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Smokers could end up paying more for cigarettes

Roger Alford, Associated Press

FRANKFORT, Ky. (AP) -- Smokers would pay more for their cigarettes under a proposal endorsed Monday by a panel appointed by Kentucky Gov. Steve Beshear.

The Blue Ribbon Commission on Tax Reform gave an initial OK to increasing the cigarette tax to $1 a pack from the current 60 cents.

The news wasn't welcomed at Bo's Smoke Shop in Lawrenceburg, where the price for a pack of the most popular Marlboro cigarettes would increase to $5 a pack.

"I don't think the customers are going to like it," warned cashier Terri Taylor. "They're already complaining about how high cigarettes are."

The proposed cigarette tax hike, if approved by lawmakers, would be the second since 2009 when it was doubled from 30 cents a pack.

Cigarette tax increases typically provide only a short-term revenue increase followed by a decline because people tend to giving up the habit rather than pay the higher prices.

Beshear appointed the tax panel earlier this year to recommend a simpler tax code that would generate enough revenue to meet state needs even during recessions.

Despite the state's still-strained budget, members of the group have ruled out some unpopular proposals, including implementation of a 6 percent tax on groceries, which would have generated some $500 million a year. They also tossed aside a proposal Monday that would have reinstated an estate tax in Kentucky.

The panel endorsed a proposal Monday to allow voters in cash-strapped local governments across Kentucky to decide through ballot initiatives whether to approve temporary sales tax increases to pay for specific building projects.

The proposal to allow a "local option sales tax" in Kentucky, one of a dozen states that don't already allow one, has support from Beshear's lieutenant governor, Jerry Abramson, a former Louisville mayor, who stressed Monday that local taxes couldn't be increased without approval of local voters.

"It will take a vote of the people of a local community as to whether the project is of value," said Abramson, chairman of the tax panel. "It's all local driven. Local legislators, council members, fiscal court members have to put it on the ballot. There are all sorts of opportunity for input and ultimately the decision is made."

Beshear's administration has had to cut the state budget every year since he took office in 2007. Beginning next month, that work will be overseen by a new budget director, Jane Driskell, a veteran government finance staffer.

Beshear announced Monday that Jane Driskell will take over the high-profile duties. She will replace Mary Lassiter, who has been serving as both budget director and as head of the governor's executive cabinet. Lassiter will continue as executive cabinet secretary.

Beshear said Driskill's "vast experience in handling financial management issues" will be beneficial as his administration implements the current budget and drafts future ones.

Driskell started her government career in 1985 as a policy and budget analyst in the Governor's Office for Policy and Management. She also has held executive management positions in Louisville and Lexington governments, including deputy mayor, chief financial officer, budget director and commissioner of finance.