NEWPORT — State Rep. Jim Callahan, D-Wilder, didn't sugar-coat his talk to the Newport Business Association on Wednesday.

        He painted a less-than-pretty picture of Kentucky's revenue shortfall and the possibility of a half-billion-dollar budget cut.

        “Right now, we're looking at ... $500 million less than we projected, and it could go to $700 million or more by the time the General Assembly meets,” Mr. Callahan said. “The 2002-2003 budget is going to be the major issue in this (legislative) session.”

        This year's projected budget shortfall is the largest in the state's history.

        The shortfall, plus overly optimistic budget plans that spent more money than the state was actually expecting, led to budget cuts of $180 million last fiscal year and another $533 million this year.

        Newport City Commissioner Ken Rechtin asked Mr. Callahan about the possibility of an additional tax on gasoline to bail out the Transportation Fund and keep the state's six-year roads projects on schedule.

        Northern Kentucky road projects in the six-year plan that are currently unfunded and could be in jeopardy include a $4.1 million reconstruction and widening of Ky. 237 toward Ky. 8 in Boone County; $9.7 million for the widening of Turfway Road from U.S. 25 to Ky. 717 near Turfway Park; a $17 million project to make U.S. 25 five lanes from Industrial Road in Florence to Richwood; a $10 million project to reconstruct Pooles Creek Road from U.S. 27 to the AA Highway in Campbell County; $2 million for preliminary engineering and environmental studies to evaluate replacement of the I-71/I-75 Brent Spence Bridge over the Ohio River; and a $33 million project to reconstruct Ky. 16 (Taylor Mill Road) from I-275 to Hands Pike.

        “We have one of the lowest gas-tax rates of any of the surrounding states,” Mr. Callahan said. “The Transportation Fund is in sad shape. I would expect to see some effort made to increase the gas tax. I have no idea how much it might be.”

        Kentucky collects 16.4 cents per gallon of gasoline, compared with 22 cents for Ohio, 25.4 cents for West Virginia, and 20 cents for Tennessee. Only Indiana, among neighboring states, is lower at 15 cents.

        Some of the highest rates in the country are New York at 28.7 cents, Rhode Island at 29 cents, Pennsylvania at 25.9 cents, and Nevada at 24.8 cents. The states with the lowest gasoline taxes are Georgia at 7.5 cents, Alaska at 8 cents and Florida at 13 cents.

        According to the Bluegrass Automobile Club, each penny increase in the gasoline tax relates to $27 million in revenue annually.

        The Transportation Cabinet's highway budget does not get money from the state's general fund and must rely solely on the gasoline and other road taxes for its revenue stream.

        A 1.4 cent per gallon gasoline tax goes to the underground storage tank fund to finance cleanup of old gas tanks. The state took $50 million from the fund earlier this year to balance finances in another area.

        When asked about the possibility of a bill to permit video slot machine gambling at Kentucky thoroughbred racetracks such as Turfway Park in Florence, Mr. Callahan said: “I am opposed to casino-type gambling. Betting on racehorses is gambling enough.

        “But, studies have shown that if video slots were installed at the state's tracks, it would mean a revenue increase of $200 million to $300 million a year. We would have to look at that very carefully. There are indications that a majority of Northern Kentuckians would favor the machines at Turfway, but we don't know how it would sit in other parts of the state.”

        Mr. Callahan, the majority caucus chairman of the state House of Representatives, told the gathering of business owners and city officials that, in 15 years as a representative, “I have never had the number of people call me for meetings that I have had recently.

        “Everyone is worried about budget cuts and what they could mean to a lot of agencies in Northern Kentucky.”

        Mary Jo Davis, executive director of the Women's Crisis Center in Covington, said Wednesday that she was one of the many who contacted Mr. Callahan and other elected state officials.

        “If we have state money cut from our budget, we would have to let some of our staff go,” she said. “We are in a very tight situation. We operate in a crisis mode all the time. We are available 24-7, and we can't do it with less money.”

        Newport lawyer Tom Beiting, president of the business association, presented Mr. Callahan with an award as the association State Representative of the Year.

        Mr. Callahan “tells people the truth, although that's not always what they want to hear,” Mr. Beiting said. “He's able to relate bad news with a common-sense perspective. And he is so obviously honest. He's been a tremendous asset for Newport and Northern Kentucky.”

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