Ky. gov: State income tax refunds will be on time

AP News
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Posted: Jan 04, 2010 4:50 PM

Kentuckians will get their state income tax refunds on time despite financial problems that have forced cuts in government services, Gov. Steve Beshear said Monday.

Beshear also said during a Capitol press conference that he has balanced the budget for the remainder of the fiscal year without laying off state workers.

Most government agencies, with some notable exceptions, will face cuts of close to 3 percent. Beshear said he managed to spare education, economic development, health care and public safety.

The state is dealing with a projected $100 million shortfall despite having already slashed the current budget by some $800 million.

And, as taxpayers prepare to file their income tax returns, Beshear promised punctual refunds.

"We're not planning to delay income tax refunds that our people are due," he said. "They need it as much as we do."

Lawmakers are scheduled to convene Tuesday for the start of a legislative session that will be overshadowed by continuing financial problems. Kentucky faces a $1.5 billion shortfall over the next two years, and, with little sentiment for tax increases, pro-gambling forces are pushing the notion of putting video slot machines at horse tracks to generate revenue for state coffers.

Laying off some of the state's 34,000 employees remains a possibility in the coming two years.

Republican Senate President David Williams said Monday that the only way to effectively reduce the state budget is to cut base spending, the largest chunk of which goes to personnel costs.

Williams was critical of Beshear's plan to balance the current budget. That plan includes cutting spending by nearly $50 million and transferring nearly $34 million from accounts intended for a variety of services, including cleaning up underground fuel storage tanks. It also applies $25 million in federal stimulus funds that the governor had been saving for next year.

"I don't really understand why he's taking this approach," Williams said. "But it appears to be stopgap measures at best."

Williams said it appears Beshear is trying to push state finances to the "brink" in hopes of convincing lawmakers to approve a proposal to legalize video slots at horse tracks and then tax the proceeds. It's a proposal Williams has staunchly opposed.

While some political leaders see gambling as a revenue generator, it remains politically charged in a state with a long tradition of betting on horse races.

By some estimates, legalizing slots, then taxing the proceeds, could generate $200 million to $350 million a year.