FRANKFORT, Ky. (AP) - Gov. Steve Beshear signs legislation
to offset Kentucky's $1 billion budget shortfall that involves
using federal stimulus money and cuts to government agencies, he
said Wednesday, hours after the measure cleared the General
Assembly.

The budget proposal will force deeper funding cuts for some
areas of state government including natural resources, tourism and
environmental protection, Beshear said.

The governor said he was supporting the proposal because it
maintains state funding for elementary and high school education,
Medicaid and public safety.

"Overall, I'm going to sign this bill because I think it's the
best we can do right now," Beshear told reporters. "Storm clouds
still loom overhead."

The Kentucky General Assembly approved the plan on Wednesday,
hours before ending a special session that last little more than a
week. Beshear said he also plans to sign into law legislation that
would offer new economic development tax breaks and create an
agency to develop Ohio River bridges into Indiana.

The $9.4 billion budget plan calls for applying $740 million in
federal economic stimulus money to the state budget. The remainder
of the shortfall would be handled largely through cuts to
government agencies that Beshear will have to determine for
himself.

Legislators also approved two other plans. One of the plans
would create an agency to work with Indiana on building new Ohio
River bridges, and allow the imposition of tolls to pay for them.
Another would provide a wide span of new tax incentives intended to
spur economic development in the state.

Those initiatives, coupled in a single piece of legislation,
also would exempt active duty military personnel from the state's
income tax and give tax breaks to those who purchase new cars and
new homes. It also offers film industry tax incentives, tax breaks
to land a NASCAR Sprint Cup race and attempts to lure the Breeder's
Cup championship races to Kentucky more frequently.

House Speaker Greg Stumbo, a Prestonsburg Democrat, said the
package would create new jobs and stimulate the state's economy.

"Those tax incentives that we just passed will help jump-start
our economy back on the road to recovery," Stumbo said.

In the budget adjustments, the state's financially strapped
prosecutors and public defenders were shielded from the cuts.
Instead, they would get more money to pay staffers handling heavy
case loads.

Lawmakers dropped a provision that would have taken away up to
five paid holidays from state employees, a moneysaving measure that
Gov. Steve Beshear had proposed.

Beshear ordered lawmakers back to the Capitol last week to deal
with a deepening state budget hole.

There was an intense focus last week on a proposal to allow
slots at Kentucky horse tracks. The measure passed the House but
died in a Senate committee. Beshear had said allowing so-called
"video lottery terminals" for casino-style games like slots could
generate up to $300 million a year through an accompanying gambling
tax.

Lawmakers have for years considered plans that would expand
gambling in Kentucky, which already allows people to bet on horse
racing, bingo, pull-tabs and a state lottery.

Senate President David Williams, a Burkesville Republican,
offered an alternative that would have increased money for breeders
incentives and purses by taxing lottery tickets and out-of-state
wagering on Kentucky horse races. Any additional legal gambling
isn't likely to come any time soon, Williams said.

"The votes are not here," Williams said. "This House and this
Senate, this General Assembly is not going to pass the expansion of
gaming."

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