FRANKFORT, Ky. -- Tough as it was for lawmakers to narrowly approve tax increases last week, the new revenue they will generate is modest and serves only to ease the state's budget crisis in the current fiscal year. Next year will be another matter, reports The Louisville Courier-Journal in its Sunday edition.
Gov. Steve Beshear acknowledged that Friday as he signed into law House Bill 144, which raised taxes on tobacco and store sales of beer, wine and liquor.
"We all know that today's action -- as significant as it is, and as important as it is for our children -- is but a temporary solution," he said. "Next year's challenges, by virtually every expert's judgment, may well be even more daunting."
Senate President David Williams, R-Burkesville, delivered a similar message.
"Everyone should operate in the foreseeable future on the worst-case scenario as far as revenue," he said. "And agencies and local governments should start making … the cuts necessary for an economic turndown."
The tax increases approved Friday are expected to generate $52 million before the current fiscal year ends on June 30 to help offset a projected $456 million revenue shortfall.
The budget-balancing plan also takes $219 million from the state's Rainy Day Fund, nearly depleting it. But the budget approved by last year's legislature called for almost all of that money to be spent in the next fiscal year, which begins July 1, reports The Louisville Courier-Journal.
Copyright - The Louisville Courier-Journal.