By Charles Wolfe
The Associated Press

FRANKFORT - Kentucky's tax revenues are on a modest upswing of uncertain duration. Gov. Ernie Fletcher's administration hopes that will motivate the General Assembly to pass a budget and the changes he seeks to the tax code.

Fletcher's chief opponent on the issue, House Speaker Jody Richards, said he favors passing a budget. But he said the increase in revenues showed there was no need to rush on taxes. "No catastrophe is going to occur if we wait until January," the legislature's next regular session, Richards said Tuesday.

Economists who make the state's revenue projections revised their forecast Tuesday, adding $300 million to projections through fiscal year 2006.

The change was based on unusually high receipts from sales taxes and individual income taxes. Why those taxes grew was less clear.

"The economy has recovered more rapidly than expected," said Merl Hackbart, a University of Kentucky economist. But the revenue gain is not huge within the context of a General Fund that would top $14 billion over the two years, he said. "That's good, but not major change," he said.

Hackbart is part of the Consensus Forecasting Group. State budgets are based on the group's projections. But revenues have fallen short of projections, requiring budget cuts, for four straight years.

Fletcher points to those cuts to buttress his case for overhauling the tax code and, it is hoped, stimulating the economy. His "revenue neutral" plan would balance tax increases with tax reductions, especially on business. Consumers would pay more for cigarettes, alcoholic beverages and certain telecommunication services such as satellite television.

The General Assembly adjourned on April 13 without a budget because the Senate's Republican majority insisted on coupling it with Fletcher's tax plan and leaders of the House's Democratic majority refused.

Fletcher has promised to call the General Assembly back into session for action on a budget, provided leaders of the two chambers strike an agreement in advance. Richards, D-Bowling Green, and other House Democratic leaders are to meet Thursday.

Fletcher's budget director, Brad Cowgill, said Fletcher "is more committed than ever" to his tax plan because he believes it is the only way to bring stability to the state's revenues.

Cowgill said revenue growth and economic growth are not automatic companions, which has complicated revenue forecasting nationwide.

Kentucky's sudden increase in individual income taxes could indicate more overtime, not more workers, and higher sales tax receipts could be the result of consumers' "pent up demand," not sudden optimism, he said.