Lawmakers Agree On Budget After All-Night Session

FRANKFORT, Ky. (AP) - Kentucky lawmakers said they've agreed on a nearly $19 billion, two-year state budget after working through the night, ending seven days of intense negotiations.

During their talks, lawmakers scuttled proposals to raise revenue through an increase in the state's tax on cigarettes and impose the state's sales tax on certain services. Instead, lawmakers settled on a scaled down spending blueprint that will include 3 percent cuts to public universities.

"The eagle has landed, and we have a budget," House Speaker Jody Richards, D-Bowling Green, said Tuesday morning, after more than 20 grueling hours of budget talks.

Legislators hoped to agree on a proposed budget by midnight Tuesday to be able to pass it and preserve their authority to override any possible vetoes by Gov. Steve Beshear.

Senate Majority Floor Leader Dan Kelly, R-Springfield, said there's still time for the General Assembly to vote on the measure by Wednesday night.

This year's budget negotiations started out in stark contrast to years past, when legislators held their entire talks behind closed doors. Leaders agreed to open the talks to the public and broadcast them live on Kentucky public television.

That lasted five days before lawmakers took their discussions behind closed doors. Lawmakers huddled in the privacy of a Capitol annex conference room throughout Monday and well into Tuesday morning, with as many as four state police troopers standing guard in the hallway.

A sagging economy and soaring government expenses have caused economic forecasters to predict the state is facing an approximate $900 million revenue shortfall over the next two fiscal years.

Beshear proposed an austere two-year budget that called for 12 percent cuts to public universities and numerous government agencies and programs. Beshear called on lawmakers to avoid the cuts by passing a cigarette tax hike of 70 cents a pack to generate nearly $200 million per year. The money could have helped finance hundreds of millions in bonds, Beshear said.

The House and Senate proposed dueling plans aimed at raising millions more in revenue to carry Kentucky government through the tough financial times that are expected.

Lawmakers in the Democratic-controlled House proposed raising the cigarette tax and imposing the state's 6 percent sales tax on certain services. That proposal also was rejected by budget negotiators.

Kentucky's cigarette tax is among the lowest in the nation at 30 cents a pack, and health advocates say raising it could have improved the state's overall physical well-being.

"We're very disappointed. We see this as a missed opportunity," said Tonya Chang, a lobbyist for the American Heart Association. "As long as we fail to act, we're going to continue to have the highest rates of adult smoking in the nation. And we're going to continue to suffer tobacco-related deaths and disease."

Members of the GOP-led Senate, meanwhile, balked at the idea of raising any taxes. Instead, the chamber approved a plan that would have relied on about $110 million in additional lottery proceeds.

After the budget talks, lawmakers agreed to take $14 million more from the lottery during the next two years.

Legislative leaders canceled Monday afternoon meetings of the full House and Senate to allow more time for budget negotiations.

Among other things, the agreed budget would give teachers and state employees pay raises of one percent in each of the next two fiscal years. It would also put $60 million into Bucks for Brains, a program that provides state matching money for private donations to universities for research and other spending.

Richards said lawmakers also included money to keep proposed bridges in Louisville on track, and included language to allow for tolls.

Dick Brown, a Beshear spokesman, said the governor had not had a chance to review the details.

"The governor and his staff will have to take a look at what their proposal is, look at all of it and see where it is and see how it fits with the governor's proposals," Brown said. "We'll take it from there."

(Copyright 20008. The Associated Press.)

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