Until two weeks ago, Beshear had been saying "Kentuckians are taxed enough" and he didn't plan to seek an increase in the smokes tax. He says that position has changed because the casino bill is in trouble and Kentucky must have some new money to stop expected budget cuts in education and social services. Beshear says he would use most of the $334 million from the cigarette tax hike to leverage $600 million in bonds that would cover the budget cuts for the next two years.

If Kentucky's cigarette tax is raised from 30 cents to $1/pack, it would have the second highest tax among surrounding states. Only Ohio has a higher cig tax at $1.02 per pack.

Beshear says he's willing to take the political heat and criticism for changing his mind on the cigarette tax. But he says he'd rather hurt his political career than the futures of Kentucky children. Beshear's announcement came after he met with House Democratic leaders, who presented the governor with their budget plan. According to democratic house members who've been briefed on the plan, it would raise about $300 million and include:
25 cents increase in cigarette tax
Sales tax on some services like janitorial and security services
Refinancing bonds

Democratic House members say the plan has the support of about 40 lawmakers.
House Speaker Jody Richards said he would have some comments on Monday.
Beshear wouldn't talk about specifics of the House plan but he says he rejected it because there's "some funny money.....phantom money" in the plan. Beshear says he doesn't want to heap any more debt on future Kentuckians, though his cigarette tax hike would be used to buy bonds and would still leave the state with a structurally imbalanced budget.

It appears to me that Beshear's willingness to come out in support of a big cigarette tax hike is a signal that he believes the casino bill is dead, dead, dead. The governor told reporters he still hopes the legislature will pass a casino bill and wouldn't speculate on whether lawmakers might find a constitutional amendment on casinos easier to swallow than a 70 cent increase in the cigarette tax.