House budget bill, revenue package pass out of committee

(Frankfort, KY) The House Appropriations and Revenue Committee passed a state Executive Branch budget bill today that would rely on an $800 million revenue package to meet the state's education, health services and other needs over the next two years.

"We can't get to the budget--as we currently have it--unless we pass this revenue measure," said committee chairman Rep. Harry Moberly, D-Richmond, the sponsor of the budget bill, House Bill 406. The revenue package is part of HB 262, sponsored by Rep. Jim Wayne, D-Louisville, which also passed the committee today.

Approximately $470 million of the new revenue would come from restructuring the state's General Fund debt and reducing the state workforce through attrition, according Moberly. The balance, he said, would come from tax changes--including a 25 cent increase in the cigarette tax, an increase in the state tax on other tobacco products and applying the state sales tax to select services like air charters and armored cars.

Several agencies would benefit from the enhanced budget proposal including state universities, which faced 12 percent budget cuts in the next biennium under Gov. Steve Beshear's proposed budget. Approximately $126 million in each year of the biennium would go to universities to restore their base operating budgets, said Moberly.

"If they don't get their base restored, they'll be hard pressed to serve the students they're serving now," he said.

Also restored would be $303 million in university projects and $100 million in General Fund projects vetoed by the last administration, while $115 million would be provided for the Bucks for Brains research program--about $55 million more than was proposed in the governor's budget.

Public schools would also see some relief under HB 406, which would provide an additional $42 million in base per pupil "SEEK" funding for school operations and restore $33.1 million in funding for merit-based "KEES" scholarships, among other enhancements. The bill would also provide salary increases for teachers of 1 percent in 2008-2009 and three percent in 2009-2010, giving them the same two-year increase proposed for state employees.

A total of $130 million in additional funding is set aside under HB 406 for health and human services in Kentucky , an area that also faces cuts under the governor's budget proposal. That money will be used to reverse cuts proposed for mental health/mental retardation programs, community based services and health departments, among other needs.

"It was agonizing to hear the cuts that they were going to face," Moberly said of the state's health and human services agencies. "These are things we have to provide for people who need these services."

County infrastructure needs were also addressed in the budget bill, which would authorize $50 million in tobacco settlement dollars to fund water and sewer projects in tobacco counties and $50 million in coal severance dollars for water and sewer projects in coal counties. It would also restore $1.9 million in base funding to local jails, which have struggled with rising operational costs in recent years.

And the bill would authorize the state to freeze 1.4 cents of the automatic 1.5 cent-per-gallon increase in the gasoline tax scheduled to take effect in July in order to bond $500 million in road projects over the next two years. Moberly said the bonds would allow the state to move forward this biennium with projects in the current six-year state road plan.

He warned the committee that not passing HB 262 would carry serious consequences.

"If we don't pass this, I think the result on the Commonwealth will be devastating," he said. "We're in a situation, primarily because of a downturn in the economy, where we can slip backwards very quickly."