LANSING A new proposal on how to allocate revenue from an increase in Michigan’s cigarette tax may go to the Senate as early as Tuesday for a vote, but the proposal is getting a cool reception from Gov. Jennifer Granholm.
Whether the chamber does vote Tuesday or Wednesday on the proposal will depend on the reaction of the majority Republican caucus when they discuss the proposal.
Senate Majority Leader Ken Sikkema (R-Wyoming) will propose that the revenue from the 75 cents a pack increase in the cigarette tax (HB 5632) be allocated completely to Michigan’s Medicaid program for the remainder of the 2003-04 fiscal year. If approved, that would add about $90 million to the program that cares for the state’s poorest residents.
Beginning with the 2004-05 fiscal year, the revenues from the increase – a minimum of some $250 million – would be divided with 75 percent going to Medicaid and 25 percent to the general fund. Any additional funding for the state’s Healthy Michigan fund would come from the general fund portion of the allocation.
Sikkema spokesperson Bill Nowling said the proposal is “more than fair.”
Granholm, when she proposed increasing the state’s cigarette tax to $2 a pack, with the 75-cent increase, called for the funding increase to go to Medicaid except for a portion that would go to the Healthy Michigan Fund.
Greg Bird, spokesperson for the State Budget Office, said the proposal “doesn’t solve the problem and it raises new problems. You’re raising the cigarette tax, but cutting Medicaid. Medicaid does not get enough revenue now to pay for the population that needs treatment, Bird said.
And so far all that is being talked about is an increase in the cigarette tax, which is just “one piece of the puzzle. It’s not a complete solution,” Bird said. The governor had also proposed boosting Michigan’s liquor tax and “decoupling” the state’s estate tax from the federal estate tax, which is expiring.
But Nowling said it is time to hold an estate sale for the estate tax.
The Senate defeated the estate tax proposal last week – as it also defeated two different proposals on the cigarette tax, the liquor tax increase and a proposal doubling the tax on Detroit’s casinos – and there is no support among Republicans for restoring it. It also was crushed in a House vote.
Nowling said if a compromise could be reached, the Senate might vote for an increase in the Detroit casino tax along with the cigarette tax. But since an increase in the casino tax would require approval by three-fourths of the Legislature – it would amend the 1996 initiated act – getting that compromise will be tough as the Detroit casinos are trying to rally legislative opponents.
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