Lottery, debt restructuring to get closer looks

CIGARETTE TAX HIKE 'OFF THE TABLE'

By Jack Brammer

JBRAMMER@HERALD-LEADER.COM

FRANKFORT --

Key lawmakers trying to iron out differences between the House and the Senate on a two-year spending plan for the state made some progress Thursday night in their efforts to find extra money for the budget.

The House and Senate budget conferees reached no final decision on additional revenue measures. But they agreed to take a closer look at proposals to restructure state debt to raise $150 million a year and to grab about $110 million more from the state lottery.

The House proposed the debt restructuring; the Senate came up with the idea to get more money from the lottery.

The budget conference committee asked staff to prepare more details about the debt restructuring, and to get Lottery President Arch Gleason to explain to them Friday the impact of the state taking more money from the lottery.

The Senate proposal would require the Kentucky Lottery Corp. to contribute 35 percent of its revenue to the General Fund, up from 26 percent last year.

The Senate estimates the change would raise about $110 million. But lottery officials have warned the plan would lead to smaller prizes and declining lottery sales -- not more state revenue.

After the meeting, House budget chairman Harry Moberly Jr., D-Richmond, said the House and Senate agreed on several ways to raise more money for the state.

He said both chambers think that $85 million a year could be found through early retirements this year from state government because of enhanced benefits.

But Moberly said the House plan to increase the state cigarette tax by 25 cents a pack "is off the table" for the Senate. That hike would generate $230 million over two years.

Without the cigarette tax hike, Moberly said, "we might be able to agree to a budget but without various projects."

He also said the House anticipates about $20 million a year from "efficiency measures and debt-service lapse." The Senate had counted on about $104 million over two years by such action. "It would be $20 million a year if we restructure state debt," Moberly said.

Negotiations on a $19 billion budget ended at 9:40 p.m. and are to resume at 1 p.m. Friday.