Frankfort, KY - The University of Kentucky would be authorized to spend $375 million of its own money, and a project that would revitalize downtown Lexington would receive $3.5 million from the state under the budget being proposed by Gov. Steve Beshear.
"It's a budget that, to be candid, is inadequate for the needs of our people," the governor told a joint session of the Kentucky General Assembly Tuesday night in unveiling his proposed budget that will be up to the legislature to enact in the next couple of months.
After a request by UK President Eli Capilouto that the state budget fund the university's priority capital projects at the expense of a project that would redo Rupp Arena, Beshear split the difference. His budget proposal would allow UK to issue up to $200 million in bonds and permit spending up to $175 million on the first phase of a public/private partnership to build 9,000 new dorm rooms. The proposal also grants $3.5 million in general fund bonds to the city of Lexington to go toward the planning and design of a re-envisioned downtown.
"This is not in competition with the University of Kentucky, as you know we're not recommending any new general fund projects for the universities because we don't have the money to do that," Governor Beshear said in a media briefing Tuesday afternoon.
In total, Kentucky's public universities would be allowed to issue $451 million in bonds they would be responsible for repaying while no money out of a proposed $304 million in general fund capital bonds - the lowest total since the 1996 budget cycle - would go toward the postsecondary schools.
One requirement of the state's $3.5 million for Lexington is that LFUCG contribute $1.5 million, totaling $5 million to pay for the planning and design of the proposed Rupp Arena Area Entertainment District. Lexington Mayor Jim Gray's spokeswoman Susan Straub said in an email there has been no decision as of yet if the city's money would be cash or a bond.
"I know you all have seen figures like $20 million being thrown around for planning and design (for Lexington's downtown and Rupp Arena) and obviously we didn't have that kind of money to address that situation," Beshear said. "But this is a matching pot here with 3.5 (million) in bonds from us and a million and a half from the city that will at least let them begin planning and design of that downtown redevelopment project."
News of the governor's inclusion of those funds - pending city participation - was received warmly by the mayor's office a week after Beshear hinted the project may not be far enough along in the planning stages to warrant state funds in this budget cycle.
"The governor has endorsed Lexington's downtown as one of the state's biggest economic growth projects, and that's a big step forward. We appreciate his support," Gray said Tuesday night in a release from his office.
"This project goes far beyond our city limits and this funding means we can take the next step forward to elevate our brand, and grow jobs and economic opportunity. We appreciate the governor's vision for a reinvented Rupp Arena, and for the potential to create new arts, educational, commercial and residential value in the 46 acres the District includes," he added.
While the governor's proposed budget included ample opportunity for UK to spend its own money toward capital projects, it is cutting all state universities' operational budgets by 6.4 percent.
"Such reductions, without question, would have a significant impact on the University of Kentucky," UK's Capilouto said in a statement. "It would force all of us to make strategic - and, yes, tough -- decisions."
Capilouto said he and other university advocates will work the halls of the legislature until the budget is finalized to receive as much state funding as possible.
"While the Governor's budget proposal is important, it represents the first step in a long process. Let me assure you, UK will be in Frankfort every day to make our case about the importance of investment in this institution. We have a compelling story to tell, and we intend to tell it vigorously - sharing the incredible stories I have heard across campus about the ways in which we prepare our students, reach breakthroughs in our laboratories and uplift communities across Kentucky."
Beshear's budget proposal, which will be enacted in some form on July 1, calls for an 8.4 percent cut across much of state government spending, though programs like Medicaid, the K-12 school funding program, corrections, debt service, retirement contributions, coal severance, student aid, mine permitting and reclamation, community based services, public defenders and the Kentucky Horse Park among a few others were unscathed in Beshear's budget.
The Budget also includes: