Saturday, August 14, 2004

Dems want more families exempt

By Joe Biesk
The Associated Press

FRANKFORT - House Democrats have modified their budget and tax proposal to remove more low-income families from the state's income tax, Speaker Jody Richards said Friday.

Low-income families of four who make at or below $18,500 would be exempted from having to pay state income tax, Richards said.

He estimated it would cost $49 million a year from the state's General Fund. A previous Democratic proposal would have set the cutoff at $13,500, costing $41 million.

"With the improved revenues in the last five months, we think that can be done without difficulty," Richards said.

Richards and House leaders met at his Capitol Annex office Friday morning to discuss the plan.

Lawmakers adjourned in April without passing a state budget. Democrats have been negotiating with Gov. Ernie Fletcher since then. Kentucky state government has been operating under a spending plan crafted by Fletcher since July 1.

Fletcher wanted a budget in conjunction with tax code changes that cut personal and business income taxes but balanced the cuts with increases in consumer taxes - chiefly the state's tax on tobacco and alcohol products.

Fletcher also proposed a replacement for the state telecommunications tax, which had been declared unconstitutional. The proposal would impose a tax on satellite television services for the first time.

Senate Republicans backed Fletcher. House Democrats refused to go along.

Senate President Dan Kelly said the Democrats' latest proposal showed they were "still unwilling to address the constitutional defects of the tax base."

Kelly, R-Springfield, said "we may very well be able to" raise the income tax exemption. But "our position is still that we have to fix the constitutional defects in the tax base before we go forward with a spending plan," he said.

Meanwhile, Richards maintained House leadership wants to first concentrate on passing a budget before a full tax overhaul.

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