ATLANTA - Kentucky lawmakers have spent the last week trying to hash out the differences between the House and Senate budgets for the 2008-2010 biennium, and it remains to be seen whether the bickering will lead to a spending plan acceptable to all.
Caught in the debate over how the state should spend its dollars are several pieces of legislation dealing with bond issues. The first is a $500 million bond package for road projects. Officials say that if the debt is approved as part of the budget, the bonds could be issued over the next two years.
Rep. Harry Moberly, D-Richmond, is one of the sponsors of the road bond bill. He says that the bill would authorize the state to freeze the automatic 1.5 cent- per-gallon increase in the gasoline tax scheduled to take effect in July. Funds from the tax would then be used to back $500 million of road bonds over the next two years. Moberly said the issuance would allow the state to move forward this biennium with projects in the current six-year state road plan.
Another bond element that lawmakers are considering deals with the U.S. Department of Defense's Base Realignment and Closure plans. In Kentucky, Fort Knox was one of the military bases that was recommended to be closed. Some lawmakers are pushing legislation to benefit economic development projects being promoted around Fort Knox so that the area won't become blighted when the base is closed.
The upcoming budget could also allow for bonds to be sold for that effort. An exact amount has not been finalized. However, Sen. Elizabeth Tori, R-Radcliff, said that BRAC at Fort Knox could nevertheless have a positive economic impact on Kentucky of more than $1 billion.
"It's imperative our state does its share in welcoming this opportunity for economic development," she said.
The bills being pushed by Tori and others as ways to stimulate the economy also include one that would create a $296 million bond pool that municipal issuers could draw upon to fund their transportation, education, and other infrastructure issues around the base.
"By this action we stand ready to receive more missions in the next round of base realignment," Tori said last week when she addressed her fellow lawmakers.
As far as spending is concerned, observers say the differences between the House and Senate budget versions boil down to revenue. The Senate version included none of the revenue measures included in the House's version.
Observers say the Senate version would augment state coffers based on increased lottery revenue, savings from state worker retirements, and other efficiency measures. There are still several areas where the Senate cut spending from the House plan.
Legislative staffers say that the goal is to resolve differences over the budget before the end of the month.
There is about $5 billion of outstanding debt issued by all state-level Kentucky issuers.
Kentucky has an issuer rating of Aa2 from Moody's Investors Service and AA-minus from Standard & Poor's. Fitch Ratings does not rate the state.
