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“This Week in Frankfort,” compliments of the LRC

May 14, 2010

With Gov. Steve Beshear‘s announcement this week that he will be calling lawmakers back to Frankfort for a special session comes another edition of “This Week in Frankfort” from the Legislative Research Commission.

As we’ve weighed in previously on the M-I editorial page, the budget stalemate offers Beshear a chance to show real leadership by bringing the House and Senate back together on a compromise budget plan. With his work this week, it appears he’s done it, at least for the short term. His compromise budget seems to have gained support in both chambers, though of course working out the details will be the true test.

Here’s what the LRC has to say about this week’s action –

This Week in Frankfort

The Kentucky General Assembly in Special Session: Back to the Capitol in 10 days

LRC PUBLIC INFORMATION

FRANKFORT With a press conference and a plan, Gov. Steve Beshear told lawmakers Wednesday to prepare for a special legislative session May 24 to quickly resolve the budget stalemate that has threatened to shut down much of state government this summer.

The governor revealed a compromise 2011-12 spending plan prepared by his administration in recent weeks. It retains the broad swath of arrived-on agreement between the chambers, while bringing what amounts to third-party arbitration to the remaining few but very thorny sticking points that had ground previous budget talks to a halt.

Legislative leaders, who were briefed on its contents earlier in the day, quickly called the plan broadly acceptable, and agreed to the special session – something they had warned the governor not to call unless a workable agreement was on the table.

Lawmakers convened for the 2010 regular session Jan.5 facing an unprecedented projected revenue shortfall of more than a billion dollars. This prospect – ‘daunting’ is a mild word to describe it — came on top of repeated shortfalls and program cuts in recent years, hundreds of millions of dollars worth.

The governor’s first pass at the budget in January featured spending cuts, savings and economies across state government, some borrowing, and some sheer optimism. But its $17.5 billion in spending also — unfortunately for its chances – bet on $780 million in projected new revenues from legalizing electronic slot machines at state racetracks.

But slots were a clear no-go in the Legislature this winter, and so was the governor’s budget. Lawmakers immediately set about writing their own spending plan. It was a session-long journey. Through various subcommittees, full committees, chamber votes, conferences and late-night meetings of leaders seeking compromise, it travelled in various incarnations until it ran aground on this compound question as the session ended:

Would taking on significant new 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 in construction and speed the economic recovery? Or an irresponsible deepening of public debt during a recession, by a state already in seeming perpetual financial crisis because of a chronic structural imbalance in its budget and not living within its means?

The House wanted bonds. The Senate wanted restraint. Each had, from its perspective, a powerful argument. And each was dug in.

The session ended April 15 with no budget, and little obvious hope of getting one anytime soon. With the fiscal year turning over July 1, Kentucky faced the very real prospect of entering the new year budgetless. And – unlike a couple of recent times this has happened — recent court rulings now severely limit the governor’s authority to operate the government without one. Executive orders will no longer suffice. Many agencies, services and all state parks would shutter.

Beshear’s compromise plan eliminates the House projects bonding (which originally totaled $1 billion). But it allows for state matching funds to assist local school districts in rebuilding the state’s 14 most dilapidated school buildings. It also redirects some of the across-the-board spending cuts the Senate wanted, to meet House concerns about certain spending priorities, including preserving K-12 base funding for education.

As the Senate insisted, it’s a full two-year budget, not a stop-gap one-year continuation. And it has no new taxes.

It foresees no mass layoffs of state employees, but no pay raises either. The governor does ask to retain the right to order furloughs if necessary. And the administration will have to cut spending on political appointees and contracts. No days will be cut from the school calendar, although one of the originally targeted two will be funded by local districts.

While the governor s may add items to the session call, the Legislature is basically returning to Frankfort on one clear and urgent mission:

Pass a state budget as quickly as possible and adjourn. Under the rules, five days is the minimum required to pass a bill. Not only will a short session itself save the taxpayers money, it will clear the way for certain bond restructuring in June that will reap $113 million in fiscal savings.

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