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Cigarette tax issue could be decided within a week

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By Todd Dorman | Thursday, February 22, 2007 11:46 AM CST | () comments

TODAY: (Updated 11:56 a.m.) DES MOINES — Democratic legislative leaders say they will know by the end of next week whether Iowa’s cigarette tax will jump by $1 per pack.

That unanswered question loomed large over a budget blueprint released by Democrats today that includes $301 million in new spending next year on education, health care and other initiatives. A $1 cigarette tax hike makes up nearly half of that increase — raising an estimated $140 million annually. Democrats control both the Iowa House and Senate.

A bill boosting the current 36-cent tax by $1 cleared a House committee late Wednesday by just one vote. The bill easily passed a Senate panel two weeks ago.

Senate Majority Leader Mike Gronstal, D-Council Bluffs, said he thinks momentum is building for a $1 increase.

“We would say it’s moving in that direction,” he said. “We know there’s going to be a cigarette tax increase.”

But some Democrats, particularly in the House, have argued that a $1 boost is too steep and would hurt some retailers. The impact could be greater along borders with states that would have lower tobacco tax rates, including Nebraska, Illinois and Wisconsin.

House Speaker Pat Murphy, D-Dubuque, said he is not certain how the issue will play in the House. He supports a $1 increase.

“I think we’ll have to wait and see when we have that debate on the floor,” he said. “We just have to see if the votes are there now.”

The budget framework released by the Democrats tracks closely with spending objectives proposed by Democratic Gov. Chet Culver. It includes a $70 million raise for public school teachers as well as money for early childhood education, universities and community colleges.

Tobacco tax proceeds would be spent on a list of health-care programs, including an expansion of health insurance for low-income families.

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