Tuesday, February 4, 2003

Ky. tax plan will include repeals, Patton says

Lawmakers to hear governor's strategy Wednesday

By Charles Wolfe
The Associated Press

FRANKFORT - A tax package being readied for the General Assembly will include some reductions and repeals to soften its increases, Gov. Paul Patton said Monday.

He indicated the "intangibles" tax, already repealed on stocks, also would be repealed on bonds and business accounts-receivable under his proposal. The state's portion of property taxes on motor vehicles might also be eliminated, Patton told reporters.

Patton previously said he would propose some higher though unspecified taxes on businesses and an increase in the cigarette tax, now second-lowest in the nation at 3 cents per pack. He indicated on Monday that he also would propose expanding the sales tax in some form and possibly cap the level at which public pensions are exempted from the state income tax.

"It will be comprehensive tax reform," Patton said, including "something about improving the low-income tax level" and "something about removing the rest of the intangibles tax."

"It will have some things to take care of the inequities in the pension exclusion from income tax. I will have a few more types of things that should have a sales tax," Patton said. He declined to elaborate.

The General Assembly returns to the Capitol today to resume its off-year session, which must end by March 25. Patton is to present his plan in an address to a joint session of the House and Senate on Wednesday night.

Legislators failed to enact a biennial budget during their regular session and a special session in 2002. Patton has been running state government since July 1 under a "spending plan" he cobbled from the failed House and Senate budget bills of 2002.

A bill to raise revenue must originate in the House, and 60 votes would be needed for passage under the legislature's self-imposed "supermajority" rule for off-year sessions.

Patton's fellow Democrats hold 65 of the House's 100 seats. Rep. Joe Barrows, the Democratic whip, last week told Patton that he did not have 60 votes.

The Republican floor leader, Jeff Hoover of Jamestown, said the chances of passing any bill raising revenue were "slim to very slim."

A "significant majority" of his 35-member caucus would vote against a tax increase, including Hoover himself "at the present time," he said.

"There has to be a showing of a change of spending habits" before the public will go along with higher taxes, Hoover said.

He predicted the General Assembly would pass a budget, even one with drastic cuts, because the legislature's integrity is at stake.

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