Saturday, December 08, 2001
NKU arena isn't likely
State projects can't be funded
By Patrick Crowley
The Cincinnati Enquirer
FRANKFORT Kentucky can't afford to borrow money to build an arena at Northern Kentucky University or pay for other capital construction projects, Gov. Paul Patton said Friday.
Lawmakers, led by House Majority Caucus Chairman Jim Callahan, D-Wilder, and Rep. Jon Draud, R-Crestview Hills, had been hopeful that even though the state is facing a $533 million budget shortfall, Mr. Patton would support selling bonds to pay for the proposed $45 million NKU arena.
Bonds are basically debt instruments. Investors buy the bonds and are then repaid with interest. With interest rates low and just 10 percent of a project's cost needed up front when bonds are sold, paying for the projects with bonds seems attractive, the lawmakers have said.
Covington city officials also had been optimistic that bonds could provide start-up costs of $5 million or more for Riverfront West, a proposed $300 million office, retail and residential project planned for the city's riverfront.
But on Friday Mr. Patton said the state does not have the money to fund a major bond issue.
I see no way that you
could responsibly propose a major bond issue under the current fiscal conditions, Mr. Patton said.
Earlier in the week, Mr. Patton had said he would include no projects in the budget he and his staff will present to theGeneral Assembly in late January.
Friday's comments indicate that even plans to capitalize projects without direct state funding can't be supported, either. The sagging economy has left the state facing a half-billion-dollar budget shortfall.
Mr. Patton has backed the concept of an arena at NKU. But on Friday he said lawmakers representing the state's 120 counties would never approve a budget containing just one major construction project for Northern Kentucky, and even supporting a bond for one project was untenable.
We're not going to have just one project, for Northern Kentucky in the state budget, he said. There is no way a legislator from Louisville can vote for a major project when there is nothing in Louisville.
To satisfy the politics of bonding projects, Mr. Patton said $200 million to $300 million worth of bonds would have be sold to investors, meaning up-front cash of $20 million to $30 million or more would have to be included in the budget.
That's the only way you can get enough for everybody to get something, he said, a comprehensive statewide development program that I would think would need to be in the range of $200 million to $300 million.
And there is just no way you can ... propose that as we see the budget today, Mr. Patton said.
Rep. Tom Kerr, D-Taylor Mill, who with 18 years in Frankfort is Northern Kentucky's most experienced lawmaker, said it is not uncommon for a project to be proposed over several sessions before it is funded.
I think we'll have to be patient, Mr. Kerr said Friday. We didn't get the convention center or the NKU science building on the first try.
Lawmakers are set to convene the 2002 legislative session on Jan. 7.
It's going to be painful with the budget, like a root canal without any anesthetic, he said. If we don't get the money this time, hopefully we'll get it in the next session.
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