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Officials: Agreement Made On State Budget

FRANKFORT, Ky. (AP) - Kentucky lawmakers said they've agreed on
a nearly $19 billion, two-year state budget after working through
the night, ending seven days of intense negotiations.

During their talks, lawmakers scuttled proposals to raise
revenue through an increase in the state's tax on cigarettes and
impose the state's sales tax on certain services. Instead,
lawmakers settled on a scaled down spending blueprint that will
include 3 percent cuts to public universities.

"The eagle has landed, and we have a budget," House Speaker
Jody Richards, D-Bowling Green, said Tuesday morning, after more
than 20 grueling hours of budget talks.

Legislators hoped to agree on a proposed budget by midnight
Tuesday to be able to pass it and preserve their authority to
override any possible vetoes by Gov. Steve Beshear.

Senate Majority Floor Leader Dan Kelly, R-Springfield, said
there's still time for the General Assembly to vote on the measure
by Wednesday night.

This year's budget negotiations started out in stark contrast to
years past, when legislators held their entire talks behind closed
doors. Leaders agreed to open the talks to the public and broadcast
them live on Kentucky public television.

That lasted five days before lawmakers took their discussions
behind closed doors. Lawmakers huddled in the privacy of a Capitol
annex conference room throughout Monday and well into Tuesday
morning, with as many as four state police troopers standing guard
in the hallway.

A sagging economy and soaring government expenses have caused
economic forecasters to predict the state is facing an approximate
$900 million revenue shortfall over the next two fiscal years.

Beshear proposed an austere two-year budget that called for 12
percent cuts to public universities and numerous government
agencies and programs. Beshear called on lawmakers to avoid the
cuts by passing a cigarette tax hike of 70 cents a pack to generate
nearly $200 million per year. The money could have helped finance
hundreds of millions in bonds, Beshear said.

The House and Senate proposed dueling plans aimed at raising
millions more in revenue to carry Kentucky government through the
tough financial times that are expected.

Lawmakers in the Democratic-controlled House proposed raising
the cigarette tax and imposing the state's 6 percent sales tax on
certain services. That proposal also was rejected by budget
negotiators.

Kentucky's cigarette tax is among the lowest in the nation at 30
cents a pack, and health advocates say raising it could have
improved the state's overall physical well-being.

"We're very disappointed. We see this as a missed
opportunity," said Tonya Chang, a lobbyist for the American Heart
Association. "As long as we fail to act, we're going to continue
to have the highest rates of adult smoking in the nation. And we're
going to continue to suffer tobacco-related deaths and disease."

Members of the GOP-led Senate, meanwhile, balked at the idea of
raising any taxes. Instead, the chamber approved a plan that would
have relied on about $110 million in additional lottery proceeds.

After the budget talks, lawmakers agreed to take $14 million
more from the lottery during the next two years.

Legislative leaders canceled Monday afternoon meetings of the
full House and Senate to allow more time for budget negotiations.

Among other things, the agreed budget would give teachers and
state employees pay raises of one percent in each of the next two
fiscal years. It would also put $60 million into Bucks for Brains,
a program that provides state matching money for private donations
to universities for research and other spending.

Richards said lawmakers also included money to keep proposed
bridges in Louisville on track, and included language to allow for
tolls.

Dick Brown, a Beshear spokesman, said the governor had not had a
chance to review the details.

"The governor and his staff will have to take a look at what
their proposal is, look at all of it and see where it is and see
how it fits with the governor's proposals," Brown said. "We'll
take it from there."


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