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Best efforts still can't get state budget approved

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From the House

By Rep. David Floyd

    “Mr. Speaker, I would move you sir that ...we adjourn sine die, until the first Tuesday following the first Monday of the Year of Our Lord 2011, unless called into extraordinary session by the Governor of the Commonwealth.”

    FRANKFORT - Sine die is Latin. It means ‘without a day.’ In session-speak, it means the end.

    That quaint parliamentary motion (replicated in the Senate, though addressed to ‘Mr. President’) is always much anticipated by lawmakers, legislative staff, reporters, lobbyists, and others who’ve worked a winter session’s long cold hours.

    And when the motion came in both chambers Thursday, the 2010 General Assembly officially ended and entered the history books.

    But this year’s ‘adjournment day joy’ wasn’t unalloyed. The session went down to its last hours with its major challenge hanging unresolved. And finally it went home as it arrived - a session without a budget. And in those final hours, the venerable adjournment motion from a past era hinted at a likely future - being called back into special session by the governor to finish that unfinished business.

    The state budget has been this session’s Holy Grail; the search for it hasprovided most of its narrative.

    And fittingly, nearing its final page, the session took a plot twist, in the form of something hitherto untried: A House proposal to pass a one-year ‘continuation budget’ to keep government operating at current funding levels until a formal budget could be agreed to, either in special session soon or in regular session next winter.

     The outcome was in doubt till the very end. The continuation proposal itself wasn’t unveiled publicly until late in the session’s penultimate day. But by mid-afternoon the next day - the session’s 60th and last day - the Senate announced it was adjourning without taking up the proposal and the suspense ended.

    It was a fitting climax to a dramatic year.

    Lawmakers convened Jan. 5 to face a staggering projected revenue shortfall.

    Some said it was $1.5 billion. Almost everyone agreed it was at least a billion. Kentucky has suffered through repeated shortfalls in recent years, hundreds of millions of dollars worth, but this was the first time anyone had used the ‘b’ word.

    By almost any metric, this was a shortfall unlike any we’ve seen, in a grinding recession disinclined to relent.

    Gov. Steve Beshear was first out of the chute with a plan to deal with it, when he delivered his Budget Address to a joint session in the House Chamber in January. It featured spending cuts, savings and economies across state government, some borrowing, and some plain optimism.

    But its $17.5 billion in spending also, unfortunately for its chances, counted on $780 million in projected new revenues from legalizing electronic slot machines at state racetracks.

    By the time the chamber lights dimmed that night, it was clear from leaders’ reactions that slots were politically impossible in this Legislature.

    And so was the governor’s budget. By sundown the next day, lawmakers had set about writing their own spending plan from scratch.

    As the Constitution requires, the House went first. 

    Its budget contained no slots revenues. But it did include some short-term tweaks in the business-tax code that would raise between $200 million and $300 million (estimates varied widely) in the two-year budget cycle. It also made some headlines by cutting two instructional days from the school calendar, although it preserved basic SEEK funding for schools. It cut agency spending pretty much across the board, counted on yet-undeclared federal stimulus money for Medicaid, and called for cuts in state political and contract hiring.

    It also specified something that would set the stage for future impasse - a billion dollars in bonded debt to build new schools to replace aging ones, plus water and sewer projects statewide.

    The Senate, in its turn, cut government spending more deeply than the House, dumped the business-tax changes as unacceptable tax increases - and said no to House bonding for projects. Senate leaders said piling on more debt with state finances stretched water-thin and the economy in grim recession would cause a ‘death spiral of debt’ in coming years.

    And so, in late March, began the semi-annual conference-committee dance between the two chambers - give some, take some, as conferees tried to find a common-ground compromise budget all could live with.

    First indications about the negotiations were optimistic. Specific spending details seem to have been resolved, or were at least resolvable.

    But finally, negotiations derailed irresolvably on a point of basic principle: 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 recovery?

    Or an irresponsible deepening of public debt by a state already in perpetual financial uncertainty because of a chronic structural imbalance in its budget?

    House leaders argued for bonding. There was $1 billion of it in their original proposal, although the total came down dramatically as various compromises were floated. Most of the money would go to replace dilapidated schools.

    House leaders said their original package would stimulate the state’s recession-ravaged economy and create 25,000 jobs for out-of-work Kentuckians. State unemployment has risen past 10 percent, and is certainly more if you count the thousands of ‘discouraged’ job seekers who’ve just quit looking.

    Senate leaders pointed to that same recession and countered that piling on $1 billion in new debt would send the state into a ‘debt death spiral.’ They said 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 Kentucky’s budget too long.

    To do otherwise would just perpetuate and worsen the underlying problem, they said.

    Despite various good-faith efforts by both sides to reach compromise over the veto recess and as the inexorable session clocked ticked down, the chambers finally threw in the towel on the session’s penultimate scheduled day.

    By that point, just as a practical procedural matter, a new bill could not be printed and prepared for a vote before the mandated April 15 adjournment. The House’s 11th hour proposal for a continuation budget never  flew in the Senate

    So now, what?

    Almost certainly, the governor will have to bring lawmakers back to Frankfort for a special session - what the sine die motion calls an ‘extraordinary session’ - before July 1 to pass a budget for the coming fiscal year. But at least one key leader has already warned Beshear not to do so unless and until the chambers have a compromise agreement in hand.

    It should be noted this is potentially ‘new’ history being written. While a couple of times in recent years a budget wasn’t in place when the new fiscal year began, in those cases governors kept government going by executive order.

    But recent court rulings have limited the governor’s authority to keep a budgetless government operating to certain essential functions, like corrections.  ‘Non-essential’ services like parks would have to shut down.

    Basically, people will notice, unlike in past years. It would be uncharted waters.

    So one hundred and seven days after the 2010 General Assembly convened Jan. 5 in great uncertainty, its session is over. But the great uncertainty remains, the full story is not yet told, and it may be weeks or months unfolding.