Tobacco News and Interesting Information

House and Senate leaders are expected to begin negotiations soon over the size of an increase in the cigarette tax.

On Thursday with no debate, the House voted to invite negotiations with the Senate on the cigarette tax. The House has proposed increasing the tax by 82 cents to $1 per pack. The Senate has proposed a more modest 31-cent increase to 49 cents per pack.

Both House and Senate leaders have said they believe it is urgent they reach agreement on the tax increase soon to provide additional revenue to the ailing state tax coffers.

"The sooner we do it, the sooner we start receiving revenue," said Senate Finance Committee Chairman Dean Kirby, R-Pearl. "It's just that simple."

The Legislature is looking for additional funds at a time that general fund tax collections are $90 million below projections for the current fiscal year. And state tax collections appear to be getting worse.

For the month of January, tax collections were more than 6 percent below the estimate and 3 percent below the amount collected in January 2008.

Gov. Haley Barbour already has made $200 million in budget cuts based on current tax collections and the amount anticipated to be collected before the end of the fiscal year on June 30.

"If it wasn't for federal money," Barbour said, "my $200 million in cuts would not have been enough."

Barbour and legislative leaders are counting on help with their budget from the federal stimulus package being considered by Congress at President Barack Obama's behest.

House Speaker Billy McCoy, D-Rienzi, said that based on current federal legislation, which is not in its final form, Mississippi could receive $2.6 billion over several years.

Whatever the final versions and amounts, the federal stimulus package and the cigarette tax increase will be key components of the state budget.

But budget leaders say they are not sure how to deal with the federal money.

"I really don't know if it will get here during this budget cycle," said House Appropriations Committee Chairman Johnny Stringer, D-Montrose. "I hope it does, but we have to continue with the budgeting process like we don't have it."

Even if the federal funding amount is not decided by the time the Legislature is scheduled to complete its budget work in late March, Stringer said lawmakers could take money targeted for Medicaid and use it elsewhere.

The program would be left with a shortfall, but it is generally believed that the federal package will include funds to help the states with Medicaid.

The amount of the federal stimulus package is one part of the budget puzzle out of the hands of state legislators. But the other key part of the budget picture - the amount of the cigarette tax - rests squarely with the Mississippi Legislature.

Both the House and Senate have called for the cigarette tax increase to be in place by March 1, meaning funds for the current fiscal year would be available.

The Senate wants to spend the money for the current fiscal year to replenish a fund that holds down the cost of car tags. The House wants to spend the funds for the current fiscal year to offset education cuts.

But the state Tax Commission has said it probably would take 30 days to enact a cigarette tax increase. That makes a March 1 enactment unlikely since the House-Senate negotiations probably won't start before next week.

And Senate Appropriations Committee Chairman Alan Nunnelee, R-Tupelo, said additional research is needed to determine what impact a 61-cent-per-pack increase in the federal tax will have on state revenue. Obama signed the federal cigarette tax increase into law Wednesday.

Health advocates point out that as the tax on cigarettes gets larger, more people stop smoking. Because of the increase in the federal tax, the amount generated by the state tax will probably be less than originally thought.