Lansing - The State House brought Michigan one step closer to resolving the current fiscal year's $250 million deficit and balancing next year's budget by concurring Wednesday with a Senate version of a bill to raise the cigarette tax.
State representatives approved the measure 55-52, but sent it back to the Senate with an amendment calling for half of the $3 million designated for smoking prevention to be applied toward programs aimed at helping smokers quit.
"We have the potential to help 323,000 people quit in Michigan. It will save money and lives," said Rick Johnson, R-Leroy, who sponsored the amendment.
The House passed Johnson's amendment, 103-4.
The bill would raise the tax on a pack of cigarettes from $1.25 to $2 beginning July 1. Introduced by Gov. Jennifer Granholm, the measure is intended to raise $97.1 million between July 1 and Sept. 30 as a way to offset the current fiscal year's deficit and reduce next year's projected $1.3 billion shortfall.
The cigarette tax is estimated to raise $295 million for the fiscal year that begins Oct. 1.
Proponents of the tax increase, such as state Rep. David Farhat, R-Muskegon, said it's a necessary way of solving current budget problems.
"What it is, is the Legislature attempting to come to some budget resolve with (Granholm's) administration in a timely manner," Farhat said. "There's still holes left to fill."
Most of the bill's opponents said there needs to be a provision for a sunset on the tax, meaning it would be gone after three years. State Rep. Lauren Hager, R-Port Huron, proposed such a provision.
"The cigarette tax should be, at best, a temporary fix to help offset the budget deficit. The sunset is an ideal way to approach the tax."
Needing a minimum of 55 yes votes to be passed, Hager's amendment fell short, with a 53-51 vote.
Last week, lawmakers met with representatives from Granholm's administration to discuss balancing the budget with a cigarette tax increase, among other options. But the talks dissolved late last week when the governor canceled Thursday's negotiating session after the Senate voted down the cigarette and liquor tax increases.
The Senate on Tuesday passed the cigarette tax increase 20-15. That version had no provision for a sunset on the tax, meaning it could potentially be a permanent tax.
The bill would use all money from the cigarette tax hike to pay for Medicaid for the remainder of the current fiscal year and all of next fiscal year. Beginning in the 2006 fiscal year, 75 percent of the money would go toward funding Medicaid and the remainder would go to the general fund budget.
State Rep. Gretchen Whitmer, D-East Lansing, said this Medicaid funding is exactly the reason the bill shouldn't sunset.
"Our Medicaid problem isn't going to sunset in a few years, so it doesn't make sense to sunset a bill that would help fund it," Whitmer said.
