FRANKFORT, Ky. (AP) — Gov. Steve Beshear was set to deliver his budget proposal Tuesday night to a joint session of the Kentucky House and Senate, marking the starting point for months of haggling over a larger pool of tax revenue still not expected to keep pace with pent-up funding requests after years of cuts.
In the days leading up to his speech, the second-term Democratic governor warned that lawmakers face a tough budget situation, despite a projected upswing in revenues flowing into Kentucky's General Fund as the state recovers from the recession.
"While we have more revenue now coming in, it's more than eaten up just by fixed costs that we already have to cover," Beshear said last week.
The governor has said he'll make education a priority, even if it means cuts for some other state programs to shift more money to schools.
"If that's what I have to do, that's what we're going to do," he told reporters.
Kentucky government has endured about $1.6 billion in state spending cuts in the past six years as tax collections plunged amid the economic downturn.
The state's top economists now predict General Fund revenue will grow by nearly $500 million over the next two-year budget cycle that begins July 1.
But funding obligations, led by a mandate to pump more money into the government pension system to restore its solvency, will devour much of the additional revenue projected.
Senate Majority Leader Damon Thayer said he's willing to consider cuts elsewhere in state government to free up money for a small increase in education funding. But he said the next budget cycle is shaping up as one of "low expectations" because funding requests far outpace projected revenue.
"I think we're going to have to say 'no' to most requests for additional funding," said Thayer, R-Georgetown.
Thayer said he thinks there are still more spending cuts that can be squeezed from state government.
Rep. Jim Wayne, D-Louisville, said education and the state's social-services network need to be the top priorities in crafting the next two-year state budget. He said the tough budget situation reinforces the need for additional state revenues.
"When we have all the ways of doing education right and we can't afford to do it right, then shame on us," said Wayne, a member of the House Appropriations and Revenue Committee. "And it's the same with social services and ... other areas of state government, whether it's environmental protection or public safety."
Beshear told lawmakers in his recent State of the Commonwealth speech that he will present a tax modernization plan with specific recommendations. He said then that broadening the tax base and creating a more competitive tax structure would bring in revenues needed to help stabilize future budgets.
Wayne is part of a group of lawmakers that recently proposed a tax plan projected to boost state revenues by at least $500 million annually.
Their plan includes raising the state's cigarette tax, limiting individual income tax itemized deductions, applying a tax on certain services used primarily by the wealthy, such as chauffeured limousine rides, and lowering taxes on low-income families.
Beshear also has renewed his push to legalize casinos as a way to boost future state revenues. He has failed in past efforts to get expanded gambling measures through the General Assembly.