The Kentucky House last week passed a $17.5 billion general fund budget for fiscal 2011 and 2012 that would plug a projected $1 billion shortfall.

The House voted 65 to 33 for the bill, which authorizes more than $2 billion in bonds for school construction, roads, water, and sewer infrastructure. It also trims state agency and higher education spending, and relies on revenue enhancements as well as $250 million in anticipated federal stimulus dollars for Medicaid.

Some enhancements include suspending for two years a tax deduction for net-operating losses suffered by businesses and accelerating sales tax collections.

“We think that this is a reasonable request, and a good way to balance our budget,” said House Appropriations and Revenue chairman Rick Rand, D-Bedford. “We have asked our business community to contribute, and we think it is fair that they do.”

The budget doesn’t include any cuts to the state corrections budget, the base school funding formula, or Medicaid. It also proposes $30 million of savings over the biennium by ordering the Department of Corrections to parole 1,000 nonviolent inmates by the start of fiscal 2012.

The House budget also provides full funding recommended for the state retirement system and restores funding to the teachers’ retirement system that had been used to cover health insurance costs. It also boosts funding for vocational education, energy development, agriculture, and base realignment and closure relocation needs at Fort Knox.

The budget will now go to the Senate.

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