Governor Supports Cigarette Tax Increase

FRANKFORT, Ky. (AP) - Facing a dismal economic forecast, the
governor of one of the nation's leading tobacco-producing states is
pushing to raise Kentucky's cigarette tax to $1 per pack.
Gov. Steve Beshear, who until now has opposed raising taxes to
solve Kentucky's fiscal woes, said Thursday he wants the General
Assembly to raise cigarette taxes by 70 cents per pack. Beshear
said the revenue generated from the tax hike could help state
government avoid making otherwise drastic funding cuts to education
and other public programs.
"As governor I've got a responsibility to step up and to
propose things that are going to protect our kids and protect our
citizens and give them the kind of services they need," Beshear
told reporters at a Capitol news conference.
Kentucky is currently facing an estimated revenue shortfall of
about $900 million over the next two fiscal years because of
sagging tax revenue and soaring expenses in the state's prison
system and Medicaid program, which provides health insurance
coverage for more than 722,000 low-income and disabled Kentuckians.
Beshear says he'd use proceeds from the tax increase to leverage
bonds and raise about $800 million in money to cover the next two
fiscal years. Beshear said the state could perhaps pay off the
20-year bonds in 12 years by dedicating money from the cigarette
tax to pay down the debt.
Beshear, a Democrat, has previously said he doesn't support
raising taxes to help cover the state's fiscal problems and viewed
them only as a last resort. Instead, Beshear has pushed a plan to
legalize casinos through a constitutional amendment and bring
estimated revenue of up to $600 million per year.
The Democrat-controlled House, however, has been unable to agree
on the gambling proposal, and its passage remains uncertain.
Beshear has said there aren't yet 60 "yes" votes needed to pass
it through the House, and Senate President David Williams,
R-Burkesville, has said he opposes the plan.
"That's still my preference. But, as we all know, it's in limbo
right now," Beshear said. "We have no idea if it's going to pass,
and it's been an uphill battle. And I can't stand by any longer and
risk the future of our kids and the health of our citizens without
stepping out here."
House Speaker Jody Richards, D-Bowling Green, has said
previously that lawmakers may be willing to endorse a less
expensive cigarette tax. House leaders are working separately on a
plan they have said could raise up to $800 million over the next
two years.
Richards was among a group who briefed Beshear on the plan
Thursday, and they plan to meet with him again Friday.
Beshear, however, said he did not support the House plan and
said it called for using "phantom money" to pay the state's
"Those are the kinds of things that I'm not going to stand for
if I have anything to do about it as governor," Beshear said.
House Minority Leader Jeff Hoover, R-Jamestown, said he was
surprised that Beshear had changed his position on taxes. Hoover
said Republicans in the House were not likely to support raising
any taxes.
Anti-smoking advocates, however, praised the governor's
"We think it's the right thing for him to do," said Tonya
Chang, a lobbyist for the American Heart Association in Kentucky.
"It shows tremendous courage and true leadership on his part."
The American Cancer Society, also an ardent supporter of a
higher cigarette tax, has launched an advertising campaign in
Kentucky aimed at convincing lawmakers in one of the nation's
leading tobacco-producing states to support the hike.
Beshear's proposal mirrors that of state Rep. David Watkins,
D-Henderson, who proposed raising Kentucky's tax on cigarettes to
$1 a pack. His proposal has been in limbo in the House
Appropriations and Revenue Committee.
The Legislative Research Commission estimates that the measure
could generate an additional $205 million in tax revenues. The
state currently receives $165 million a year from cigarette sales.
Watkins, a physician, said he believes the tax would raise the
price of cigarettes to a level that would cause people to stop
smoking, especially teens. The price of Marlboro, one of the most
popular brands in Kentucky, would rise to about $3.70 a pack.
Kentucky's cigarette tax now is only 30 cents per pack - the
third lowest in the nation. Until 2005, when lawmakers approved a
hike, the state's cigarette tax was 3 cents a pack, the lowest in
the nation.
Chang said raising the tax an additional 70 cents will cause
some smokers to give up cigarettes. That's critical in Kentucky,
which has the highest smoking rate in the nation.
Nearly 28 percent of Kentucky adults smoke, as do nearly 25
percent of Kentucky teens, according to the Centers for Disease
Control and Preventions in Atlanta.
Watkins' legislation is House Bill 443.
Associated Press Writer Roger Alford contributed to this story.
(Copyright 2008 by The Associated Press. All Rights Reserved.)

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