A proposed 25-cent cigarette tax hike passed by House lawmakers and eventually struck down by the Senate would have generated about $115 million in revenue, said state Rep. Harry Moberly, D-Richmond.
“That allowed us to give quite a bit more money to elementary and secondary education and human services and also more to higher education,” he said about what the cigarette tax revenue would have helped fund.
“We gave teachers a 4 percent raise over the biennium instead of the 2 percent that they’re getting now,” Moberly said. “And, we were able to give schools additional money in their base SEEK allocation. We gave them $12 million more in the first year and $30 million more in the second. Higher education got back to where there wasn’t any cut at all. Without the cigarette tax, that has to be a 3 percent cut.”
The two-year, nearly $19 billion state budget was approved last Wednesday without a tax increase by a 74-21 vote with all dissenting votes coming from Democrats, including Moberly, who voted against a state spending plan for the first time in his lengthy legislative career.
“I didn’t think that we bargained hard enough at the end with the Senate to get more money for education and human services,” he said. “I thought that, on the House side, if our leadership had done a better job negotiating we would have been able to get more in those crucial areas.
“I felt that they gave into (Senate) President (David) Williams without the proper intensity of negotiations,” Moberly said. “That’s the reason I voted against the budget. The budget is not good for teachers, kids and education in general. I thought we could have done better.”
The cigarette tax increase was proposed to help offset a projected $900 million budget deficit during the next two years.
After the proposal by the House, Gov. Steve Beshear proposed raising the tax to even higher to 70 cents.
The state now has one of the lowest cigarette taxes in the nation at 30 cents a pack, which generates tax revenue of $165 million a year.
The national average for state tobacco tax is $1.07 per pack, and for the seven states surrounding Kentucky, the average is 70 cents per pack, according to the Campaign for Tobacco-Free Kids.
From a public health standpoint, an increase in the state’s cigarette tax would have had many positive implications, said Jim Rousey, public health director of the Madison County Health Department.
“While we are not in a position to advocate or oppose a political action such as a tax, we recognize that smoking and secondhand smoke exposure lead to a number of illnesses that drain our state’s health care funding,” he said. “The burden of illness then falls back on everyone. We may see increased health insurance premiums or decreased availability of health care safety nets services like Medicaid.”
Research has shown that for every 10-percent increase in the total cost of a pack of cigarettes there is an overall 4 percent reduction in use of tobacco products and a 7 percent reduction in smoking among kids under age 18, according to the Campaign for Tobacco-Free Kids.
Kentucky has the highest rate of adults smoking and second-highest rate of youth smoking, according to the Tobacco Youth in Kentucky 2005 Report.
“We thought it would be particularly helpful to discourage youth smoking,” Moberly said about the tax increase proposal. “That’s where we wanted the effect. The information and research showed it would have discouraged youth smoking. Of course, if you stop smoking at early ages, more than likely that individual won’t take it up later. So, it had some significant health implications as well.”
With reduced state revenue, the funding the health department receives from the state also will undoubtedly be affected.
However, the full scope of budget implications will not be known for about two weeks, Rousey said.
“Budget cuts are challenging, and they sometimes force us to make decisions about changes in services or maybe to postpone nonessential program expansions,” he said. “Our focus remains on being good stewards by being as efficient as possible with what resources we have. We must keep in mind that everyone — individual families, small businesses, large agencies — are facing these same potential economic problems right now.”
Moberly admits local health departments will suffer some cuts, but he said he does not think they will be as deep as proposed in the governor’s budget.
“Because the Senate wouldn’t raise revenue, we had to take out a health department infrastructure fund that was intended to help health departments construct new facilities and renovate facilities that they have,” he said. “They would have gotten more assistance from the state as well in their operating funds.”
While the possibility of raising the cigarette tax appears to be dead, Beshear recently said he could potentially call a special session to address revenue shortfalls.
“Our revenue receipts were down in March,” Moberly said. “If they continue to go down, we may have to come back to address the lack of revenue from the failing economy.
“If the economy stabilizes or picks up, we probably will not have a special session,” he said. “If it doesn’t, we probably will at some point. At that point, I think the tobacco tax will be looked at again.”
Bryan Marshall can be reached at bmarshall@richmondregister.com or 624-6691.
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