2008 General Assembly: Budget options are all difficult

Kentucky.com

March 04, 2008

Rank-and-file members of the House of Representatives began bracing Monday for the difficult choice that awaits them later this week: raise taxes or cut education spending.

House Speaker Jody Richards, D-Bowling Green, said leaders have devised several options to raise $400 million a year to bolster an austere $18.8 billion spending plan proposed by Gov. Steve Beshear. The governor's budget cuts spending next year by about $165 million.

Richards likened the choices that await House Democrats during a closed-door caucus on Thursday to a TV game show.

'They'll have suitcase A, B and C,' he said.

For now, the suitcases remain closed, but lawmakers already have the jitters over potential tax increases.

Budget committee chairman Harry Moberly, D-Richmond, said an increase in the cigarette tax is featured in every plan. Raising the 30-cent-a-pack tax by 25 cents would produce $110 million a year, he has said.

One option that appears doomed to failure will be a suggested increase in the top corporate income tax rate, which was slashed from 8.25 percent to 6 percent as part of former Gov. Ernie Fletcher's tax change plan.

'That will be thrown out there but I don't think they'll go for it,' said Rep. Don Pasley, D-Winchester.

Several House Democrats, including Rep. Dennis Keene, D-Wilder, said they would have a hard time supporting any increase in levies.

'At this time I don't think I'll support any tax hikes at all,' Keene said. 'People are having too hard of a time. We don't need to be raising taxes, we need to be living within our means.'

But the prospect of cutting spending on higher education by about 12 percent is equally disturbing to some.

'I would have a hard time voting for a budget that has cuts in education. And I would have a tough time voting for a budget that had taxes in it. So it's a double-edged sword,' said Rep. Richard Henderson, D-Jeffersonville.

Rep. Hubert Collins, D-Wittensville, said he and other members would be more likely to approve tax increases if the budget contains provisions for their home districts -- especially projects.

'I've got to have something to vote for,' he said.

Richards downplayed that scenario Monday, saying he doesn't think there will be money for any new projects.

Meanwhile, Senate President David Williams, R-Burkesville, said he has seen little evidence of officials in Beshear's administration lobbying lawmakers to restore funding to certain programs or areas that were slashed by the governor's initial draft. As a result, the Senate might be inclined to pass an 'austere' budget just as Beshear introduced, Williams said.

'I think the governor could very well get a budget returned to him that looks very similar to what he proposed to the House,' he said.

Williams said tax increases might not be politically feasible because Beshear hasn't even endorsed a cigarette tax increase -- something House leaders requested on Sunday.

At the very least, Williams said the Senate would likely change some of Beshear's spending proposals, especially what Williams called 'disproportionate cuts' to higher education and health programs other than Medicaid.

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