- Associated Press - Monday, March 26, 2018

FRANKFORT, Ky. (AP) - Sending inmates to private prisons and building a high-speed internet network dominated the second day of budget talks Monday as lawmakers sought to resolve initial disagreements on how to spend more than $70 billion in public funds over the next two years.

Lawmakers agreed to get rid of language allowing private prisons after hearing testimony from the Kentucky Jailers Association saying they could handle the projected increase of inmates. House budget chairman Steven Rudy said Republican Gov. Matt Bevin still has the authority to contract with private prisons, as he did last year. But the legislature won’t budget for it, meaning the money would have to come from the state’s reserves or other sources.

A proposed 3,000-mile (4,800-kilometer) network for high-speed internet was trickier. Dubbed Kentucky Wired, the network is supposed to be finished already. But it has only completed just over 700 miles (1,100 kilometers), plagued by an onerous contract and millions of dollars of delays

Republican Gov. Matt Bevin’s administration says it needs more than $100 million to keep the project going, but the state lawmakers needed to approve that funding are skeptical.

“These numbers are just ridiculous. It sounds like something Tony Soprano would have his fingers in,” Republican Rep. Kevin Bratcher said.

But lawmakers might not have a choice. If they refuse to pay the money, that could kill the project and make state taxpayers responsible for paying off a $270 million loan plus potential unspecified damages in any lawsuits filed by the state’s private sector partners. Phillip Brown, who oversees the project as executive director of the Kentucky Communications Network Authority, said it could result in a $500 million loss for the state.

“And we have nothing at the end,” Brown said.

Lawmakers spent nearly two hours discussing the complex project Monday, the second day of budget negotiations. Lawmakers barred the public from attending the negotiations, but broadcast them on state television for others to watch - provided officials remembered to turn on their microphones. Lawmakers have until April 2 to reach a deal and preserve their ability to override any potential vetoes from the governor.

The broadband project needs about $30 million per year to make contractually obligated payments to its private partners. If the state doesn’t make those payments, it would essentially kill the project, which could make Kentucky taxpayer responsible for paying off the debt.

“There is no legal basis to undo this transaction,” Executive Cabinet Secretary Scott Brinkman said.

About 80 percent of the fiber optic cables will be hung on existing telephone poles, and state officials have had trouble getting permission to use those poles. It has caused considerable delays that have forced the state to reimburse its private sector partners for their costs.

Brown said the state has reached a settlement with the companies for $88 million, but they don’t have the money to pay it. They’ve asked lawmakers for permission to borrow the money against the network’s future revenues, should it ever be completed. Brinkman said he expects the network to generate $1.3 billion for the state over the next 30 years.

The project was started as a partnership between then-Democratic Gov. Steve Beshear and Republican U.S. Rep. Hal Rogers as a way to attract businesses to eastern Kentucky. The project later expanded to include the entire state.

“We don’t need to lose sight of the fact how important this is for eastern Kentucky,” Senate Democratic Leader Ray Jones said.

Lawmakers did not reach a decision Monday. The House of Representatives included the $60 million for the contractually obligated payments. The Senate did not.


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