State Politics

Senate set on passing higher cigarette tax

TALLAHASSEE — As legislators signed off on rival House and Senate spending plans Tuesday, the Senate showed its determination to force Gov. Charlie Crist to accept a tax on smokers — or risk a budget flame out.

With a budget now having passed the House, State Rep. Bill Galvano of Bradenton called the process the “greatest challenge” he has faced as a legislator.

House Speaker Pro Tempore Ron Reagan of Bradenton said, “we still have a long way to go” to meld the House and Senate versions. State Rep. Darryl Rouson, who represents a portion of Manatee, called the budget ”a work in progress.”

Of the contentious cigarette-tax increase, Rouson said the debate continues.

“I believe there should be increased taxes on cigarettes because of their health cost and addiction costs, I’m not so sure it should be a whole dollar,” he said.

The Senate wants to make the $1-a-pack tobacco tax almost veto proof by directing the surcharge’s proceeds into Medicaid. Medicaid is a linchpin of balancing the budget because it’s linked to billions in federal stimulus money.

If Crist vetoes the tobacco tax, his move could create a $3 billion budget hole in the Medicaid program, a federal-state insurance program for children, the elderly and the sick that Crist backs. Crist has repeatedly said he opposes a new tobacco tax. But his opposition appears to be softening.

“It may be difficult for the governor to get at,” said Senate budget leader J.D. Alexander, a Lake Wales Republican.

Tax gets new name

Like other Republicans, Crist seems to find a tobacco tax more palatable when it’s called a surcharge or user fee — anything but a tax. Crist, who ducked a reporter’s question about the Senate’s veto-proof language, has begun trying to spare cigar makers from the tobacco tax.

“I view that (as) more of a Florida industry,” Crist said.

So do legislators from Miami-Dade County and the Tampa Bay area, where the cigar industry is based. Some lawmakers are working behind the scenes to spare hometown cigar makers.

Florida’s tax on cigarettes, 33.9 cents per pack, is one of the nation’s lowest and has not been raised since 1990. The increased tax has strong bipartisan support in the Senate but resistance is much higher in the Florida House. The House hasn’t heard the tax bill and has no tobacco-tax money in its proposed budget.

But even House legislators are acknowledging the surcharge — as long as it’s earmarked

for Medicaid — is in play with less than a month before the May 1 end of session. Also on the table: plans by both Crist and the Senate to ink a taxable gambling deal with the Seminole Tribe of Florida.

“There are going to be issues that come down to the final moments whether it’s going to be the budget, obviously cigarette taxes, and obviously the gaming issue,” said House Republican leader Adam Hasner of Delray Beach.

Lawmakers from both chambers predicted they’d agree on a balanced budget by May 1. But significant differences remain now that the full budget committees from both chambers voted out their budget plans.

The budgets’ dollars

The House’s proposed budget is $546 million smaller than the Senate’s, and it has roughly $800 million in new fees. The Senate version raises $2.1 billion in new fees and taxes.

The fee increases in both budgets would up the cost of court filings, some fishing licenses, driver license tags, registrations, driving tests, license reinstatements, accident reports and original or duplicate titles of cars.

Senate Bill 1778 contains $365 million in new fees on motorists.

Bradenton’s Reagan addressed those ideas, saying, “There’s all this on the table at this moment, we’ll weed through them, we’re doing that right now, as a matter of fact. Hopefully, by this time next week, we’ll have some way through.”

Galvano said, “The budget we’re passing is one of the most difficult challenges I’ve had since I’ve been elected because of the lack of money. On the House side, we took the time to go through very meticulously and address what we could to maintain the quality of life for Floridians most in need.

“For example, we didn’t cut the agency for persons with disabilities, which was very important to me. We looked at programs and tried to decide which ones were critical, and which ones weren’t, and based it on that.”

Reagan said, “We still have a long way to go, we’re not balanced. We must look at what we’ve got coming in and going out. Tough decisions, hope we can find additional revenue, maybe in next couple of weeks.”

Said Rouson: “It’s a work in progress, it is painful and ugly. Not only have we asked agencies who cannot afford cuts to cut more, we have refused to fully and completely embrace novel ideas of new revenue streams. I can’t even get my bill heard that seeks to tax crack pipes and marijuana pipes sold in these head shops. They refuse to even consider the idea as a revenue stream.”

No part of the House budget got more discussion Tuesday than the preK-12 portion. Chairwoman Anitere Flores, R-Miami, touted a slight increase in per-student funding. Democrats complained about cuts to mentoring and teacher development programs.

“The fact is that we have less money. I don’t know how else to say it,” Flores said. ‘‘The fact that we’re not cutting per-student funding, I think, is a victory.’

Partisan bickering broke out over who deserved credit for meeting educators’ appeals to protect the funding. Republican leaders thanked each other, staff and Floridians. Democrats thanked President Barack Obama for pushing the federal stimulus package.

Rep. Ron Saunders, D-Key West, put it bluntly. The stimulus, he said, “bailed our butts out.”

Rep. David Rivera, R-Miami, chair of the House full appropriations council on education and economic development, challenged anyone voting no on the budget to come forward with alternative ideas.

“Put it on your personal letterhead. Own it. Be accountable,” Rivera said. “To vote no and not give those specifics before we go to the floor — I believe would be irresponsible and a dereliction of our duty.”

Rivera said the budgets in both chambers were a first step. He didn’t rule out a tobacco-tax increase.

But though the Senate has the tax increase in its budget, Hialeah Republican Sen. Rudy Garcia said he’s working to exempt cigar makers, who could be charged $1 per ounce of tobacco.

“It could affect 10,000 rollers in direct or indirect jobs,” Garcia said.

The Senate’s budget chief, Alexander, said he placed the tobacco tax in the budget by using special “proviso’’ language. Normally, a governor can veto a line item of spending. But vetoing proviso language for Medicaid risks undoing the entire program and throwing the budget into chaos. That’s especially true this year when federal stimulus money for Medicaid helps balance the entire budget.

Alexander and Senate President Jeff Atwater said that, if the Legislature doesn’t increase tobacco taxes, all taxpayers will be on the hook for higher Medicaid costs.

“I think tobacco, no matter what its form, causes tobacco-related illnesses,” Alexander said. “And we’ve adopted a policy that we believe is fair to all based on the amount of tobacco consumed rather than other illnesses.”

Herald staff reporter Sara Kennedy contributed to this report. She can be reached at (941) 708-7908 or at skennedy@bradenton.com

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