Kentucky State Budget Battle Shifts Focus to Rupp Arena Renovations

  FRANKFORT—Kentucky state lawmakers spent the first several hours of a Saturday afternoon budget conference haranguing one another for Washington-style politicking and discussing whether to use state bonds to finance portions of a $310 million renovation plan for the University of Kentucky’s Rupp Arena.

The fourth consecutive day of budget negotiations between House Democratic and Senate GOP leadership began with heightened levels of rancor, with each side blaming the other for adhering to politics that invoked the specters of Presidents Barack Obama and George W. Bush.

But after the venom subsided, they turned their attention to the plight of Lexington Mayor Jim Gray, who pitched lawmakers on taking out $65 million in bonds to finance Rupp Arena’s renovation, although he offered little details on the fiscal aspects of the project.

Gray warned that if lawmakers fail to appropriate state funds, “it will drive a stake through the heart of the project.”

The version of the budget drafted by Gov. Steve Beshear and House Democrats included language that funded the renovation, but Senate Republicans excised it in their draft.

Gray said that he was bound by a verbal agreement with the university that prohibited him from speaking about certain details of the project, including how much money the University of Kentucky would be investing. He said if the state were to appropriate funds, it would be about $65 million in bonds.

Gray assured lawmakers that UK has insisted that “the project will not be paid for on the backs of regular fans,” and that ticket prices would not be raised to help offset its cost.

Rep. Larry Clark, D-Louisville, supports the project. He told lawmakers that the Rupp Arena project would avoid the same mistakes that have plagued downtown Louisville’s KFC Yum! Center, specifically regarding the issue of tightening up its tax-increment-financing district, which is a funding mechanism that redirects taxes collected from businesses around the construction area to offset construction costs.

As it stands, the state would be one of 18 financiers of the renovation project, including UK. The total amount that the university will provide, along with many other details, remain unknown, including the amount of debt financing that the state would be obligated to pay. Senate Republicans expressed concern over the exposure the state would have if the project went belly up, but Gray assured them that if the legislature approved the bonding, then the Lexington-Fayette Urban County Council would appropriate funds to minimize that exposure.

By 3:30 p.m., lawmakers had ejected journalists from the conference committee and entered a closed executive session, but they did not offer a reason for the move. 

Many important items remain to be discussed, including ironing out discrepancies between the two chambers’ versions of the state’s biennial road plan.

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