A plan to increase the state’s tobacco tax could resurface as legislators look for ways to offset further budget cuts. But if it does, it is almost certain to fail, said House Speaker Mike O’Neal.
“If there is a stalemate over the budget, there may be some who will propose that we go with increased taxes, but I don’t think that will be in the end game,” O’Neal, a Hutchinson Republican, said. “If there are attempts made, they will fail.”
House members “don’t really have an appetite for any tax increases,” O’Neal said, particularly in the current economic climate.
“I’m not hearing much interest in a tobacco or an alcohol tax, although I know there are some out there who have talked about raising the sin taxes,” he said. “Neither one of those would raise enough money to make a whole lot of difference.
“I could be wrong, and if we have trouble getting a budget passed, we could look at it, but I don’t think it’s a viable option. And I will personally oppose any tax increase, whether it’s a tobacco tax, a sales tax, or an income tax. I just don’t think you do that in a recession.”
Officials at the Kansas Health Policy Authority in January requested House Bill 2327, which would increase the state’s cigarette tax by 75 cents to $1.54. Such a tax, the officials said, would produce $68.7 million in new revenue in fiscal year 2010.
Lawmakers are trying to close a projected budget deficit for fiscal 2010 of between $350 million and $400 million.
The health policy authority wanted the tax increase to pay for its own health reforms, including a statewide community health record, a tobacco cessation program for Medicaid beneficiaries, grants to small businesses for workplace wellness , and expanding Medicaid to cover parents earning up to 100 percent of federal poverty guidelines, or $18,310 a year for a family of three.
None of those programs have been approved by legislators.
There’s little chance that if a tobacco tax increase were implemented that it would be used for those programs, O’Neal said. Instead, it would go to prop up the state’s general fund.
“It would literally be used to fill the hole,” O’Neal said.
The House Taxation Committee never held hearings on the bill.
Rep. Richard Carlson, R-St. Marys, chairman of the tax committee, said he had heard little interest among colleagues in reviving the measure.
“Not at this point,” he said, last week as the budget committees prepared their versions of the Omnibus spending bill, “but I would suspect everything is going to be on the table,” when the full Legislature returns on Wednesday.
A federal cigarette tax increase to fund expansion of the children’s health insurance program has further dampened House members’ enthusiasm for a state tax increase. The federal tax was raised from about 38 cents to about $1 per pack.
“I don’t know that it ever really had legs in the House, but I think the federal government beat us to the punch,” said Rep. Kevin Yoder, R-Overland Park, chairman of the House Appropriations Committee.
The state last raised its per-pack tax from 24 cents to 79 cents in 2002 as part of a $252 million tax package to help balance the state budget. According to the Campaign for Tobacco-Free Kids, Kansas has the 34th highest state tax on tobacco products.
-Sarah Green is a staff writer for KHI News Service, which specializes in coverage of health issues facing Kansans. She can be reached at sgreen@khi.org or at 785-233-5443, ext. 118. Staff writer Mike Shields contributed to this report.