Failure to agree on a cigarette tax increase has made for a rough ride and car tag concerns.
By Bobby Harrison
Daily Journal Jackson Bureau
JACKSON – A funny thing happened on what was supposed to be a smooth end to the 2009 legislative session.
While all acknowledged it would be a difficult budget year because of a dramatic drop in state tax collections, the plan was to take a generous portion of federal stimulus funds to plug some of the holes and to use revenue from a cigarette tax increase and from a tax on hospitals to fill the rest.
House and Senate leaders even agreed to leave Tuesday – four days early – and come back to craft the budget, probably in May when more details are known about how federal stimulus funds can be used.
But on the way to that smooth ending, at least one major impasse and possibly two broke out. And lawmakers are worried it could ultimately mean higher car tag costs.
Last week, House and Senate leaders could not agree on how much to increase the cigarette tax. As of now, that legislation is dead and would take a two-thirds vote by both chambers to revive it.
Legislation to tax hospitals to help fill a Medicaid shortfall is on life support and will die Monday if negotiators do not reach an agreement.
Without additional revenue from a cigarette tax and hospital tax, Senate Appropriations Committee Chairman Alan Nunnelee, R-Tupelo, said agencies with the exception of education probably would be cut at least 10 percent and the cost of a car tag could go up by hundreds of dollars.
“Nero at least was playing a fiddle,” Sen. Hob Bryan, D-Amory, mused. “We are not even making any music. Just on issue after issue we have not been able to come to a conclusion. It is extremely frustrating.”
Bryan, chair of the Senate Public Health Committee, says he supports taxing hospitals at $90 million annually to help fund Medicaid. He said it is frustrating that the House negotiators have not offered a position on the issue.
But House Public Health Chair Steve Holland, D-Plantersville, says he believes there will be an agreement on a hospital tax, but that it will be closer to $45 million.
“We have continued to talk,” Holland said. “We have not broken down. I feel we will work something out.”
The cigarette tax is another issue. As of now, there is no proposal to tax cigarettes alive in the process. Sen. Bill Stone, D-Ashland, and Rep. Tommy Reynolds, D-Water Valley, have filed legislation in their respective chambers to revive the issue. It is not certain when or even if the leadership of both chambers will take it up.
When cigarette tax increase negotiations broke down, Finance Chairman Dean Kirby, R-Pearl, said he could not agree to more than a 42-cent-per-pack increase to 60 cents. The House’s last offer was a 62-cent-per-pack increase to 80 cents per pack. Ways and Means Chairman Percy Watson, D-Hattiesburg, broke off negotiations when Kirby said he would not go beyond 60 cents per pack.
But in recent days, Kirby said, “I would have sincerely considered signing one (agreement) at the contiguous state average.”
The average of the four surrounding states is 63.88 cents per pack or almost 4 cents more than Kirby said was his last offer when negotiations broke down. House leaders have been pushing for a cigarette tax of $1 per pack for several years only to be stymied by the Senate and Gov. Haley Barbour. Whether they will return to the negotiating table for an additional 4 cents per pack remains to be seen.
If they do, it would be because both House and Senate leaders are concerned about finding money to replenish a fund that holds down the cost of car tags by channeling help to counties. The fund relies on the tax from vehicle sales, which are down in the recession. Unless about $25 million is placed in the fund by May 1, the cost of car tags will increase across the state and will nearly double in some counties.
Appropriations Chairman Nunnelee and Lt. Gov. Phil Bryant have said cigarette tax revenue is the only source of funds to deal with the car tag issue. But some members contend that money could be taken from the state’s rainy day fund, which currently has about $360 million in it, to replenish the car tag fund.
Bryant and Nunnelee said the rainy day fund might be needed for several years because of the troubling economic times and they would not agree to take money out to hold down car tag costs.
Sen. Eric Powell, D-Corinth, said the car tag fund had to be replenished one way or the other because people can not afford to pay what could be hundreds of dollars more for car tags.
“If we don’t take care of that, we’re going to hit people in the heart,” he said.
Contact Daily Journal Jackson Bureau reporter Bobby Harrison at (601)-353-3119 or email@example.com.