- Associated Press - Friday, February 5, 2016

PINEVILLE, Ky. (AP) - Republican Gov. Matt Bevin wants to downsize a proposed 3,400 mile fiber optic network meant to make high-speed Internet possible throughout the state.

Bevin told the Saving Our Appalachian Region meeting Friday the project is off track. He said he still supports installing the network in eastern Kentucky, an area he said has the most need.

“If you try to be everything to everybody, you end up being nothing to anybody,” Bevin told the group. “We’ve got to be smart.”

The project, known as KentuckyWired, is one of the signature initiatives of SOAR, the group founded by Republican U.S. Rep. Hal Rogers and former Democratic Gov. Steve Beshear. Last year, a group of private companies led by the Australian-based investment firm Macquarie Capital borrowed $289 million to begin constructing the network. Kentucky government officials promised to pay the companies about $28 million a year for Internet service, which the companies would then use to pay off the loan.

But a key piece of how Kentucky planned to pay back the loan was to have the network provide Internet services for the state’s 173 public school districts. The Finance and Administration Cabinet put the contract out for competitive bid.

Steve Rucker, a deputy secretary with the cabinet, helped write that contract. He resigned to take a job with the Kentucky Communications Network Authority, the public entity Beshear created to bid on the contract. AT&T; formally protested, saying Rucker could not bid on a contract he helped write. Beshear’s administration pulled the contract before leaving he left office in December. Bevin has yet to reissue it. Rucker resigned last week, citing serious health problems.

Without that money, Finance Secretary William Landrum said it could put taxpayers at risk for paying back the $289 million loan. The Kentucky Wireless Operations Company, responsible for managing and maintaining the network, said taxpayers are not responsible for paying back the loan.

“Those bonds were already issued. They were issued in September, they have certain legal ramifications,” Bevin told reporters after the meeting. “To the extent that that handcuffs us, we are going to go back to try to renegotiate, if it was needed. I’m not sure it will be.”

Rogers said he supports Bevin’s proposal to downsize the project. He noted his original idea was only to have the network installed in eastern Kentucky, but said Beshear and other legislative leaders wanted to expand it to reach throughout the state.

KentuckyWired is the latest high-profile project from the Beshear administration that Bevin has downsized or eliminated. Last year, Bevin repealed some Beshear executive orders that automatically restored voting rights to some convicted felons and increased the minimum wage for some state workers to $10.10 an hour. And Bevin has given the order to dismantle kynect, the health insurance exchange Beshear created that allowed eligible Kentuckians to purchase private insurance plans with the help of federal subsidies. Bevin wants Kentucky to use the federal exchange.

But Bevin said Friday he is committed to SOAR, the nonprofit organization Beshear helped create. Its mission is to rebuild eastern Kentucky’s economy, which has been devastated by the collapsing coal industry. With Bevin installed as the group’s new co-chairman, the board agreed to hire a chief financial officer with an annual salary not to exceed $75,000. That would give the group a total of four full-time employees with an annual budget of about $400,000, which includes some public funds.

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