Franklin County

Close vote expected on tax package

FRANKFORT — State senators braced themselves for a close vote Friday on a package to raise taxes on cigarettes and alcohol, but Senate leaders maintain they have the necessary 23 votes for it to clear its final hurdle.

A test run Thursday morning in committee showed how slim the margin could be as one Republican senator switched her vote to "yes" just to keep the bill alive. That came after a rare committee appearance by Gov. Steve Beshear, who has taken an active role in urging legislative approval of the proposal.

To help plug a $456 million budget shortfall, the bill would raise the state's 30-cents-a-pack cigarette tax to 60 cents and extend the state's 6 percent sales tax to cover packaged wine, liquor and beer. It escaped the Senate budget committee on a 9-7 vote.

Senate President David Williams, R-Burkesville, said late Thursday after a closed-door meeting with his party members that the Senate will approve the same version of the bill that passed the House Wednesday 66-34.

"I'm not going to predict the vote, but I believe it will pass," said Williams. "People are still deciding, and we are trying to convince folks it's the thing to do in these hard economic times."

"It'll pass," Democratic Senate Floor Leader Ed Worley of Richmond said after a meeting with fellow Democrats. The Senate has 15 Democrats, 21 Republicans and one independent.

Even late Thursday, some senators weren't sure which of their colleagues would provide the last couple of votes needed to get to 23 — the magic number for passing revenue bills in the Senate in odd-numbered-year sessions.

An informal Herald-Leader survey of all state senators showed 16 firm "yes" votes and 10 senators solidly against. Others kept their votes close to the vest or said they were undecided.

"As of right now, there are 21 votes for the bill," said Sen. Tom Buford, R-Nicholasville. "They need two more votes. I think they'll get them."

Buford, however, said he probably won't be one of them. The one thing that would have persuaded him to switch sides would be making the 6 percent tax on alcohol temporary. But no one filed an amendment to do that.

Two Democratic senators — David Boswell of Owensboro and Julian Carroll of Frankfort — also said they would be more likely to support the tax bill if the alcohol portion would sunset after this two-year budget ends.

And many senators echoed House lawmakers who bemoaned the alcohol and cigarette tax increase as a short-term fix for a more systemic revenue problem. Several key senators who planned to vote for or against the bill said the state must look long-term.

"We're just about out of Band-Aids in the first-aid kit," said Sen. Jerry Rhoads, D-Madisonville. "I hope this vote makes everybody, regardless of how this turns out, go back and take a thorough, comprehensive approach to our tax structure."

Rhoads said he would vote for the tax bill Friday.

But Sen. Julie Denton, R-Louisville, said she wouldn't support it . She took issue with additional taxes on alcohol because those taxes would be collected in mostly urban areas that allow beer and liquor sales, yet the revenue would benefit the whole state, including dry counties that don't allow such sales.

But she said her overall criticism with the plan is that it's shortsighted.

"This is bad public policy, what we're doing," she said. "We have a revenue/spending problem and we really need to address that on a long-term basis through comprehensive tax reform."

The cigarette and alcohol tax increases would generate $52 million this fiscal year, which ends June 30. The rest of the budget shortfall would be filled by a combination of using most of the state's rainy-day funds and other fund transfers and at least $147 million in cuts to most state agencies.

The Medicaid program, which provides health care to Kentucky's poor and disabled, basic school funding and the corrections department would be spared further cuts in the plan to be voted on Friday.

As in the House, those who planned to vote for the increases in House Bill 144 said they would do so grudgingly to avoid cuts to education and human services.

"We're in a situation where there is not much of an alternative than to be for it," said Sen. Carroll Gibson, R-Leitchfield.

Sen. Ken Winters, R-Murray, said that he hadn't decided which way he'd vote but that he will "vote on what's best for the Commonwealth of Kentucky, not what might sound best for re-election."

Sen. Elizabeth Tori, R-Radcliff, who switched her vote during Thursday's Senate Appropriations and Revenue Committee meeting to break an 8-8 tie, said she can't support any tax increases during an economic downturn.

"I am a 'no' vote," she said. "I just changed to get it out of committee. It was a tie, and I think the people who are for and against it deserve a date on the floor."

The alcohol industry, which has employed a full lobbying blitz complete with beer trucks circling the Capitol for the last three days, remained hopeful that the measure will fall short in the Senate.

"We think it's very tight," said Eric Gregory, president of the Kentucky Distillers' Association.