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Search on for votes to raise taxes

FRANKFORT — Legislative leaders are scrambling to dredge up enough votes to raise the cigarette tax 30 cents and to put a 6 percent sales tax on alcohol as they patch a gap in the state's budget.

After stitching together their proposal, top-ranking House and Senate lawmakers from both parties began the politically tricky task Monday of selling their colleagues on the measure, which could be enacted by the weekend under emergency provisions.

The first test will come later this week in the 100-member House, where the Democrats, who are in the majority with 65 lawmakers, don't appear to have the necessary 60 votes to approve a tax measure.

Rep. Jim Wayne, D-Louisville, said as few as 43 of the Democrats stood up in support of the proposal Monday night at the end of an hourlong meeting.

"This is a petty Band-Aid," said Wayne, who has pushed for broader tax reforms and a steeper cigarette tax increase. "I have to give them credit for going to the Senate, for working out some type of compromise, but it's not good enough, so they didn't get enough votes."

Still, House Speaker Greg Stumbo, D-Prestonsburg, noted that about 10 Democrats missed the meeting and weren't counted.

"I think we'll get to 60," he said. "I think we'll have a successful vote on Wednesday."

However, Rep. Bob Damron, D-Nicholasville, the House caucus chairman, said it's likely that Republican votes will be needed to pass the tax increases.

"I think we'll have votes from the Republican side," he said. "This is a bipartisan initiative."

While the Democrats were meeting, minority House Leader Jeff Hoover, R-Jamestown, presented the budget plan to House Republicans. He said no formal vote was taken.

Legislative leaders, as well as officials from Gov. Steve Beshear's administration, have been locked in near-constant negotiations in recent days as they bartered over how to balance the budget in the face of a $456.1 million shortfall caused largely by the struggling economy.

Beshear initially proposed raising the state's 30 cent-per-pack cigarette tax to $1 in order to limit cuts to state services. Under the governor's plan, most state agencies would be cut 4 percent and public universities would take a 2 percent reduction. School districts and the Medicaid program that covers health costs for poor and disabled Kentuckians would largely be left alone.

But it quickly became clear that a 70-cent cigarette tax increase couldn't pass the General Assembly. Instead, House and Senate leaders cobbled together a hybrid that raises revenue from smokers and alcohol drinkers.

Combined, those tax increases would bring in $150 million over a full year, Stumbo said. That's "in the ballpark" of what Beshear wanted in new revenue. But Beshear will probably have to cut $10 million more from state government than he initially planned, Damron said.

In addition, lawmakers are proposing to scoop money from other pots in state government, including $7 million from a state-run land conservation trust. The legislature would later allow the trust to borrow money to replace the $7 million, Hoover said.

Hoover said the state's school funding formula will end up with $15 million in excess funds that won't be used by school districts. Damron said that money will probably go into the Rainy Day fund, which will be largely depleted by the end of the year.

Stumbo said that the tentative plan includes borrowing $50 million from the health insurance trust fund for state workers.

Senate President David Williams, R-Burkesville, said he is confident the upper chamber will approve the proposal.

"I'm sure there's enough support in the Senate if it gets there," he said. "I'm for it."

Senate Democrats, meanwhile, are reserving judgment until they see the final bill, said Sen. Ed Worley, the Democrats' floor leader from Richmond. But he said the proposed fixes "are viable."

"What concerns me is that this state has to have a constitutionally balanced budget by June 30," he said.

The reasons that some House Democrats oppose the plan are as diverse as the various districts those lawmakers represent.

Some Louisville-area lawmakers resent that many rural counties don't allow alcohol sales but would still reap the benefits of an increase in taxes on beer and liquor.

"It hurts primarily the wet areas and the rural areas benefit from it, so that's not fair either," Wayne said. "Alcohol is overly taxed anyway."

Others from some rural areas feel the opposite.

"I don't have a problem with the alcohol tax," said Rep. Richard Henderson, D-Jeffersonville, whose district includes Powell, Wolfe and Montgomery counties. But when asked about the cigarette tax increase, Henderson said "no comment."

Damron said lawmakers have been heavily lobbied in recent days by the alcohol and cigarette industries but aren't hearing from state workers and teachers who would be affected if new revenue isn't approved.

"Personally, I can't go home to Jessamine County and tell my local superintendent that we're going to cut $1.5 million out of her budget," Damron said. "But I can vote for a cigarette tax and have the same sales tax on beer and wine and spirits that you're paying on water and soda."