Caroline Rushing remembers sitting on a bus in Monroe County, headed to school, while some of her classmates passed around a cigarette. She felt like she couldn’t breathe.
“It was just a bad environment,” Rushing said.
So she helped make Monroe County a tobacco-free school district. Then she helped get a tobacco-free park in the Southern Kentucky county.
Now, working with the Kentucky Youth Advocates, Rushing is trying to accomplish a more difficult task — persuading the Kentucky General Assembly to raise the state cigarette tax by $1 a pack. She was among a group of students and doctors rallying for the tax increase in the Capitol Rotunda on Wednesday, but their words were met with misgivings by Republican leaders.
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“As a general rule, we just tend to be very reluctant to raise taxes and certainly there’s no way you can argue that it’s not a tax increase,” said House Speaker Pro Tempore David Osborne, R-Prospect. “So that certainly has to go into the conversation and has to be considered and balanced with the overall benefits of it.”
Kentucky last increased its cigarette tax rate to 60 cents a pack in 2009, when Democrats controlled the House of Representatives and governor’s mansion. Since then, Republicans have gained control of Frankfort and shown little enthusiasm for raising taxes despite slow revenue growth and an unfunded liability of more than $40 billion in the state’s ailing public pension systems.
The state would bring in an estimated $100 million each year if it raised the cigarette tax $1, according to the fiscal note on a 2017 bill to raise the tax filed by Rep. Jim Wayne, D-Louisville. That amount would not solve the state’s money problems, but it could ease deep spending cuts proposed by Gov. Matt Bevin. For example, Bevin’s proposal to eliminate all state funding for 70 programs would save the state an estimated $85 million a year.
Knowing that many Republicans are reluctant to raise taxes, advocates are emphasizing the health benefits of a cigarette tax increase. They point out studies that show raising the cigarette tax helps decrease the number of people who smoke and studies that show 34 percent of cancer deaths in Kentuckians age 35 and older can be attributed to smoking, the highest rate in the nation.
More than 8,000 Kentuckians die of tobacco-related illnesses a year, according to the Kentucky Cabinet for Health and Family Services. Smoking-related illnesses and conditions cost Medicaid and Medicare $1.2 billion a year in Kentucky.
“So much of this measure is around health,” said Terry Brooks, executive director of Kentucky Youth Advocates.
Kentucky’s cigarette tax is among the lowest in the nation, according to the Tax Foundation, a conservative-leaning think tank in Washington D.C. Raising the tax by $1 would make Kentucky’s tax the same as Ohio, at $1.60.
“The facts are clear that we are well below any other state,” said Julie Raque-Adams, a Louisville Republican who is chairwoman of the Senate Committee on Health and Welfare. “Raising that up a dollar has shown that it will cause people not to start smoking, it will cause people to break the habit and it will save the people of Kentucky a tremendous amount of money on health-related expenses.”
Many of her fellow Republicans, though, are less enthusiastic.
Senate Majority Floor Leader Damon Thayer, R-Georgetown, who gets a say in which bills are heard on the Senate floor, said he thinks the cigarette tax is a declining source of revenue and isn’t worth a stand-alone bill that doesn’t make broader changes to the state’s tax code.
“I think it will change people’s habits, but it will also create a black market for tobacco that will not be taxed,” Thayer said.
Another issue facing Senate Bill 29, which would raise the cigarette tax, is that all revenue-generating bills must originate in the House of Representatives, according to the Kentucky Constitution.
Still, a cigarette tax increase could be part of overall tax reform, Thayer said, referencing a potential special legislative session to overhaul the state’s antiquated tax laws that Gov. Matt Bevin had promised would happen last year, and now promises to call in 2018.
A spokesman for Bevin said the governor is open to considering a cigarette tax increase as part of a broader tax reform effort, but he stopped short of pledging support.
“Gov. Bevin has called for meaningful tax reform to simplify and modernize Kentucky’s tax code — a crucial component to getting our fiscal house in order,” said Woody Maglinger, a spokesman for Bevin. “Tax reform must ensure that we are competitive with surrounding states and that general fund revenue keeps pace with economic growth. Effective tax reform must consider all taxes and tax expenditures, including the cigarette tax.”
So far, there have been few formal discussions about reforming the state’s tax system.
Osborne doesn’t expect the House to consider a stand-alone bill to increase the cigarette tax, but said he thinks it could be included in a larger bill to generate revenue this session.
“We have not polled that issue within our caucus,” Osborne said. “I know that there is considerable discussion amongst members and certainly people from the outside but we have not gotten far enough into that to really figure out if we have overall support for that or not.”