Plan would raise Kentucky’s cigarette tax above $1 per pack to pay for education
Tom Loftus, Louisville Courier Journal Published 7:53 p.m. ET Feb. 27, 2018
Plan would raise cigarette taxes above $1 per pack to pay for education
FRANKFORT, Ky. — The House Republican budget plan includes a hike in the cigarette tax and a new tax on dosages of opioid drugs to help restore funding for education, according to two House Democrats.
House Democratic Whip Dennis Keene, of Wilder, and Rep. Kelly Flood, of Lexington, said they were among a group of Democrats given an advance briefing late Tuesday afternoon on the budget plan of the majority Republicans.
Keene and Flood said in separate phone interviews that they were told House Republicans will propose to come up with additional money through a 50-cent increase in Kentucky’s 60-cent per pack cigarette tax and a new tax of 25 cents per dosage of opioid drugs.
“The new dollars generated are targeted for education …” Flood said. “The lobbying effort and citizen engagement on the part of teachers, superintendents, principals, parents and students has paid off.”
Keene and Flood said they were told the new revenue would allow the budget to increase funding for the main public school program known as SEEK (Support Education Excellence in Kentucky) as well as restore much, if not all, of the cut that Gov. Matt Bevin’s proposed budget would have made in funding to school districts for student transportation.
Keene said that Rep. Steven Rudy, the Paducah Republican who chairs the House budget committee, and House Republican Leader Jonathan Shell, of Lancaster, briefed Democratic leaders and Democrats on the budget committee.
Keene said, “It’s not all crystal clear. … The briefing lasted about an hour and we weren’t given anything in writing.”
Flood also said the House GOP budget plan will restore some funding that Bevin’s proposal would have cut from state universities and would address the problem of the governor’s failure to fund health insurance for teachers who retired since July 1, 2010, but have not turned 65 and become eligible for Medicaid.
“If I understood that correctly, that issue (retired teacher health insurance) is being addressed, but in another way that may not be in this budget bill,” Flood said.
Earlier Tuesday, Rudy told reporters that his committee planned to meet Wednesday afternoon and release its revised version of the 2018-2020 budget bill. He also said the committee would consider a revenue bill.
But both Rudy and House Speaker Pro Tem David Osborne, R-Prospect, declined to provide any details. Also, each was asked if the revenue bill included any cigarette tax or opioid tax provisions, and they declined to comment.
In January, Bevin proposed an austere budget that would fully fund the state’s huge pension obligations and that he said would put Kentucky’s financial house in order. But to do so, Bevin said he was required to slash spending to most parts of government and eliminate funding for 70 specific smaller state programs.
That proposal was met by a storm of objections — particularly from school districts that would be saddled with additional costs, particularly for student transportation.
Flood said Democrats were told at the meeting that a 50 cent increase in the cigarette tax would raise about $127 million in the first year of the budget, and $110 million the second year.
She said the tax on dosages of opioids would be applied at the wholesale level and generate about $70 million per year.
Flood also said the plan calls for eliminating a $10 per person tax credit on the individual income tax, a move that would generate about $55 million per year.
While encouraged by the move to raise revenue, Flood said she’s disappointed that the plan is based on revenue sources like tobacco that will decline over time. “This is not tax reform, modernization or matching our taxes where consumers are spending more today on services,” she said.
She said she’d have to consider all aspects of the budget and revenue bills before deciding whether to vote for them. “I will vote for increased revenue if I think we’re doing the right thing overall,” she said.
Flood is uncertain whether a budget plan bolstered by small tax increases could pass the Republican House and, later, the Republican Senate. But she noted that the increases proposed for cigarettes and opioids would not be so politically unpopular.
“After all, the Kentucky Chamber of Commerce is on record for supporting a $1 increase in the cigarette tax,” she said.
Health advocates have been pushing for legislation that would raise the cigarette tax by $1 a pack — a big increase that they say would significantly reduce teen smoking.