Culver stands firm on cigarette tax
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By Todd Dorman | Monday, January 22, 2007 |
TODAY: (Updated 10:28 a.m) DES MOINES – Gov. Chet Culver said this morning he will to stand firm on his call for a $1 cigarette tax hike despite opposition from some key lawmakers.
Culver said a $1 increase in the state’s current 36-cent-per-pack tax will be included in the budget plan he presents to lawmakers on Jan. 30. The higher tax would raise an additional $130 million annually that Culver would spend mostly on health programs.
But in recent weeks, House Speaker Pat Murphy, D-Dubuque, and other lawmakers have insisted a $1 increase is too steep. They’re leaning toward a 64-cent hike that would make Iowa’s tax an even dollar.
A 64-cent increase would raise an additional $99 million, according to nonpartisan budget analysts.
Culver, however, said legislative misgivings won’t deter him from honoring a campaign promise to seek a $1 increase.
“We’ve been very adamant about the importance of increasing the cigarette tax by a dollar for a lot of reasons,” Culver said during his first news conference since taking office Jan. 12. “First and foremost, you have to raise the cigarette tax a significant amount to deter those young people, especially, from smoking in the first place.”
Culver argues that the tax hike would help cover the cost that smoking-related illnesses exact on the state’s Medicaid program. And he contends that Iowa’s current tax, which ranks 42nd nationally, is too low.
“It has not been raised for a number of years, and this will allow Iowa to be more in the area of the national average when it comes to this important tax,” Culver said.
Todd Dorman can be contacted at (515) 243-0138 or at todd.dorman@lee.net.
EARLIER STORY
Smoke still hasn't settled on Iowa's cigarette tax proposal
By Todd Dorman
DES MOINES — From Travis White’s perspective, behind the counter of the Second Hand Smoke Shop in Sioux City, a proposed cigarette tax increase in Iowa would be bad for business.
Cigarette sales keep the lights on, and the doors open. A tax hike likely would send some of the shop’s customers across the Missouri River to Nebraska, where the cigarette tax would be lower if Iowa anti-smoking advocates get their way.
“It’s a bite in the butt,” said White, of Sioux City, who works in the shop on 5th Street near downtown. “It’s going to make it harder to operate.”
White said he’s tired of politicians targeting tobacco use.
“Damn, just let America smoke,” White said.
At the Statehouse, however, smoking is out, and new spending is in.
Democratic Gov. Chet Culver has yet to deliver his budget plan to lawmakers, but it’s certain to include a $1 increase in Iowa’s current 36-cent per pack cigarette tax. And it will be many more weeks before the Democrat-controlled Legislature decides how large a tobacco tax increase it’s willing to accept.
But the race is on to grab any new dollars raised by a tax hike.
Anti-smoking groups want more money for programs aimed at stopping young Iowans from smoking and helping older smokers kick the habit. Some Democratic lawmakers want the money to cover the cost of dramatically expanding state health-care programs for poor adults and children.
The state’s largest teacher’s union has its eye on the tobacco tax as it lobbies for higher teacher salaries. Property tax reform advocates have floated the possibility of using cigarette tax dollars to smooth the path to big changes in the system.
“I think everyone is a little greedy right now. Everyone’s got their hand out,” said Rep. Elesha Gayman, D-Davenport, who supports a $1 tobacco tax hike and wants the money spent on health-care initiatives.
Culver also wants a $1 increase, which would raise more than $130 million in additional revenue annually, according to Statehouse budget experts. Culver would spend part of the money on expanding health insurance coverage for children, but he also told the Iowa State Education Association last weekend that schools may benefit from a higher tax.
There are growing signs, however, that Culver may not get a dollar increase.
Border economics, including the fate of such businesses as the Second Hand Smoke Shop, is a major factor for lawmakers. Raising the tax to $1.36 would boost Iowa’s tax beyond the 98 cents charged in Illinois, the 77 cents charged in Wisconsin, and the 64 cents assessed in Nebraska.
House Speaker Pat Murphy, D-Dubuque, said the increase likely is to be smaller than what Culver wants.
“I think we’re much more likely to be somewhere between 40 and 64 cents,” said Murphy, whose hometown borders on both Wisconsin and Illinois. “I don’t think we’ll be doing a dollar.”
Lobbying efforts
Still lawmakers will face intense pressure to approve a dollar increase from dozens of organizations.
“Saving lives is important,” said Sandra Quilty, who lobbies at the Statehouse for the American Cancer Society. “We’re not going to negotiate that away for anything less than a dollar increase.”
There also will be plenty of budget pressure. For example, during the 2006 campaign, Culver promised to spend tens of millions of dollars to raise teacher salaries to the national average.
The state education association wants $280 million over the next four years for pay raises. The group’s president, Linda Nelson, said tobacco tax money is a possible funding source.
“I think part of it certainly could go to education,” Nelson said. “It will be interesting to see how they divide up that money in the end.”
Sen. Frank Wood, D-Eldridge, who co-chairs a panel that oversees education funding, concedes schools’ needs are many. But his view on the tax also is affected his parents’ deaths, both of them from smoking-related illnesses.
“If the cigarette tax is brought up, I hope that all that money goes to health care,” Wood said.
Last week, Sen. Jack Hatch, D-Des Moines, and Rep. Ro Foege, D-Mount Vernon, unveiled an ambitious plan to expand Medicaid, HAWK-I children’s health coverage and other programs with the goal of providing universal coverage for all Iowans. A $1 cigarette tax increase would help pay for the plan.
Other Democrats, including Murphy, said the plan may be too ambitious.
“I don’t know that we’re to the point where we do a universal bill,” Murphy said.
Todd Dorman can be reached at (515) 243-0138 or at todd.dorman@lee.net.
CIGARETTE TAXES
State Tax per pack
South Dakota 1.53
Minnesota 1.49
Illinois 0.98
Wisconsin 0.77
Nebraska 0.64
Iowa 0.36
Missouri 0.17
Source: Campaign for Tobacco Free Kids
Culver’s proposal
Iowa Gov. Chet Culver is expected to include a $1 increase in the state’s current 36-cent per pack cigarette tax when he delivers his budget plan to lawmakers. Other lawmakers aren’t that confident that will happen.
“I think we’re much more likely to be somewhere between 40 and 64 cents,” House Speaker Pat Murphy, D-Dubuque, said.
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