Several takes on the impact of the stimulus package on the states

Stateline.org this week has been asking various officials their thoughts on how much the federal economic stimulus package signed into law Tuesday by President Barack Obama will impact the economy on the state level. 

Today, the site turned to the head of the American Association of Highway and Transportation Officials (AASHTO) and an official with the U.S. Chamber of Commerce to get their takes

Here’s the response from John Horsley, AASHTO’s executive director – 

Transportation funding in the bill will allow the states to increase their highway project contracting by 25 percent to 50 percent this year. Our state DOTs said they could spend $65 billion on more than 5,000 ready-to-go highway projects. The $27.5 billion is very helpful, but we could have done more. We are also disappointed that transit funding was not provided at the level proposed by the House.

On Tuesday, the site asked various economists from around the country about what the package will mean for state budgets. 

I found the response from Jerry Nickelsburg, a senior economist at UCLA Anderson Forecast which provides forecasts on the California economy, interesting. 

The decision making on the part of the states will be the determining factor. In some cases, the transfer from the federal government to state governments will simply substitute borrowing in the Treasuries market for borrowing in the muni markets. In other cases, states will use the funds to postpone cutting programs. In the latter situation the transfers may just serve to push the budget cutting out to the 2009/2010 fiscal year and only have a temporary impact. Thus it is difficult to quantify the efficacy of these transfers.

Those seem to be some of the same concerns House and Senate leaders along with Gov. Steve Beshear were trying to allay with language in the recent budget shortfall legislation dealing with any stimulus money. Continue reading

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Senate passes increase in alcohol, tobacco taxes

The Senate this morning passed House Bill 144, which would increase the state’s alcohol and tobacco taxes, by a vote of 24 to 12. 

The bill’s passage relied heavily on Democratic support for its passage, with half of the “yes” votes coming from the minority party in the chamber. 

Nine Republicans, including Senate President Pro Tempore Katie Stine, broke with their GOP colleagues in voting against the measure, which required at least 23 votes for passage. 

Two senators – Sen. David Boswell, D-Sorgho, and Sen. Brandon Smith, R-Hazard – changed their “no” votes from when the bill was in front of the Senate A&R Committee to “yes” on Friday. 

Boswell said he changed his vote after realizing the full impact of not passing the tax increases would have on state services and education. 

Boswell said he hopes the federal economic stimulus package that Kentucky will receive can help fill some of the budget gaps Kentucky is facing this year and in the near future. 

“I can only hope that the stimulus package … will add some releif to our state’s situation as well as other states across this country,” Boswell told the chamber. 

Several lawmakers said their vote in favor of the measure came with the hope that a more comprehensive overhaul of the state’s tax system was on the horizon. 

“We’re going to have to make some tough choices going into the future,” said Sen. Gerald Neal, a Louisville Democrat. “We’re going to have to make some choices we have not made in the past.”

Senate vote on tax, budget bills coming this morning

The Senate Republican and Democratic caucuses are now meeting in preparation for the debate over a plan to raise the Kentucky’s alcohol and tobacco taxes to help balance the state budget this fiscal year. 

The bill outlining the tax increases – House Bill 144 – narrowly passed the Senate A&R Committee Thursday morning and only after Sen. Elizabeth Tori, a Radcliff Republican, changed her “no” vote to give the bill a 9 to 7 edge. 

Sen. David Boswell, a Sorgho Democrat, was among the seven members of the committee voting against the bill, with Boswell calling for a sunset on the alcohol tax increase. 

Sen. Jerry Rhoads, a Madisonville Democrat and Senate minority whip, voted for the measure. 

Polls of Senate members by various media outlets failed to find enough solid “yes” votes for the measure, which needs 23 votes in the 38-member chamber, though a number of senators declined to say which way they would go on the bill. 

Both caucuses have been meeting for about 30 minutes already (as of 9:05 a.m. EST) after coming into session briefly this morning. 

Stay tuned for updates – it looks like the caucus meetings are breaking up.

Update, 9:28 a.m. ….

Senate President David Williams and Sen Dan Kelly, majority floor leader, just left the Democratic caucus and neither had anything to say about the meeting.

The Dems continue to meet behind closed doors about the vote.

Update, 9:38 a.m. …

The Senate just came back into session.

Update, 11:09 a.m. …

The Senate passes the tax bill – House Bill 144 – by a vote of 24 to 12.

