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Ky. House leaders looking at suspending tax breaks

FRANKFORT, Ky. (AP) - Kentucky House leaders are looking at
possibly suspending some tax exemptions temporarily to help balance
the next state budget, Speaker Greg Stumbo said Wednesday.
The budget writers are looking at a "pretty significant
package" that could generate about $400 million in revenue by
closing select tax breaks for two years, Stumbo said.
"We are looking at some of the exemptions, and we're
considering perhaps forgoing them during this biennium only,"
Stumbo, D-Prestonsburg, told reporters.
House leaders have rolled out proposed budget cuts and other
steps to try to plug a shortfall exceeding $1 billion for the next
two-year state budget cycle, which starts July 1. The steep
economic downturn has taken a toll on state revenue collections.
The House leaders hope to finish work in the coming days on
their budget plan, and Stumbo predicted once that's done "we'll
more than be in balance." Stumbo said they are considering
"novel" ideas by some House members who have been reviewing the
state tax code.
One proposal would generate some $90 million from accelerated
sales tax collections.
Another would produce an estimated $184 million over two years
by temporarily suspending tax write-offs for businesses reporting
losses. Those businesses would still be able to eventually claim
those losses for tax purposes.
"This is really holding businesses harmless," said Democratic
Rep. Jim Wayne of Louisville, part of the tax review group. "For
those two years, when we're in this economic bind, you suspend
that."
Asked if temporarily suspending tax breaks would amount to a tax
increase, Wayne said, "It depends on how you frame it. In my
opinion, these are tax exemptions, these are tax giveaways that the
state through the years has carved into the statute and they're
never reviewed."
Meanwhile, Stumbo said House leaders are scheduled to meet with
public university presidents Friday to discuss the budget.
The budget plan by House leaders includes a 2 percent cut for
higher education in the first year and no funding increase in the
second year of the biennium. House budget writers have said the 2
percent cut would result in yearly savings of about $20 million.
The plan also contains no capital projects for the universities,
but Stumbo has said the House will try to find money for
maintenance and operation of new university buildings opening in
the next two years.
The budget proposal also seeks savings by cutting government
contracts and the number of non-merit positions across state
government, along with revising state health insurance offerings.
The plan assumes Congress will prolong the temporary boost in the
federal government's share of Medicaid costs in Kentucky for at
least six months.
The proposal also calls for eliminating two instructional days
in Kentucky public schools, which is projected to save about $34
million each year.

(Copyright 2010 by The Associated Press. All Rights Reserved.)


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