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Lobbyist Money Help  

New tobacco taxes won't help budget shortfall

October 04, 2002
By: Jason McLure
State Capital Bureau

JEFFERSON CITY - A proposed 55-cent hike in the tobacco tax would do little to cover the state's projected $436 million revenue shortfall, according to the governor's budget director.

Missourians will vote in November on whether to raise the state tax on a pack of cigarettes from 17 cents to 72 cents and taxes on other tobacco products by 20 percent of their wholesale price.

State budget director Linda Luebbering said that although the tax is projected to raise $343 million in state revenue, much of that funding is earmarked for new spending and to offset rising Medicaid and health care costs.

Luebbering said the wording of the ballot measure is fairly specific about how the tobacco tax money can be used. This leaves legislators little room to shift revenue to departments that have been hard hit by budget cuts, such as higher education.

Some think this is not such a bad idea.

Sen. Marvin Singleton, R-Seneca and chairman of the public health and welfare committee, said it's important any increased tobacco revenues be used for health care and not the state's current budget shortfall. He said the state's share of the tobacco settlement money had not been used for its intended purpose, and that the cigarette tax increase could make up for that loss.

"The governor can take the tobacco settlement money," he said. "The legislature can take the tobacco settlement money, any money we have, even money dedicated for education....It's been seen you can divert the revenue stream pretty easily."

Nearly $100 million of the proposed tax would go toward supplemental Medicaid payments to hospitals. However, this money can be used only to upgrade ambulance, trauma and other emergency services. Regular funding for Medicaid could not be shifted to other uses without cutting service.

Approximately $48 million of the proposed tax would fund anti-tobacco campaigns and community grants for early childhood programs. The state's current anti-tobacco programs are funded exclusively by earmarked funds from Washington that cannot be shifted to other causes. The only source of funding for current early childhood grants is from another earmarked source the legislature has no control over: gambling revenues.

An additional $48 million of the increased tobacco revenue would go for life sciences research, something the state does not currently fund. This money could be a boon for Missouri's universities, particularly the University of Missouri-Columbia -- the state's largest university.

The remaining $147 million is earmarked for programs providing health care for low-income families and prescription drugs for seniors. Luebbering said technically the state could free up general revenue currently used for this purpose and replace it with tobacco money. However, Luebbering said she thought that was unlikely.

"Those [health care] services are costing more every year," she said. "I think the cigarette tax will be used to help us pay for those increasing costs."

Luebbering said that if the measure passes in November, some of the revenue could help the state pay for some low-income health care programs this year.

Earmarked taxes have been criticized recently by State Auditor Claire McCaskill after an audit of Missouri's Conservation Department. The audit found that since the passage of a one-eighth cent sales tax earmarked for Conservation, that department's budget has ballooned to be the third largest of its kind in the nation.

McCaskill's audit criticized the Conservation Department for several questionable expenditures. Among these were $2.3 million to improve the Canadian habitats of migratory ducks and $492,000 for a logging museum which, after three years and the expenditure of most of the funds, remains unbuilt.