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Beshear rejects bond issue solution

Gov. Steve Beshear doesn't want Kentucky to borrow its way out of a nearly half-billion-dollar shortfall by issuing bonds, he said Thursday.

So far, Beshear has given few other specifics about how he plans to resolve the shortfall, preferring to talk in generalities.

He remained non-committal about the possibility of calling for a cigarette tax increase, declining to immediately support a bill pre-filed Thursday by Rep. David Watkins that would raise the tax from 30 cents to $1 a pack.

Beshear, who is expected to make public next week his plan to deal with a projected $456.1 million budget shortfall this fiscal year, told the Lexington Herald-Leader editorial board that he does not want to propose a financial solution "that would make things worse over the long haul."

He specifically mentioned avoiding such traditional practices in Frankfort as issuing bonds that would generate money for programs and projects but require debt payments for years to come.

"The simple thing would be to go out and float a bond issue and get myself $200 million and plug up some of these holes" while knowing that they would require more money in the future, Beshear said.

The Democratic governor, who will have been in office for a year on Dec. 11, said he wants to consider cuts in state government before deciding whether to try to find additional dollars through tax increases.

In this year's legislative session, Beshear backed a 70-cent increase in the state's 30-cent-a-pack cigarette tax.

Asked Thursday whether he will push for a cigarette tax increase in his plan to deal with the current shortfall, Beshear said: "We're going through the process of getting all the information in before we make any final decision."

Watkins' bill is similar to a failed measure he filed in the last legislative session.

His legislative assistant and son, Jonathan Watkins, said the bill is similar to the one considered in this year's legislative session.

"But we feel it has a better chance now because the need for its proceeds have been thoroughly documented, and more and more people understand a higher tax would help the health of Kentucky's citizens," Jonathan Watkins said.

It is estimated the tax would generate more than $200 million a year for the state, he said. He added that the national average for state taxes on cigarettes is $1.18.