Tuesday, June 29, 2004

Fletcher issues spending plan

$9.4 billion earmarked for quarter just ahead

By Charles Wolfe
The Associated Press

FRANKFORT, Ky. - Gov. Ernie Fletcher on Monday issued a plan to get state government through the next quarter in the absence of a budget from the General Assembly. It calls for spending $9.4 billion through Sept. 30.

Fletcher said it was his responsibility to ensure that public services do not screech to a halt when the new fiscal year begins Thursday.

"I cannot and will not shirk those responsibilities because one branch of government has failed to act," Fletcher said in a news conference.

The "public services continuation plan" would be a substitute for a budget. Fletcher said it would not prevent House-Senate negotiations on a budget and taxes and that he stood willing to call legislators back to the Capitol. The General Assembly adjourned April 13.

The current budget runs through Wednesday. Fletcher said he did not lay out a spending plan for the entire year because he expected a budget would be passed. Another quarterly plan would be issued in September if needed, administration officials said.

State Budget Director Brad Cowgill said the spending plan provides some modest cash for construction. But the state could not sell bonds for projects without appropriations for debt service.

Aside from that, state services will continue as usual. The public as a whole "will not notice that as of Thursday there's any change," Cowgill said.

No state government employees would be laid off.

They would get a slightly higher pay raise - 2 percent, up from 1.5 percent - than Fletcher proposed in the budget he submitted to the General Assembly in January. So would teachers and other school employees.

In most years, the raise is 5 percent, and there is a state law to that effect. In tough times past, the General Assembly has used the budget legislation to temporarily suspend that law.

Fletcher's general counsel, John Roach, said Fletcher could get around the salary law because it applies to budgets, and "this is not a budget."

Universities, which were ordered to make $41 million in cuts as state revenues nosedived early in the year, would get back $20 million of it under Fletcher's plan - the result of a revised forecast that the state's General Fund will take in $305 million more than expected in fiscal 2005.

Fletcher's predecessor, former Gov. Paul Patton, set the precedent for a spending plan in 2002 after the General Assembly adjourned without passing a budget. The 2004 General Assembly ended the same way.

The two chambers deadlocked two years ago on whether to provide public matching funds for gubernatorial candidates. The issue this year was Fletcher's proposal for a new tax code that would have reduced or eliminated some taxes, especially on businesses, while raising others.

Fletcher's Republican allies in the Senate included the tax plan in their budget. Democrats in the House refused to consider it. Fletcher said Monday that "much of the responsibility" for the impasse "lies at the feet of House Democrats."

The Democrats say they still oppose action on taxes this year. But they outlined another budget proposal last week and invited Fletcher and Senate Republicans to agree to quick action. The invitation "has been met with nothing but contempt and derision," Tom Martin, a spokesman for House Speaker Jody Richards, said Monday.

Attorney General Greg Stumbo, a Democrat, has sued to test the extent of Fletcher's authority. Stumbo's suit deals only with whether the governor can use a spending plan to suspend statutes. It avoided the question of whether it was constitutional for a governor to spend unappropriated money.

Highlights of the governor's program

Highlights of Gov. Ernie Fletcher's "Public Services Continuation Plan," released Monday.

• No curtailment of state services, programs.

• Would spend $9,489,769,661 from July 1 through Sept. 30. Money from various sources, including: General Fund, federal government, state Road Fund, agency restricted accounts, investments, national tobacco settlement.

• No state bonds to be sold but debt service on bonds already sold is covered.

• No use of "one-time money" for recurring expenses; only for one-time costs.

• 2 percent raises for state employees and school employees.

• $23 million increase in base state funding of public schools - $3,222 per pupil in average daily attendance, up from current $3,191.

• Adds $20 million to appropriation for universities. $10 million distributed among institutions for research, other projects that aid economic development. Other $10 million to be distributed later.

• $5.5 million in cash for new Warren County technology center, as promised for a Magna International truck frame plant.

• "Cash funds" four other projects considered urgent: $4.4 million for aircraft hangar, Bluegrass Station, Fayette County; $1.2 million for new roof, Carl Perkins Rehabilitation Center, Johnson County; $1 million each for information technology projects, Finance Cabinet and Cabinet for Health and Family Services.

• $5 million for planning, design of future construction projects.

• $2.5 million for future economic development projects.

• $2.5 million for maintenance, emergency repair or replacement of state buildings.

• $5 million to Medicaid for implementation of new management, cost containment programs.

• Adds $66.6 million to budget reserve trust fund - 1.6 percent of General Fund.

• Increases coal severance tax receipts being returned to counties by $16.6 million.


On the Net

Text of spending plan: http://governor.ky.gov

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