Beshear Thinks Lawmakers Can Balance Budget

FRANKFORT, Ky. (AP) - Gov. Steve Beshear said Monday he's ready to strike a deal with Kentucky lawmakers on balancing the state budget.

The nation's economic woes have hit the state hard, forcing cuts in government services and prompting the Democratic governor to call for a tax increase on cigarettes, a hard sell in a state where tobacco is a major cash crop.

Lawmakers were expected to arrive in Frankfort on Tuesday for he start of a legislative session that will focus on balancing a $19 billion state budget pock marked by major revenue shortfalls.

In the past year, Beshear has cut more than $400 million from the state budget. And economists warned late last year that the state will face an additional revenue shortfall of more than $450 million by June.

"We've got to find an answer," Beshear said during a Capitol press conference Monday. "And it has to be a quick answer in terms of any additional revenue and any additional budget reductions that we will make."

Beshear said he believes the solution can be hammered out in the legislative session that runs through March 24 and a special session devoted solely to financial matters will not be necessary, though he is ready to call one if needed. Both the state's Democratic-controlled House and Republican-controlled Senate have vowed to work with Beshear on solutions.

Talks so far have gone well, Beshear said Monday.

Increasing the state's cigarette tax remains one of Beshear's primary proposals for easing the financial crunch. Beshear wants to boost the cigarette tax from 30 cents to $1 a pack and double taxes on other tobacco products, moves that he said could produce $81 million this fiscal year and an additional $144 million in the following two years.

The governor's proposals also include three-day unpaid furloughs for all state employees and taking $179 million out of the state's so-called "rainy day fund."

Senate Appropriations and Revenue Chairman Charlie Borders, R-Grayson, said he agrees with Beshear that the financial solutions can be hammered out without calling a special session that would cost taxpayers about $60,000 a day.

Borders said budget negotiators from the House and Senate could begin work next week and have a proposal ready for consideration in early February.

The governor's proposed cigarette tax increase or any other kind of tax increase, Borders said, could be a hard sell as Kentucky residents struggle financially in an ailing economy.

"At this point in time, I think it's far too early to talk about any kind of a tax increase," Borders said "I think everything has to be on the table, but it's too early to assess exactly how much is needed. So I think it's to early to start talking about taxes."

Borders said he believes lawmakers will be amenable to the furloughs to avoid actual layoffs. And he said the "rainy day fund" was set aside for situations like the one the state is facing.

Lawmakers will rise to the challenge, Borders predicted Monday.

"It's going to require everyone working together," he said. "If there's ever been a time for working together, it's now."

(Copyright 2009 by The Associated Press. All Rights Reserved.)

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