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‘This Week in Frankfort,’ courtesy of the LRC

April 9, 2010

My description of this week in Frankfort would be — you could hear the crickets chirping.

After missing the chance to pass a veto-proof budget last week, lawmakers headed home, with an eye on working during the interim to find a budget that could pass muster during the last two days of the session.

But, as noted by the Legislative Research Commission’s public information office below, those negotiations didn’t exactly pick up where they left off last week. By the end of the week, there was some talk between House and Senate leaders, but little to provide some hope that the state’s going to have a completed budget at the end of this year’s legislative session on April 15.

Read more below.

This Week in Frankfort

The 2010 Kentucky General Assembly: Veto Recess

LRC PUBLIC INFORMATION

FRANKFORT – With most lawmakers home for their veto recess and the budget conference committee not meeting though it could, prospects for passing a two-year state spending plan hung in precarious balance in Frankfort this week.

Indeed, the week’s early news was inauspicious. Some lawmakers familiar with the closed negotiations between House and Senate leaders made headlines by expressing public pessimism that the differences could be resolved by the time the Legislature returns to the Capitol next week, April 14-15, to wrap up business.

Whether that pessimism prevails or a breakthrough occurs, that’ll be it for the 2010 regular session: the final deadline. Under the state Constitution, the Legislature must pass a budget before midnight April 15, when it is required to adjourn sine die.

Failing that, Gov. Steve Beshear would have to bring lawmakers back to Frankfort for a special session before July 1 to pass a budget for the coming fiscal year. And while it has happened before that that a budget wasn’t in place when the new year came, recent court rulings have limited the governor’s authority to keep a budgetless government operating to certain essential functions, like corrections.

Put simply, if it happens this time, parts of government and government services — like state parks — will shut down.

All told, there’s enormous practical and political pressure for the chambers to reach agreement, and the work continues. But the fact that House-Senate budget conferees were free to resume negotiations this week but had no meetings reflected in part how strongly each chamber is committed to its core position.

The disagreement isn’t so much in budget details as in philosophy, and in many ways mirrors the national recovery debate:

Would taking on significantly more bonded debt for badly needed school- and water-and-sewer construction projects be an economic boost, essentially a ‘jobs bill’ to put Kentuckians back to work and speed the recovery? Or an irresponsible piling on of more debt by a state already in perpetual financial uncertainty because of a chronic structural imbalance in its budget?

House leaders want projects bonding. There’s $1 billion of it in their original proposal. Most of that would go to replace aging schools. They say this will stimulate the state’s recession-ravaged economy and create 25,000 jobs for out-of-work Kentuckians. State unemployment is beyond 10 percent, and certainly more if you count ‘discouraged’ workers who’ve just quit looking.

Senate leaders point to that same recession and counter that piling on $1 billion in new debt would send the state into a ‘debt death spiral.’ They say the time has come to seriously belt-tighten government, share in the recessionary pain business and families feel, and address the chronic structural imbalance that has plagued the Kentucky budget for too many years.

This fundamental difference has created a formidable roadblock to a $17.5 billion budget bill that was hard to cobble together anyway, given a bottomed-out economy and estimates of up to $1.5 billion in likely revenue shortfalls over the next two years.

Still, both chambers have shown desire and willingness to compromise. By Wednesday, the House was preparing to release its own version of a compromise bill for discussion, something the Senate had already done just before the veto recess last week.

The Senate compromise had restored a good portion of the basic education funding its original budget had earlier cut. It also offered some flexibility on the school construction and other bonded projects the House wanted.  But House leaders said the Senate proposal basically restated a position they had already rejected.

This week’s House compromise, its leaders say, will pretty much ‘meet in the middle’ with the Senate on projects spending – which means they’d propose around $500 million in bonds instead of a billion. It will also, they say, re-jiggle how the school projects are selected, to answer Republican objections in both chambers that the choices were politicized.

They will also drop their proposal to suspend an operating-loss tax deduction for business as a temporary way to raise money over the next two years. The Senate has opposed that as a tax increase that would hinder jobs creation.

It appears the two instructional days dropped from the school calendar by the House and restored by the Senate will survive into each chamber’s compromise proposal, with differences in how they’re funded.

House leaders sent a letter to the Senate Wednesday, saying their formal proposal was being drafted and would be in final form by Friday. They asked for a new meeting later that day. Senate leaders said only that when they received the House counterproposal, they would ‘promptly review that document and respond.’ At his writing — early Friday — Frankfort waits to see the final proposal, and hear the Senate reaction.

The only thing certain here is uncertainty. But by next Thursday, we’ll know if the great budget struggle of 2010 has ended — or we need to prepare for a special session.

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2 Comments
  1. Bob Costelle permalink
    April 9, 2010 3:07 pm

    I’ve really been able to follow and understand the legislature’s doings this year with “From the LRC.” Sometimes I haven’t been happy with what it told me but it seemed to tell it like it is. Thank them for writing it. I enjoy your blog by the way.

  2. April 9, 2010 3:36 pm

    Thanks for the feedback – I’ll pass that along to the folks in the LRC office. They do a great job of explaining the issues, and I’ve particularly enjoyed the work that they’ve put into providing this weekly wrap up of what’s happened.

    Owen

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