ATLANTA -- Kentucky Gov. Brereton Jones plans a special legislative session for January to take up bond requests rejected during the regular session earlier this year.
The Democratic governor will ask lawmakers to approve $67.2 million in funding for three building projects -- the Louisville and Northern Kentucky convention centers and a state history center in Frankfort. Debt service on the three projects would total $6.5 million annually.
The borrowing could face opposition from legislators, given their reluctance to incur new debt on top of Kentucky's appropriation-backed debt, which will stand at $3.8 billion as of the end of fiscal 1995. Legislative sources suggest the session will be called for Jan. 17.
Crit Luallen, the state's finance director, said the governor chose to reconsider the question of bond financing for the three capital projects "because they should receive more [legislative] support now than last January."
More than $100 million in bond-financed projects was cut from the governor's proposed budget for the 1994-96 biennium. Last June, Kentucky legislators needed a special session to approve the biennium budget, which totaled $10.2 billion.
Luallen said the two convention centers are "viable revenue generators" and that the history center will support "educational and cultural growth" in the state.
Kentucky House Speaker Joe Clarke said yesterday, however, that "construction projects of any kind won't be met with favor in the special session."
Clarke said legislative backing for the governor's bond proposals broke down last year when some representatives failed to receive funding for projects that affected their districts. In the final budget, the Senate cut out financing for many capital projects.
Clarke also called the revenue projections for the convention centers "inflated."
Others have raised concerns about funding for the construction projects, given that in the special session Jones plans to rally support for a repeal of the state tax on private pensions, which would mean a loss of $60 million to $75 million in revenues, according to some sources.
"I don't think the governor's thought this [special session] through," said Sen. Michael R. Moloney, co-chairman of the Appropriations Committee. "Why does he propose to offer tax relief and incur debt at the same time?"
Said Jones in an statement of his intent for the session: "I believe it is fundamentally wrong that government pensions have been exempted from state tax while the pensions of working people in the private sector have not."
The statement also said the governor has created a task force to produce a comprehensive study of tax reform.
Moloney, who voted against new construction borrowing in the regular session, said "some of the leadership might acquiesce to the governor's request" for more funding.
The senator also said the governor's proposal "to eliminate the private pension tax without a substitute revenue source is a bad move."
Moloney said he agrees that the taxing structure needs reforming, but he said the governor should "hold back on major [tax] cuts until further analysis."
According to Terry Jones, a staff assistant to the Appropriations Committee, a repeal of the private pension tax would cut revenues to the state by $60 million to $75 million.
The aide said estimates of the renenue loss would be difficult to calculate since the legislature would need to define a "private pension."
"The legislature would have to decide if personal savings accounts and investments would be treated like a 401(k) plan," Jones added.
Referring to the repeal of a private pension tax, Clarke said he would support the measure but cautioned against "piecemeal tax cuts."
"My belief is we should stop this feeding frenzy," Clarke said. "If we want a cohesive change in the taxing of Kentucky residents, we should look at the whole structure."
The governor has made no official proclamation detailing the agenda of the special session.
