handed when school construction projects are doled out as part of the spending plan, Speaker Greg Stumbo said Monday.

The revenue enhancement — meant to raise more than $300 million in the next two years — passed the House last week on a 64-36 vote along mostly party lines. Every Democrat except two supported the measure. Republicans were united against it with one exception.

“That was their choice — they made that choice,” Stumbo said when telling reporters that opponents of the revenue plan would not be in line for school construction projects as part of the spending plan.

House Democratic leaders have proposed a state spending blueprint for the next two fiscal years that includes about $1 billion in bonding for school construction, water and sewer projects and transportation projects, said Stumbo, D-Prestonsburg.

About $500 million of that amount would go toward construction in school districts and on community and technical college campuses. Those projects would include replacing some of the state’s oldest elementary and secondary school buildings.

“There’ll be a lot of building going on, and that’s what it takes to get people back to work in this state,” Stumbo said.

The Republican-led Senate will get its say on the budget after the House passes its version.

Stumbo said the flurry of proposed construction projects are aimed at creating about 25,000 jobs in a state plagued by high unemployment. State officials announced last week that Kentucky’s annual unemployment rate for 2009 jumped to a 26-year high of 10.5 percent.

Stumbo said opponents of the revenue bill could still be in line to get road projects in their districts as part of proposed bonding for transportation work.

Meanwhile, the House Appropriations and Revenue Committee approved legislation Monday evening calling for about $3.4 billion in road and bridge construction projects in the next two-year budget cycle. The money would be a mix of state bonding and federal funds.

In one high-profile project, the committee’s transportation plan accepted Gov. Steve Beshear’s proposal to include $112 million in new bonding for road improvements in the Fort Knox area, said committee Chairman Rick Rand. The road work stems from the influx of soldiers and civilian workers due to the military’s base realignment.

Rand said the proposed total bonding is similar to the amount proposed by Beshear.

During the hearing on the transportation legislation, Republican Rep. James Comer of Tompkinsville asked why some projects in his district appeared to be pushed back.

“Is that just a coincidence, or did you just pick Republicans out?” he asked.

Democratic Rep. Sannie Overly, head of the budget subcommittee on transportation, replied that any adjustment to bonded projects in his district would have been “inadvertent” and said she would be “happy to take a look at that.”

On the revenue side, top House Democrats have said the tax code changes are needed to help plug a shortfall exceeding $1 billion for the two-year state budget cycle beginning July 1. Without it, they said, the alternative would be painful cuts to education and human services.

Rep. Danny Ford, R-Mount Vernon, who voted against the revenue bill, said Monday that jobs are needed throughout the state. He said he would be disappointed if opponents of the revenue measure would be left out of the school construction if they had worthy projects.

“I think things should be based upon need, and not put it up for sale,” he said.

The proposed tax change drawing the most attention would temporarily suspend tax write-offs for businesses reporting losses. The proposal would generate an estimated $72 million in the first year of the next budget cycle and $90 million in the second year.

Affected businesses would still be able to eventually claim those losses for tax purposes.

Republicans called it a tax increase at a time when the economy is struggling.

Ford said Monday that the proposal seeks to generate additional revenue “on the backs of people that are already hurting financially.”

Supporters have said the proposal is a tax suspension, not a tax increase. They said the write-off generally benefits large companies with multiple subsidiaries.

The tax measure was sent to the Republican-led Senate, where its fate is uncertain.

Meanwhile, an approximately $17.5 billion two-year state spending plan was scheduled to be presented to the House Appropriations and Revenue Committee on Tuesday. The plan relies on budget cuts, revenue enhancements and other steps to plug the shortfall.

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