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Wilkinson Asks Legislature for $1-Billion Increase in Taxes

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Gov. Wallace G. Wilkinson of Kentucky has called on the legislature to raise taxes by nearly $1 billion over two years.

Most of the new revenues would be used for education, including the package of major reforms currently being devised by a state task force and soon to go before the legislature.

The state supreme court has ordered the legislature to redesign Kentucky's school system, including eliminating funding disparities among districts.

Mr. Wilkinson's proposal, outlined in his budget address to the legislature this month, appeared to some to conflict with his 1987 campaign pledge not to raise taxes.

When the supreme court handed down its landmark decision last June, however, Mr. Wilkinson indicated that he would support the necessary revenue measures.

The tax package includes changes needed to make state tax laws conform to the federal tax code; elimination of the deductibility of federal income taxes on state returns; extension of the sales tax to advertising, consulting, and other services; a 1 percent increase in the corporate income tax; and a 7-cent raise in the cigarette tax.

The proposal also contains a low-income tax credit that, Mr. Wilkinson estimated, would reduce taxes for half of the state's residents.

"After two years of cutting and trimming and reducing, and then going back and cutting some more," Mr. Wilkinson said in his address, "we must face the harsh reality that, even our leaner, tougher state government will require $482 million a year in new revenue."

At an earlier press conference, the Governor said his proposal would set a "bold new course of the future" by closing "loopholes on the few who aren't paying their share."

Efforts to raise broad-based taxes, such as on sales or income, represent the "old, worn-out, discredited way of the past," he added.

In his budget plan, the Governor slated $780 million in new funds for education during the two years that begin on July 1--a 25 percent increase over the last biennium.

Of that increase, $512 million would be new money in excess of that needed to cover inflation-related increases in salaries and program costs.

Early Childhood Targeted

In his address, the Governor specifically referred to a few education programs he would like to see enacted. He said he would defer most of the discussion on reform, however, until the legislative/executive task force completes its recommendations.

Mr. Wilkinson noted that he has budgeted $51 million in lottery proceeds to initiate a statewide program of early-childhood education for at-risk 4-year-olds.

He also suggested the development and implementation of a new statewide testing program that would allow comparisons with other states.

In addition, the Governor proposed two new higher-education programs designed to help students attend college. He also said he is forming a new cabinet for workforce development, and urged redesign of vocational and technical programs.

Mr. Wilkinson called for reforms in the property-tax system, and is expected to unveil a more detailed legislative proposal soon.

But he said he would oppose any changes in a state law that essentially requires local tax rates to be lowered to correspond with increased assessments, so that governments do not receive windfalls through reassessments.

In its decision, the supreme court described the law as a deterrent to raising school funds.

The revenue package drew praise from many legislators and education activists--including the lawyer for the group of school districts that filed the school-finance suit that led to the court-ordered redesign.

Several legislators said last week that some form of the revenue package is likely to pass. They noted, however, that the proposed increases in cigarette and sales taxes will be difficult to enact.

One lawmaker predicted that the revenue proposals will probably be considered as part of an overall education-reform bill.

Ending speculation that most of the reforms would be passed in a special session after the May primaries, legislative leaders said last week that the entire package would be taken up during the regular session. The session concludes in late March.--rrw

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