BRADENTON, Fla. — Kentucky Gov. Steve Beshear recommends what he calls "harsh cuts" along with $1.96 billion of bonds in his proposed $68 billion budget for the 2014-2016 biennium.

The total spending plan relies on "modest" growth in revenues over the next two years that will not be adequate to meet all obligations and address certain critical needs, State Budget Director Jane Driskell said in a letter to the governor Tuesday.

To fill the gap, Beshear said his plan includes budget reductions between 2.5% and 5% to produce $98.6 million in cuts at some state agencies, higher education institutions, and the state police.

The nearly $2 billion bonding plan is the state's highest since the 2008-2010 biennium with 76%, or $1.58 billion, earmarked educational needs.

"This budget proposal strategically focuses our very limited resources on what I believe will deliver the greatest return - a more highly educated population that will become a more talented workforce," he said. "This proposal makes substantial investments in the physical and intellectual infrastructure of our schools, both the K-12 system and our institutions of higher learning, including an historic proposal for our two-year community and technical colleges."

Beshear is proposing a new program that would authorize $145.5 million in agency bonds to be issued for the Kentucky Community and Technical College System, which serves about 100,000 students.

The state's general fund can't meet the system's infrastructure needs, so agency bonds will finance up to 75% percent of project costs with the remaining 25% coming from other public or private sources.

The proposed budget, which is now in the hands of the Legislature for consideration, fully funds the actuarially recommended contribution for the Kentucky Retirement System, Beshear said.

For the first time in four years, the state budget includes pay raises for employees ranging from 1% to 5% with the lowest-paid workers getting the largest increases.

The reserves, or rainy day fund, would remain at $98.3 million.

Kentucky would move forward with a $100 million plan to expand and improve high-speed broadband Internet service under Beshear's plan.

The state ranks 46th in broadband availability, which includes 23% of rural areas without the service.

The plan, called Next Generation Kentucky Information Highway, would be financed from various sources, including $60 million from bonds, $20 million from federal funds, and $20 million from others.

The state budget proposal also includes $7 billion of state and federal funding for transportation improvements.

Beshear is also seeking authorization for high-priority ventures, including the $753.6 million Mountain Parkway widening and extension project, which includes $158 million in toll revenue bond financing.

Another $60 million in highway funds is being sought to facilitate building a second bridge alongside the Brent Spence Bridge between northern Kentucky and Cincinnati. The project is expected to receive $1.78 billion of toll revenue bond financing.

In his budget speech Tuesday, the governor said that during the legislative session he would also present proposals for modernizing the tax system and expanded gambling, both of which would bring new revenue to the state's coffers.

Those revenues were not included in the budget, but Beshear they could help stabilize the state's spending needs.

He also wants lawmakers to approve a statewide referendum in hopes of keeping revenues from gambling in the state.

"Expanded gaming would get us the additional recurring revenue even faster, again not by creating a new burden on Kentuckians, but by capturing a revenue stream that already exists," he said. "Kentuckians are currently spending hundreds of millions of entertainment dollars on gaming but they're spending it in other states [and] funding programs outside our borders."

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