FRANKFORT, Ky. (AP) -- House leaders are closing in on a plan to plug a massive shortfall in the next state budget without any new tax revenues, Speaker Greg Stumbo said Friday.
In a show of bipartisan optimism, the Democratic speaker and Senate President David Williams, a Republican, predicted lawmakers will agree on a budget in the current 60-day session despite a shortfall exceeding $1 billion, caused by the deep economic downturn.
"This is a defining moment for the General Assembly," said Stumbo, who predicted lawmakers will step up to the challenge by passing a two-year budget that "shows fiscal responsibility."
During the two leaders' regular Capitol news conference, Stumbo offered a few glimpses into the ongoing deliberations among House leaders, who are working to craft a spending blueprint that could be presented to rank-and-file members next week.
The speaker expressed some doubts about pay raises for school teachers. Also being scrutinized, he said, are personal service contracts, the Medicaid program that provides health coverage for low-income Kentuckians, plus spending by the various state agencies. House leaders are looking to achieve Medicaid savings by making the system more efficient, he said.
Stumbo said House leaders aren't discussing any tax increases to help balance the budget.
"We're preparing a budget under the scenario of existing revenues," Stumbo said.
A small, bipartisan group of lawmakers has been discussing possible tax legislation that could help erase the shortfall. Democratic Rep. Jim Wayne of Louisville, a participant, has said the various options could include closing tax loopholes, perhaps temporarily.
Stumbo said any tax plan emerging would likely be discussed by lawmakers, but said revamping the state tax code would be difficult while lawmakers struggle to craft a budget.
Stumbo predicted the next budget could be balanced without deeply painful cuts.
"The parks aren't going to close, the schools aren't going to close, the roads aren't going to go without maintenance," he said. "None of those drastic things are going to happen."
Once a budget plan passes the Democratic-led House, the GOP-controlled Senate will get to put its imprint on the spending plan for a two-year period starting July 1.
Both Stumbo and Williams downplayed an attempt by Gov. Steve Beshear to revive his proposal to legalize video slots at Kentucky race tracks as a way to raise revenue to avoid budget cuts.
Beshear's budget proposal last month assumed $780 million in revenue from legalizing slot machines at tracks, but the expanded gaming idea has been a nonstarter among lawmakers so far.
Stumbo said he had not read a letter Beshear sent to House lawmakers Thursday urging them to take another look at his expanded gaming proposal to shore up the budget.
An expanded gambling proposal passed the House last year but died in the Senate.
Stumbo said he hasn't seen signs of an active lobbying campaign by Beshear to win over lawmakers to his expanded gaming plan.
Williams said Beshear has "kind of become a one-trick pony. And his one trick is, he's interested in expansion of gambling."
The Senate leader raised the possibility that lawmakers might look at taking away some of the governor's latitude in deciding how to spend funds appropriated by the General Assembly.
Williams also said state government employees, from top to bottom, "cannot be expected to be completely insulated from the situation that we find ourselves in economically."
Sen. Julian Carroll, D-Frankfort, whose district includes many state workers, said in an interview that pay raises for teachers and state employees appear to be "out of the question." He held out the chance of an eventual raise in the second year of the next budget cycle if the economy improves or the state receives another round of federal stimulus money.
But for now, Carroll said, "The best under this budget that state employees can hope for is maintaining their present employment."
(Copyright 2010 by The Associated Press. All Rights Reserved.)
