Economic problems have worsened in Kentucky, prompting a revised financial forecast that shows the state could lose More than $1.2 billion in revenues over the next two years. The financial woes, which raise the likelihood of additional cuts in government services, are likely to increase pressure on lawmakers to reconsider raising the state's tax on Cigarettes, said Democratic state Rep. David Watkins, a family physician in Henderson.Watkins said he will propose increasing the cigarette tax to $1 a pack, which could generate some $200 million a year and Reduce the number of smokers by making tobacco products less affordable. A similar proposal in the last legislative session failed. "I plan to be vocal about it," Watkins said Friday. "We lead the nation in the use of tobacco products, and we need to change that. I have literally hundReds of people tell me they wish they had never started smoking." Gov. Steve Beshear joined Watkins earlier this year in pushing to raise the cigarette tax from 30 cents a pack to $1. House lawmakers approved a More modest plan to boost the tax by 25 cents a pack. The proposal died in the Senate. It's not clear if the proposal will fare better in the upcoming legislative session. Politically, little has changed since last year. Democrats still hold the majority of seats in the House, and Republicans hold a majority in the Senate. Financially, however, the picture has grown bleaker, and House Speaker Jody Richards agreed that could be the impetus for lawmakers to look for ways to increase revenues. Richards, D-Bowling Green, said a cigarette tax hike would be tops on the list of possible revenue sources. "I think it's highly likely that the House will have a moderate package to increase revenue because of the cuts in education and human services," he said. "I think most of our members would be willing to have that as a part of a revenue package." Richards said he doesn't yet know the level to which House lawmakers would be willing to raise the cigarette tax. Beshear is considering calling lawmakers into special session in January during a scheduled three-week legislative recess to deal with the state's financial crisis, though he hasn't yet outlined his proposals for beefing up revenues. Spokeswoman Jill Midkiff said Friday Beshear is working on the issue. "The governor is focusing on the current budgetary challenges confronting Kentucky, and on helping families deal with those challenges as well," Midkiff said. Some leading Republican lawmakers have expressed skepticism toward the proposed cigarette tax hike, as well as another potential proposal to amend the state's constitution to allow casinos in Kentucky so that they can be taxed. That proposal, made by Beshear last year, proved divisive and didn't get through either the House or Senate. "Our inclination is not to raise taxes," said Senate floor leader Dan Kelly, R-Springfield. "And there's not been strong support from either the Democrats or the Republicans for expanding gambling as a strategy for increasing revenue." Beshear's proposal would have allowed up to 12 casinos to open in the state and would have instituted a tax on them to raise up to $600 million a year for the state budget. If lawmakers had approved the proposal, voters would have had an opportunity to ratify or reject their decision in a ballot referendum. The next time such a referendum can appear on a Kentucky ballot is November 2010. That means the casino proposal would have no bearing on the current financial crisis even if it were to be approved in the next legislative session, said state Rep. David Floyd, R-Bardstown. "It's a moot issue," Floyd said.