Wednesday, April 12, 2000
Ky. Senate passes $14 billion budget plan
Final vote scheduled for Friday
N.Ky. projects in line for budget money
BY Patrick Crowley
The Cincinnati Enquirer
FRANKFORT — The Republican-controlled state Senate on Tuesday passed a surprising and complicated revenue plan that for the first time would tax out-of-state long-distance phone calls.
The 31-6 vote — which included 16 Republicans and 15 Democrats voting for the plan — came at 8:44 p.m. after Republicans spent a harried day of reaching an agreement that sets the stage for final passage of the state's two-year, $14 billion budget.
That budget vote is scheduled for Friday, the final and 60th day of the session.
The House is expected to approve the measure. Gov. Paul Patton has called it “a good budget” and is expected to sign it.
The Senate revenue plan was supported by two Northern Kentucky senators, Republicans Dick Roeding of Lakeside Park and Ernie Harris of Crestwood.
But two other Northern Kentucky Republican senators — Katie Stine of Fort Thomas and Jack Westwood of Erlanger — voted against the plan, even though it would help pay for several projects worth hundreds of thousands of dollars in their districts.
Mr. Westwood said even though he thinks the plan would be revenue-neutral and not raise taxes overall, there is a perception in Northern Kentucky that the plan would raise taxes.
“The projects are great. I'm glad it passed,” he said. “But when I came down here, I pledged not to raise taxes, and I don't want to go back on my word.”
Mrs. Stine said she would have preferred to come with up new money through budget cuts.
Both senators said they are not sure how they will vote on the budget Friday.
Out-of-state long distance phone calls are not taxed in Kentucky. Beginning July 1, the calls would be taxed at 6 percent.
House Democrats and Senate Republicans have been at a stalemate over the budget. At times it appeared the session would end and lawmakers would leave Frankfort without passing a budget, which would have forced Mr. Patton to call a special session before June 30 to pass a budget.
Tuesday's Senate vote provided a late-session twist on what has been the major political fight in a General Assembly that for the first time features a chamber controlled by the GOP.
Republicans have spent weeks tearing into Gov. Paul Patton and the House Democrats for promoting a budget that would include $178 million in new taxes on telecommunications services.
But over the weekend, the GOP-controlled Senate, sensing a stalemate over the budget and appeased that they defeated Democratic plans to raise more taxes — including a hike in the state gas tax — capitulated and came up with a budget plan that not only would include the tax on phone calls but also another 200 projects in Senate Republican districts.
The projects would be paid for through the phone tax and through an access fee on long-distance phone calls that the state has not been collecting. In July, the state will begin collecting that fee, which will raise nearly $80 million over two years.
Here is how the Republicans are claiming that the plan does not raise taxes. The 6 percent tax on out-of-state long distance phone calls would raise an estimated $90 million over two years.
That would be offset by:
•A reduction over two years of $75 million in the unemployment insurance premiums businesses pay.
•An $8.6 million reduction in taxes from several bills passed this session.
•Farmers receiving money from the federal government's settlement with tobacco companies won't have to pay taxes on the Phase II funding, saving $8.7 million a year.
Some lawmakers say the estimates, particularly on the tobacco money, are dubious and far too high.
But Senate Republicans were eager to tout the figures Tuesday.
“We're not raising taxes,” Mr. Roeding said. “Yes, there are some winners or losers, but the bottom line is we didn't raise taxes overall.”
Democrats, particularly in the House, agreed with the GOP interpretation largely because doing so takes a political issue off the table for the November elections. By voting for the tax plan, Republicans will not be able to accuse Democrats of raising taxes.
But not all Democrats agree with the tax plan.
“I support it, but it's a tax increase,” said Sen. Marshall Long, D-Shelbyville.
“Read my lips,” said Sen. Tim Shaughnessy, D-Louisville, making a reference to the ill-fated statement that helped cost George Bush the presidency in 1992. “No new taxes.”
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