Kentucky Governor Steve Beshear signed a bill Friday afternoon that imposes higher taxes on cigarettes and alcohol sold in the state.
The Senate narrowly passed the measure Friday morning by a vote of 24-12.
The measure increases the tax on cigarettes from 30 cents to 60 cents a pack, generating about $81.5 million a year, and imposes a 6 percent retail sales tax on all alcohol products, generating an additional $97.9 million a year.
The plan also transfers $219 million from the state's rainy day fund to the general fund.
Kentucky is facing a $456.1 million shortfall in the fiscal year ending June 30.
Lawmakers say raising the taxes combined with shifting other state money should offset the need for deeper cuts in government spending.
The new taxes will go into effect on April 1st.