Despite best efforts, cigarette tax negotiators fail to negotiate

April 22, 2009

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JACKSON -- House-Senate negotiators didn''t give in and agree Tuesday to resolve the Legislature''s three-month stalemate on how to raise the state cigarette tax and preserve the car tag discount. 

 

But they''re not giving up a potential compromise to generate more than $100 million in much-needed revenue. 

 

"I do think we will all agree to a bill everyone can agree on," said Senate Finance Chairman Dean Kirby, R-Pearl, who met with his House counterpart for another of the public bargaining sessions they''ve had off and on in recent weeks. 

 

"Everybody knows we''re going to increase the cigarette tax and we''re going to take care of the tag problem," said House Ways and Means Chairman Percy Watson, D-Hattiesburg. "We''re going to take care of it this year -- unless the Senate is insistent on 64 cents." 

 

That was the case Tuesday as Kirby declined again to agree on raising the state''s current 18-cent-a-pack cigarette tax above 64 cents. Watson and other House leaders are equally insistent on the new tax being 75 cents. 

 

 

 

Anti-tax members 

 

In turning down that amount, Kirby said there are enough staunch anti-tax members in the Senate to deny it the 60 percent majority required to pass tax bills. 

 

"We''ve got some people who are not going to vote for any tax increase," he said. 

 

With Watson having earlier agreed to reduce by 25 cents the $1 tax the House originally voted for in January, he questioned why Kirby won''t equally reciprocate: increase by 25 cents the 49-cent tax the Senate originally passed. 

 

That 75-cent median would generate a state Tax Commission-estimated $140 million a year in extra revenue -- enough to replenish the state''s withering car tag reduction fund and boost spending for the deficit-plagued Medicaid program. 

 

 

 

''Not rocket science'' 

 

"This is not rocket science. (The public) is wondering why we can''t reach across the table and reach an agreement," Watson told Kirby. 

 

"People would rather see cigarette taxes go up than car tags." 

 

"It''s not that simple," said Kirby, who noted he doesn''t want the cigarette levy to be so high -- especially since the federal tax just rose to $1.01. 

 

"It gets to the point -- where do you stop?" Kirby said. "We know we can''t pass 75 cents." 

 

He also pointed out that a cigarette tax increase must meet the approval of Republican Gov. Haley Barbour. The governor has proposed the tax be 60 cents but hasn''t said if he''d veto a bill that went higher. 

 

When asked if Barbour is adamant on 60 cents, his spokesman only said the governor is insistent that "any tobacco tax increase must reflect reliable, realistic revenue projections." 

 

 

 

From bad to worse 

 

"Otherwise, we''ll simply take a bad budget year and make it worse," said press secretary Dan Turner. 

 

Barbour also wants a special tax hike on smokeless tobacco and cigarettes made by companies that don''t pay Mississippi millions of dollars like others annually do to settle the 1994 lawsuit Mississippi filed against the industry for sickening smokers. 

 

Watson and Kirby -- joined by the four other members of the House-Senate panel appointed to negotiate a compromise -- met for about two hours in a state Capitol committee room full of lobbyists, health advocates and reporters. 

 

The session -- the first since the Legislature began a lengthy recess April 1 -- provided negotiators a chance to render the public more information about their positions on House Bill 364, but it didn''t move them closer to an agreement. 

 

 

 

Return to stalled session 

 

They did not set their next meeting date. The House and Senate are tentatively scheduled to return in two weeks to resume their stalled legislative session. They decided to take a break April 1 so legislators can further assess how federal stimulus funds will impact the state budget. 

 

The Legislature''s main task upon its return is to fund state government for the fiscal year that begins in July. 

 

The move to increase the cigarette tax is being largely propelled by legislators'' desire to keep car tag prices from going up. 

 

The state Tax Commission voted last week to decrease the discounts people have been receiving for their car taxes since 1994. The car tag credit would decline from 5.5 percent to 3 percent.  

 

The commission has been warning since January this cut would happen beginning in July as the state''s car-tax reduction fund runs out of money. This is being caused by a decline in automobile sales. Sales tax revenues are diverted to counties to replace local taxes lost because of the car tag credits.