- The Washington Times - Wednesday, January 22, 2003

FRANKFORT, Ky., Jan. 22 (UPI) — Gov. Paul Patton is taking a new tack on the state's budget crisis, calling for an end to the corporate income tax and asking businesses to support a "business activity tax" instead.

At the same time, his administration lowered the estimate of the Kentucky budget shortfall by $115 million to $394 million through fiscal 2004.

Patton proposed the new business tax last week, saying it would raise as much as $374 million more than the corporate income tax.

In a speech Tuesday before the Greater Lexington Chamber of Commerce, Patton said he is not willing to "support cuts that will take Kentucky back a generation."

Patton has been working without a budget, unilaterally deciding where to trim spending since the Legislature adjourned its 2002 session without adopting a biennial spending plan. In recent weeks, the governor ordered hundreds of prisoners freed early to save money on corrections.

The proposed "business activity tax" would apply to all business entities, except professional partnerships, sole proprietorships and real partnerships, engaging in limited-liability business. Patton is expected to lay out the details to state lawmakers Feb. 5, one day after they convene for their 30-day session. The plan also is expected to include a 3-cent increase in cigarette taxes.

At a House-Senate budget committee meeting Tuesday, administration officials proposed transferring $100 million of 2004 revenues to 2003 to plug the current hole in the budget, leaving a $394 million shortfall through June 2004. Earlier estimates of the shortfall topped $500 million. Tuesday's action precluded cuts in the education budget to plug a $50 million shortfall.

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