Culver still wants $1 cigarette tax hike

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By Todd Dorman | Tuesday, January 23, 2007 2:53 AM CST | () comments

DES MOINES — Gov. Chet Culver said Monday he will 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 said he would spend mostly on health care 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 an increase in the 40-cent to 64-cent range.

A 64-cent increase would raise an additional $99 million, according to nonpartisan budget analysts, while 40 cents would raise $66 million.

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 official news conference since taking office. “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 the tax hike would help cover the cost that smoking-related illnesses exact on the state’s Medicaid program. And he contends 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.

But raising the tax by $1 would also give Iowa one of the highest rates among its neighbors. A $1 increase would push Iowa’s rate higher than state tobacco taxes charged in Illinois, Wisconsin and Nebraska.

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said some lawmakers are worried a big tobacco tax boost could hurt border retailers who sell cigarettes.

“Legislators from border communities are definitely hearing those concerns,” Gronstal said.

Murphy said a $1 tax hike will be a tough sell among House Democrats.

“I just don’t know if we have enough votes to do a buck,” Murphy said. “I think the higher you go, the more people you lose.”

But Culver likely needs a sizeable shot of new revenue to balance his budget. Culver said he would use a portion of any new tobacco tax proceeds to expand the state’s HAWK-I health insurance program for children. Culver wants to cover more youngsters and some poor parents.

Culver’s overall budget also will include big increases in education and environmental spending as well as a $100 million “Iowa Power Fund” to pay for renewable energy projects and research.

Todd Dorman can be reached at (515) 243-0138 or at todd.dorman@lee.net.