Wednesday, March 16, 2011

Cigarette tax hike a 'no go' for now

By Jamey Dunn

A push to pass a cigarette tax increase to fund capital construction fell flat today.

Senate President John Cullerton said lawmakers need to approve a new version of the state’s capital construction plan, which an Illinois court ruled unconstitutional in January.
He is backing a $1-a-pack tax increase on cigarettes to take the place of legalized video poker as a revenue source for the plan. The increase would be phased in over two years, with a 50-cent increase in fiscal year 2012 and another in fiscal year 2013, and would bring in a projected $300 million.

However, Senate Republicans said there is no need to rush a new plan through the process, and they would rather wait to see how the Illinois Supreme Court rules on the original legislation. Senate Minority Leader Christine Radogno said she worries that making changes now could endanger the plan, and the legislature should only address the issue if the Supreme Court makes it necessary by upholding the lower courts’ ruling.

She said that leaving out video poker indicated that Cullerton either wants to swap revenue sources — noting that he also introduced a bill to eliminate video gaming — or plans to expand capital spending if the court upholds the original funding. “If you want to pass this for [general spending], heaven knows the state could use the money. But I have a great deal of concern that this is laying the groundwork to undoing the entire capital [plan,]” Radogno said of Cullerton’s tax increase proposal. She also said she was concerned about a cigarette tax unfairly targeting lower-income residents. She and other Republicans said that doubling the cigarette tax, which is currently 98 cents a pack, might push Illinoisans to buy cigarettes in neighboring states.

Cullerton supports the tax, in part, because he says it would stop young people from taking up smoking and encourage smokers to quit. Proponents also highlight the fact that fewer smokers would mean less state money spent on medical care for smoking related ailments.

Radogno said it would be unfair to start the process of legalizing video poker in bars and restaurants across the state — something that had previously been an illegal under-the-table source of profit for many establishments — and not follow through. “These people are going to lose lots and lots of money because they relied on their state government,” she said.

Cullerton said that he does not have any immediate plans to call Senate Bill 17, which would repeal the Video Gaming Act passed in May 2009.

“I was never really a big supporter of the video gaming, but we did vote for it. We just haven’t made any money on it yet,” Cullerton said. However, he added: “We’re not doing anything now. We’re just being neutral.”

The cigarette tax increase and two other bills — SB 1323 and SB 1322 — that contain other parts of the new capital plan passed in a Senate committee today with no Republican support. Cullerton said he planned to call the tax increase for a full Senate vote this afternoon, but he did not, likely because there were not enough legislators on board for it to pass. “The [Senate] president did not obviously call it for a vote, and I’m assuming that he did not do that because he didn’t think he had the votes to do that,” said Sen. John Sullivan, a Rushville Democrat.

Sullivan said that lawmakers have been looking for a way to replace the expected revenues from the video gaming plan once it became clear that implementing the bill would be difficult. “It’s a real issue. The money has not come in from the video poker.” However, he said he could not support a cigarette tax increase “at this time” because he is concerned it would hurt business in areas of his district that are close to the Missouri border. “If it was just cigarettes, it would be one things, but many people who buy cigarettes, when they travel to Missouri, for example, not only do they buy cigarettes, they buy gas. They buy groceries. They buy other goods and get other services while they’re there. So it’s not the one factor of that tax increase. … You’ve got to look at it in its entirety.”


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