Proposed Cigarette Tax Hike; Proposed Cuts For Schools

FRANKFORT, Ky. (AP) - Gov. Steve Beshear is proposing raising the state's cigarette tax by 70 cents to generate $81 million over the next year to help offset a $456 million revenue shortfall.

The Democratic governor released a plan on Thursday that also called for cutting the budget by 4 percent to trim about $147 million in spending and for taking nearly $179 million out of the state's "rainy day fund."

Beshear's plan also calls for a three-day unpaid furlough for all state employees, a move that he said would save $8 million and eliminate the need for massive layoffs. He also proposed transferring more than $40 million to the general fund from restricted accounts.

Beshear said his proposals represent a starting point for discussions with state lawmakers, who are scheduled to convene in January.

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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