House Democrats approve leadership's budget plan

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March 2, 2010

One Democrat says the ship is still sinking, however

By RONNIE ELLIS The Daily Independent Tue Mar 02, 2010, 06:29 PM EST

FRANKFORT — House Democrats Tuesday “overwhelmingly” approved a revenue plan put together by their leadership, according to Speaker Greg Stumbo, D-Prestonsburg.

Stumbo, however, wouldn’t say how many Democrats in the meeting didn’t like the plan which raises no general taxes, relies on cuts to the school calendar, across-the-board cuts to most state agencies and cuts to higher education, but Rep. Keith Hall, D-Phelps, said there were “some rumblings in the corner.”

Rep. Jim Wayne, D-Louisville, was one of those.

“I think we can do a lot better,” Wayne said as he left the hour-long meeting following the House floor session Tuesday. “This is just re-arranging the furniture on a sinking ship, but the ship is still sinking. It just cuts, cuts, cuts.”

The state faces somewhere around a $1.4 billion revenue shortfall over the next two years, and Wayne has suggested reform of the tax code to close various loopholes, extend the sales tax to some services and shift the portion of income taxes collected by the state up the income ladder to raise new revenue and avoid painful cuts to services.

The House has been working on a revenue plan which temporarily suspends a business write-off of losses for two years; assumes about $225 million extension of federal aid for Medicaid; makes adjustments to employee health care plans accelerating sales tax collections, and a variety of cuts to make up the shortfall. The state chamber has opposed the suspension of the tax write-offs, but Stumbo and Wayne each said that remains part of the House plan.

House budget chairman Rick Rand, D-Bedford, said the plan may produce a surplus of $75 million in the second year, although he said some portion of that money will likely be directed toward diminishing the cuts to higher education in the second year. Still, he and Stumbo said they expect to retain some surplus for the state’s “rainy day fund” in the second year.

Rand said House leaders discussed only the revenue side and the cuts they propose with House members Tuesday. Rand said a floor vote on a complete spending plan could occur as early as next Tuesday and the budget then go to the Republican controlled Senate.

Senate President David Williams, R-Burkesville, and Senate budget chairman Bob Leeper, I-Paducah, said on the KET television show Kentucky Tonight Monday that they anticipate making changes to the House budget and the final product will require “shared sacrifice” by everyone. Williams expressed skepticism about sparing higher education from the 2 percent cuts most agencies will undergo.

Stumbo has said he would like to restore those cuts after meeting last Friday with university presidents, but he and Rand said that higher education is likely to face cuts of around 1.5 percent in the first year at least.

Stumbo also said he thinks Williams and Leeper are likely to agree “with the overall tone” of the House budget plan.

“I think they’ll like the tone of the budget,” Stumbo said. “Yeah, there’s going to be some give and take, but that’s the process.”

Hall said the budget reflects the same reality facing many Kentucky households.

“It’s lean,” Hall said when he emerged from the caucus meeting saying he supported the plan. “We’re not going to raise taxes. We’re being frugal. We’re doing the same thing as every household in Kentucky.”

RONNIE ELLIS writes for CNHI News Service and is based in Frankfort. Reach him at rellis@cnhi.com. Follow CNHI News Service stories on Twitter at www.twitter.com/cnhifrankfort.

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House Democrats approve leadership's budget plan

One Democrat says the ship is still sinking, however

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