Assembly Defeats Proposal To Cover State Budget Deficit with Cigarette Tax Increase
The Assembly yesterday voted 50-20 to reject a budget proposal that would have increased the state's tax on cigarettes to $3 per pack, the AP/Contra Costa Times reports. The measure required a two-thirds majority to pass but fell four votes short. No Republican voted for the plan (Bluth, AP/Contra Costa Times, 8/8). The plan would have increased the state's cigarette tax from 87 cents to $3 per pack. The 250% tax increase would have increased the retail price of a pack of cigarettes to $7 and would have generated an estimated $1.7 billion per year (California Healthline, 8/7). Lawmakers have not reached an agreement on a budget plan for fiscal year 2002-2003 that would offset a $23.6 billion shortfall. For their part, Republicans have said that they would not vote for a budget that increases taxes. Instead, they want a budget that would make more than $7 billion in reductions, including cuts for some health services (AP/Contra Costa Times, 8/8). Despite the defeat, Assembly Speaker Herb Wesson (D-Culver City), who sponsored the cigarette tax plan, said he is "confident" the tax increases will be included in the budget that the Legislature eventually adopts. The state's cigarette tax last rose in 1998, when it increased from 37 cents to the current 87 cents per pack (Wiegand, Sacramento Bee, 8/8).
In response to proposed spending cuts, 88 of California's "high-income earners" sent a letter to Gov. Gray Davis (D) and legislative leaders proposing that the state reinstate top income-tax brackets to balance the budget, the Los Angeles Times reports. Unless the proposed cuts are reversed, "all of California will be affected," according to Roy Ulrich, president of the California Tax Reform Association. Ulrich said, "This is about the devastation to needed services in the state and thinking about something other than your own wallet." He added, "We may be separated by neighborhoods, but we are not separated in terms of a failed health care system. We all use trauma care centers." Senate Majority Leader John Burton (D-San Francisco) had proposed increasing the highest tax bracket from 9.3% by adding 10% and 11% brackets, but the plan failed because it did not receive any support from Republicans. Davis also opposed the plan, saying that the state has become "too reliant" on income taxes, the Times reports (Tamaki, Los Angeles Times, 8/8).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.