House Democrats Offer New Budget Proposal

FRANKFORT Kentucky House of Representatives Democrats this week offered a compromise proposal which they hope will break the current state budget impasse.

"We have offered a very structurally balanced budget, a very fair budget," House Majority Floor Leader Rocky Adkins, D-Sandy Hook, said Wednesday. "It's a good proposal for the state of Kentucky."

But high-ranking Republicans' response to the proposal was cool at best.

Without quick action by the legislature, Kentucky would be left without a budget after June 30, last day of the fiscal year. Legislators adjourned on April 13 without passing a budget.

Democrats don't agree with Fletcher's tax reform plan which called for raising the cigarette tax from 3 cents to 29 cents per pack, raising taxes on alcohol, closing business tax loopholes, and replacing state and local telecommunication taxes with a 7.62 percent tax. The Republican-majority Senate favors Fletcher's plan.

This week House Democrats presented a new, balanced proposal based on $305 million in projected new state revenues resulting from an improved economy.

"The revenue came in the form of sales tax and personal income tax," Adkins said.

The House proposal includes portions of Gov. Ernie Fletcher's tax plan that relate to the creation of new jobs, while eliminating what Democrats called a "structural imbalance" present in all previous budgets considered by the House and the Senate during the recent legislative session.

Education spending also gets a big boost in the House plan, with a $70 million increase in funding for elementary and secondary schools over the biennium. Teachers and state employees would get salary increases, too, of 3 percent in 2005 and 4.5 percent in 2006. This is compared to Gov. Fletcher's suggested pay raise of 1.5 percent and 3 percent over the biennium.

The House proposal also seeks to head off or reduce the need for future tuition increases at state colleges and universities by restoring $45 million in cuts imposed on higher education during this past year. Additionally, it will fund infrastructure projects related to economic development, including the extension of water lines for safe drinking water and sanitary sewer service.

Adkins said money budgeted for debt services, particularly bonding for critical capital construction projects, includes many colleges and could put efforts for Northern Kentucky University's arena back on track.

By 2007, Kentucky families whose incomes are below the federal poverty level will be removed from the tax rolls in the new House budget plan. The proposal strengthens efforts at low income tax relief by removing those families with incomes up to $13,000. The House plan would remove 190,000 filers from the tax rolls, eventually bringing relief to more than 400,000 Kentuckians.

"We're sending a letter to the Governor and (State Senate) President (David) Williams (R-Burkesville) asking them to consider the proposal," Speaker of the House Jody Richards, D-Bowling Green, said Wednesday. "We're doing everything we know to do. Compromise is the essential element."

In separate interviews with the Associated Press, Senate Majority Leader Dan Kelly and Fletcher's chief of staff, Daniel Groves, zeroed in on a particular difference between the Democrat plan and Fletcher's proposal.

Both proposed to eliminate a number of corporation exemptions. But Fletcher proposed to immediately cut the top corporate income tax rate, now 8.25 percent, to 6 percent. The Democrat plan would reduce it to 7.5 percent next year and to 6 percent the year after.

Kelly, R-Springfield, and Groves both said the difference to businesses would be $66 million. Kelly said that difference, even for a single year, might prompt some companies to move headquarters to another state.

Groves noted that the Democrat plan, unlike Fletcher's tax proposal, would do nothing to fix the state's telecommunication tax, which a court declared unconstitutional because it applied to cable television but not to satellite TV.

The Associated Press contributed to this story.

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