Governor: Kentucky's budget crisis worse than first realized

Associated Press Writer
FRANKFORT, Ky. (AP) - Kentucky could be facing a budget
shortfall of more than $1.5 billion over the next two years because
of the economic recession, Gov. Steve Beshear said Tuesday.
"We face a challenge much greater than many had anticipated,"
Beshear said at a Capitol news conference. "Obviously, this is
going to require, more than ever before, a cooperative, bipartisan
working relationship between the legislature and the governor's
office if we are going to continue to move this state forward."
The Democratic governor didn't rule out the possibility of
furloughs or layoffs among the state's nearly 34,000 employees.
He said he would do all that is "humanly possible" to spare
education from sharp cuts at a time when rising Medicaid costs and
debt payments for construction projects are eating away at state
Surrounded by spending charts, Beshear said he is open to all
suggestions for generating more revenue except one. He said he is
opposed to any type of broad tax increases.
"I think it would be counterproductive right now to have a
broad-based tax increase," he said. "I think it would tend to
push us farther into this recession than to help us come out of
this recession."
Some legislative leaders have touted a variety of ways to
generate more revenue, including a proposal to open the state to
more gambling opportunities by legalizing slots at horse tracks.
Revenue generated by taxing slots has been estimated at $200
million to $350 million a year - not nearly enough to resolve the
budget crisis.
Beshear said Tuesday that slots remains one option that may be
considered. He said he remains hopeful that Congress might provide
some additional economic stimulus funding so that it won't be
necessary to make massive cuts to government services.
The shortfalls have fueled discussions among legislative leaders
about tax reforms. The governor said he would oppose any such
reforms that would result in broad tax increases.
A panel of Kentucky economists predicted earlier this month that
the state will have to deal with an additional $100 million budget
shortfall in the current fiscal year. That's in addition to some
$800 million in cuts that have already been made to the current
The governor called on Democratic and Republican lawmakers to
put political differences aside to find solutions to the financial
"It's imperative that we begin to work together on the
unprecedented challenge of balancing the budget," Beshear said.

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

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