Roll call for vote on tax bill

Stephenie Steitzer with the Courier-Journal has the breakdown of how House lawmakers voted Wednesday on House Bill 144, the measure that would raise the state’s tobacco and alcohol taxes. 

Here’s how the local delegation voted – 

For

Rep. John Arnold Jr., D – Sturgis

Rep. Jim Glenn, D-Owensboro

Rep. Jim Gooch, D-Providence

Rep. Tommy Thompson, D-Philpot

Rep. Brent Yonts, D-Greenville

Against

Rep. Dwight Butler, R-Harned

House passes tax package 66 to 34, budget plan 77 to 23

The House of Representatives has just voted 66 to 34 to approve House Bill 144 which will double the state’s tobacco taxes and make alcoholic beverage purchases subject to the state’s sales tax. 

The debate that lasted more than an hour had opponents citing the potential impact of the tax increases on Kentucky’s businesses while supporters looked at the impact on the health of Kentuckians and the need to pass this “stop-gap” revenue measure to close a $456 million budget shortfall. 

“It is just a first step. It is a beginning, but a very very significant beginning,” House Speaker Greg Stumbo told members while urging passage of the bill. 

Rep. Harry Moberly, a Richmond Democrat, doubted the allegation that the alcohol tax increase would reduce alcohol sales or endanger Kentucky companies. 

“This argument is completely bogus.,” Moberly told the chamber. “They’re not going to sell one drop of alcohol less because we’re removing the exemption on the sales tax on alcohol.”

Rep. Arnold Simpson from Covington was one of only a handful of Democrats who voted against the measure, and said the tax changes were unsound. 

“I’m willing to raise about any tax you want to raise as long as it’s the result of sound economic tax policy,” Simpson said.

Update, 4:36 p.m. …

House Bill 143 is also heading to the Senate after the House approved the plan to allow Gov. Steve Beshear to trim the state’s budget and use up to $219 million of the state’s budget reserve trust fund. 

The bill also permits the use of $50 million from the public employee health insurance trust fund and various fund transfers.

Close to close House vote on budget plan

With beer and bourbon trucks circling the Capitol, the House convened just minutes ago and is expected to bring to a vote two bills to close a $456 million gap in the state’s budget this year. 

Lawmakers are saying the vote will be close, with some of the chamber’s 65 Democrats expected to vote against the measure and House leaders looking to the Republican caucus for support. 

The two bills – House Bill 143 and House Bill 144 – allow Gov. Steve Beshear to trim the state’s budget by about $150 million and double the state’s tobacco taxes. 

A provision to subject alcoholic beverages to the state’s sales tax has garnered the most attention this week as the plan moves through the legislature. 

The bills require at least 60 votes in the 100-member chamber for passage since it is a non-budget year and the bills deal with revenue. The chamber has 65 Democratic members.

Beshear issued the following statement in preparation for the vote today – 

“Today’s vote in the House marks an important moment. The House is considering an appropriate and timely approach to resolving the state’s budget shortfall this year. With this mix of revenue enhancements and additional cuts, we are making a statement about the priorities and values we all share – educating our children, providing health care to those who need it most and protecting our families by putting more police on the streets and in our communities. I applaud the work of my colleagues in both the House and Senate in working together on this package and I urge its passage.

At the same time, though, today’s vote is only a first step in a longer journey. We all recognize that the global and national economic environment will likely make next year’s budget challenges even more steep and significant. With that in mind, I am looking forward to starting work with my colleagues in the legislature on a longer term solution to the challenges confronting us. We will need to discuss how we create a tax system that is not only equitable, fair, and responsive to the changing nature of the global economy, but also keeps Kentucky competitive with surrounding states.”

House leaders are reportedly still leaning on members to get the support they need for the plan’s passage. 

Stay tuned for updates as the debate commences.

The Frankfort Bourbon Party

Meant to mimic the Boston Tea Party, representatives of the state’s bourbon distilleries poured out bottles of bourbon in front of the state Capitol this afternoon. 

The display was part of a rally in the rotunda to protest a bill moving swiftly through the General Assembly that would make alcoholic beverage purchases no longer exempt from the state’s 6 percent sales tax. 

Among the bottles poured out today were Maker’s Mark, Wild Turkey, Jim Beam, Four Roses, 1792 and Bulleit, creating a strong smell of Kentucky’s signature liquor before the crowd of several hundred.

“Frankfort’s never smelled so good,” one onlooker said. 

The display was coupled with beer and liquor distributors trucks that have been circling the Capitol since this morning.