FRANKFORT, Ky. (AP) - A more than $450 million hole in
Kentucky's state budget is likely to fill much of the General
Assembly's time when lawmakers convene in January.
Gov. Steve Beshear has predicted drastic funding cuts "that
will bring pain to our people," and he's suggested a possible
special session for lawmakers to deal exclusively with Kentucky's
budget problem.
Last week, he asked university and government agency officials
to suggest how they'd cut 4 percent in spending this year.
"There's only two options and everybody better accept them,"
said Senate Minority Floor Leader Ed Worley, D-Richmond. "Either
raise some money or you cut expenses. It is that simple."
Kentucky lawmakers passed a two-year, $19 billion budget nearly
eight months ago that included funding cuts for higher education
and government services. It was based on an estimated $900 million
drop in revenue from the prior year.
Last month, however, matters got worse.
A group of state economists predicted that state revenue is off
pace an estimated $456 million between now and the end of June.
Over the next year and a half, Kentucky's general fund shortfall is
estimated to be more than $1.3 billion behind.
Kentucky's road plan, which is supported by fuel and vehicle
taxes, is also short about $100 million, the economists predicted.
The news was even worse than Beshear's internal projections that
the state was facing a $294 million drop in revenue. Beshear is
crafting a proposal to address the problem, spokesman Jay Blanton
said.
Now all options - from boosting the state's tax on cigarettes to
severe funding cuts - appear to be on the table.
Beshear supports a higher cigarette tax and casino gambling as a
way for Kentucky to rake in hundreds of millions in new revenue.
Lawmakers so far have ignored both ideas.
"We know this process is not easy for anyone involved and the
size of the cuts being contemplated would, as the governor
indicated ... result in very difficult and painful choices,"
Blanton said in a statement last week. "But we have to prepare and
these scenarios are critical in doing that."
Still, lawmakers are likely to want a say in how the fiscal
problem gets settled.
Senate President David Williams, a Burkesville Republican, said
he's looking for the governor to present a budget plan for
lawmakers to consider early next year. Lawmakers could start
considering a budget solution in January, Williams said.
"Will there have to be cuts? Yes. Are folks in the private
sector, private businesses, having to cut their budgets? Yes,"
Williams said. "We'll look forward to seeing what happens."
House Speaker Jody Richards, a Bowling Green Democrat, said in a
statement last week he believes Kentucky needs to raise more money
to avoid further cuts in education and human service programs.
"Together we must work to weather the worst crisis this nation
has seen since the Great Depression," Richards said in a
statement. "The only thing we know for sure is that there are no
easy ways out of this."
State Rep. David Watkins, a Henderson physician, said he's
planning to reintroduce his proposal to raise the state's cigarette
tax by 70 cents. Watkins, a Democrat, pushed the cigarette tax hike
earlier this year, but it stalled.
Watkins said raising the tax to $1 per pack likely would
generate more than $200 million in revenue. It would also benefit
the state long-term by improving citizens' health and reducing
state-funded medical costs, Watkins said.
"This is when we need leadership," Watkins said. "We need to
have leaders stand up and lead and show that they have some
backbone, and that they have some fortitude to stand up and make
our state a prosperous and healthy state."
Whether new money is needed remains to be seen, Williams said.
Still, if any tax needs to be raised, the cigarette tax would be
"the most acceptable tax to most people," Williams said.
"That's where we find ourselves now, reaching the point to see
if we have to have additional revenue," Williams said. "I'm not
in favor of increasing any taxes until we see where we are."
Worley, the Democratic leader in the Senate, said he expected
the governor would have to work with lawmakers to solve the
problem. Worley said he was "surprised" that talks between the
Beshear administration and lawmakers had not already started.
"The executive branch cannot drive the train alone," Worley
said. "This train is rolling too fast, and it's too big for them
to handle just out of the governor's office."

(Copyright 2008 by The Associated Press. All Rights Reserved.)