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Archive for Thursday, May 24, 2001

Graves OKs tax increase on insurance companies

Measures signed to help close gap in state budget

May 24, 2001

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— An increase in taxes for insurance companies and another part of the Legislature's budget package will become law because Gov. Bill Graves has signed two bills.

Both proposals were part of a package drafted to close a $206 million gap between expected revenues and spending approved in early April for the state's 2002 fiscal year, which begins July 1.

Graves and legislators also hoped to avoid problems for fiscal 2003, but the package fell short of that goal.

"These were budget adjustments that the governor had agreed were necessary to put the state in a financial position to build a budget for the next two years," Don Brown, the governor's spokesman, said Wednesday.

The signings late Tuesday leave only the last budget bill of the year awaiting action from Graves, who has until Sunday to decide whether to sign it, veto individual spending items or veto the entire bill.

The insurance tax change takes effect July 1 and is expected to raise $10 million during fiscal 2002.

The second new law, taking effect May 31, suspends payments for six months into a fund that pays benefits to the families of state employees injured or killed on the job. The change is expected to save $9.2 million in fiscal 2002.

The insurance tax bill changes a 1997 law. Supporters contend it represents the correction of a flaw, not a true tax increase.

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