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Williams says state needs new revenue now

February 03, 2009 | | Comments 6

By Beth Musgrave – bmusgrave@herald-leader.com

Senate President David Williams, R-Burkesville

Senate President David Williams, R-Burkesville

FRANKFORT — Legislative leaders from both parties acknowledged for the first time Tuesday that the state must raise new revenue to deal with a projected $456 million budget shortfall.

Senate President David Williams, R-Burkesville, said all budget options — including increases in cigarette or liquor taxes — are on the table. Previously, he has said there is little sentiment in the Senate to raise taxes.

Despite a federal stimulus package currently being debated in Congress, the state needs money now, Williams said.
“It appears to me that there will be a need for some revenue,” Williams said.

Still, Williams warned of impending budget cuts, regardless of whether lawmakers approve any revenue measures. His admonition came as the General Assembly reconvened Tuesday after a nearly month-long break.

“Anyone who thinks there will not be a significant round of cuts — even if the governor gets the entire amount of his new revenue — is not well informed,” Williams said.

Gov. Steve Beshear has proposed a 70-cent increase in the cigarette tax, approximately four percent cuts to most state agencies and furloughing state workers to rectify the shortfall in the current fiscal year, which ends June 30.

House and Senate budget committees have spent the past three weeks going over the state’s budget and leaders from both houses have been discussing budget options. Williams and House Speaker Greg Stumbo, D-Prestonsburg, said they hope to have a consensus budget bill ready by the end of the week or early next week.

“I would like to resolve it that quickly, but I’m not sure that can happen,” Stumbo said. “But we have gained a lot of ground these last couple weeks and we’re making progress.”

Stumbo said the next step is to resume negotiations Wednesday with House Republicans and Senate leaders.

Lawmakers also will continue watching a federal stimulus package wind its way through Congress, but realize that any money from that package won’t likely bring relief before July 1, when the next fiscal year begins.

Stumbo said after a closed-door Democratic caucus meeting Tuesday that it was clear the House did not want to make up the entire $456 million shortfall with cuts.

Budget cuts are “the least preferable option to our caucus,” Stumbo said. “The caucus is unified on pressing forward to find some budget solution that will not require us to go to the last least desirable option — allowing the governor to enact the full budget cuts.”
Still, it’s unlikely that lawmakers will raise the cigarette tax by 70 cents a pack to $1, both leaders said Tuesday.

Stumbo said he could support a 70-cent cigarette tax increase, but many of his colleagues can’t.

“I think realistically it’s going to be something lower than that,” Stumbo said.

Williams said there was concern in the Senate that raising cigarette or liquor taxes too high could put Kentucky retailers at a disadvantage, especially those along the state’s borders.

Stumbo said that increasing the wholesale tax on beer and alcohol is gaining momentum, especially with the cigarette tax up for discussion.

“There’s some general discussion and a lot of public sentiment … that people will say that if you’re going to tax one of these items, why not tax them both,” Stumbo said.

In 2005, the General Assembly raised the cigarette tax from 3 cents to 30 and the wholesale alcohol tax from 9 percent to 11 percent as part of former Gov. Ernie Fletcher’s tax restructuring bill.

Several House Democrats said Tuesday they are open to all revenue options.

“We have not committed to any option,” said Rep. Jim Wayne, D-Louisville.

Rep. Robin Webb, D-Grayson and a vice chairman of the House budget committee, said key House and Senate members have been combing through the budget for the last two weeks to find how deep the cuts to programs would be under various scenarios: no new revenue, some new revenue and the full 70-cent cigarette tax proposed by Beshear.

Webb said after the caucus meeting that no specific numbers were discussed.

“It was more of a topical discussion,” Webb said of the meeting. Additional cuts to the already reduced state budget was not an attractive option. “Nobody wants to feel that kind of pain,” Webb said.

Some lawmakers in both parties said Tuesday that they believe the state may have to look at long-term changes to its tax structure in order to resolve chronic budget problems.

Wayne, for instance, filed a bill early Tuesday that called for changes in the state’s tax system. The bill — which calls for a state earned income tax credit for the poor, increasing taxes on the wealthy and new taxes on luxury service items — has been proposed four previous times but has never been passed.

Wayne said Tuesday he has talked to House leadership about the bill and said Beshear has also agreed to talk to him about his proposals. However, Wayne acknowledged it is unlikely his tax overhaul plan will pass this session, which has only 25 working days left.

Wayne said he is hopeful that the bill will at least get a hearing in the House during this session but said overhauling the tax system may be something the legislature could address in a special session.

“We don’t have the revenue to provide the services people want us to provide,” Wayne said. “You need a diversified revenue system.”

Filed Under: David WilliamsFeaturedGreg StumboKY General AssemblyState BudgetState GovernmentSteve Beshear

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  1. Lightbulb says:

    Finally, Williams acknowledges that we have a revenue problem! Several weeks ago on KET, he all but called the economic experts liars and said there was no proof. Thank goodness this arrogant man has come to his senses before its too late to do something!

  2. LouLex says:

    All right, go ahead and raise taxes. But not on me.

  3. Bill Adkins says:

    Whooaaa – did Williams finally get a clue? Does he finally recognize that Fletcher left the state bankrupt and the economy has gone south, too? It’s the perfect storm for Kentucky – and with ice. As in hell has frozen over because David Williams finally got a clue and maybe, just maybe, has left his fantasy world called Republickan.

  4. Jess says:

    It’s about time. They need to get to work on overhauling the tax structure in a way that is *fair* for all Kentuckians.

  5. A monkey can raise taxes says:

    To all of the Monkey lovers, there is no such thing as a tax on rich, there is no such thing as a fair tax system. The rich are the people that hire employees, when you tax those people they increase the price on the product or service and they lay people off. It is happening right now. Bring in the UK MBA school and you will find the money sitting in the budget needed to provide the services that Wayne is speaking of or not speaking of. I mentioned earlier that someone would spin this tax deal into a plea to save the children and to save lives, and it was done just as I thought. There will never be enough money in the system we have set up. We must change our system, we can not sustain it as it is. Tax increases will do nothing, and they will need to do it again next year since they can not control their spending.

  6. UK MBA says:

    “Another Israeli spokeswoman, Tzipora Menache, stated that she was not worried about negative ramifications the Israeli onslaught on Gaza might have on the way the Obama administration would view Israel. She said ‘You know very well, and the stupid Americans know equally well, that we control their government, irrespective of who sits in the White House. You see, I know it and you know it that no American president can be in a position to challenge us even if we do the unthinkable. What can they (Americans) do to us? We control congress, we control the media, we control show biz, and we control everything in America. In America you can criticize God, but you can’t criticize Israel.”

    Human animal mentioned by Abramovic refers to the Judaic religious belief that Jews are Gods chosen people; the elite and the pure-blooded, while all others (non-Jews, Goyims, gentiles) are animal souls incarnated into human bodies to serve the Jews. Killing a human animal is just a sport like hunting deer or birds.