After working through the night and into yesterday morning, House and Senate leaders have agreed on a $19 billion state budget that includes a 6 percent cut for higher education over the next two years.

The budget would cut higher education funding by 3 percent on top of a 3 percent cut enacted by Gov. Steve Beshear for the fiscal year ending in July. If approved by the full House and Senate, and the governor, UK’s funding would be reduced by $10 million each of the next two years from the original 2007 budget.

Unlike the plan passed two weeks ago by the House of Representatives, the budget approved yesterday by the conference committee contains no cigarette or gasoline tax increases.

The state would instead use other methods to fill a $900 million shortfall over the next two years, including taking an additional $7 million from state lottery revenue each year. About $85 million would be generated by not replacing about 3,400 state workers after they retire this year, and the state would restructure its debt to delay paying about $50 million for a few years.

The House and the Senate approved cuts for higher education in the separate budgets that each body produced in the last few weeks, although none as high as the reduction proposed by Beshear in December.

Beshear enacted a 3 percent cut for this fiscal year and recommended a 12 percent reduction on top of that for the next two years. The House approved maintaining the 3 percent cut, while the Senate approved a total higher education cut of 6 percent.

In a statement yesterday, Beshear said he is disappointed the proposed budget does not include plans for raising money.

“As you recall, I proposed not one but two plans for recurring revenue — namely expanded gaming and an increase in the state’s low cigarette tax — in an effort to move the state forward in the areas of education, health care, public safety and economic development,” Beshear said. “The House of Representatives made its own proposal for additional revenue. However, the Senate majority has refused to consider any new revenue options.

“Without much needed recurring revenues, these and other vital services will not be adequately funded.”

UK’s Top 20 Business Plan called for an increase of $20 million each year from the legislature. A cut of $10 million may have a negative impact on UK’s plans, said Brad Cowgill, interim president of the Kentucky Council on Postsecondary Education.

Because all of the terms of the committee’s deal have not become available yet, Cowgill said he does not know the specifics on the agreement for funding. However, he said, higher education fared well considering the circumstances.

“I’m still very encouraged by that considering the cut could have been considerably deeper,” Cowgill said.

How any cuts will impact student tuition will be known by April, when UK decides its tuition increases. In 2006, the same year the state approved UK’s request for $20 million in increases each year of the 2006-08 budget cycle, tuition went up 12 percent. In 2007, tuition went up 9 percent.

Before the budget can become official, it must pass through several steps between now and the end of the 2008 session of the General Assembly on April 15.

Now that a compromise has been reached, the legislature will likely vote on the budget Wednesday afternoon, going to the House and then the Senate. Legislators would not vote on individual portions of the bill, but the budget as a whole.

If approved, the budget proposal will move to the governor’s office Wednesday. Beshear would have until April 14 to examine the budget, during which time he could veto all or part of the document. In that case, legislators would be able to override vetoes by April 15.