When Illinois smokers take a drag, more than tobacco will go up in smoke. They face a new $1-per-pack state tax in a bill that now goes to Gov. Pat Quinn to sign into law.
The Illinois Senate on May 29 and the House on May 25 approved a cigarette tax increase to raise revenue to avoid even deeper cuts to health care for low-income people. No Senate Republicans voted for the tobacco tax measure. Four Democrats, primarily those representing districts on the state's borders, voted against it.
According to the Chicago Tribune, the tobacco debate unfolded as House members appeared poised to take action on plans for a revamp of public employee pensions, which have been major drivers of spending in a state that can't pay its bills and has the nation's most underfunded retirement plan.
The tax hike on cigarettes and other tobacco products had long been viewed as a key but controversial component of Illinois' Medicaid funding problem, according to the Tribune.
In all, the legislation is expected to bring in $800 million to help offset growing Medicaid costs. This, combined with the $1.6 billion in cuts lawmakers approved last week, brings the total Medicaid savings to $2.4 billion.
To garner more votes, the increase was paired with a proposed new tax on hospitals with the hopes of generating $50 million that could leverage another $50 million from Washington. Also, the increase is expected to generate $350 million, which would grow to $700 million when combined with federal matching dollars.
The House had long been the stumbling block to higher tobacco taxes, so the 60-52 vote was viewed at the Capitol as tantamount to passage, the Tribune reported. The bill was expected to pass in the Senate because the Democrats in the past have backed raising the cigarette tax. Although the vote was close, it passed 31-27.
The $1 increase brings the state cigarette tax to $1.98 and pushes the cost of smokes to nearly $11 a pack in some parts of Chicago. The House vote came a day after lawmakers approved $1.6 billion in cuts to taxpayer-subsidized Medicaid services, according to the Tribune. If the tax increase had failed in the House, lawmakers would have had to look for more cuts.
Gov. Pat Quinn supports the tax hike.
"Today's action will improve the health of our people and lower the burden of smoking-related conditions on our Medicaid system, while helping to fill the $2.7 billion Medicaid shortfall and stabilize the system for those that need it," Gov. Pat Quinn said in a statement May 25 about Senate Bill 2194.
Quinn and state lawmakers originally had been looking at making $2.7 billion in cuts to Medicaid. Combined with an earlier $300 million shift, revenues from the new tobacco and hospital taxes and the cuts approved the day before equal $2.7 billion.
The measure also would assist hospitals that have found their property tax-exempt status jeopardized over the amount of charity care they provide.
Based on cigarette tax rates at the start of the year, Illinois would move from 32nd- to 16th-highest in the country, according to the anti-smoking Campaign for Tobacco-Free Kids. The $1-a-pack increase would bring state, county and city taxes on a pack of cigarettes to $4.66 a pack in Chicago, the group found, behind only the $5.85-per-pack state-and-local tax rate in New York City.
Bill Fleischli, of the Illinois Petroleum Marketers Association, predicted the increase would result in a 20 percent reduction in the volume of cigarettes sold in Illinois and would take $300 million in economic activity away from retailers.
“Smokers already pay more than their fair share,” he said, quoted by Herald-review.com.
How Area State Representatives Voted
Franco Coladipietro (R-Bloomingdale)
Jim Durkin (R-Western Springs)
Shawn K. Ford (D-Chicago)
Camille Y. Lilly (D-Chicago)
Eileen Lyons (R-Downers Grove)
Michael J. Madigan (D-Chicago)
Chris Nybo (R-Lombard)
Dennis Reboletti (R-Elmhurst)
Karen Yarbrough (D-Maywood)
Michael J. Zalewski (D-Riverside)
Patricia R. Bellock (R-Westmont)
Michael Connelly (R-Naperville)
Mike Fortner (R-West Chicago)
Sandra M. Pihos (R-Glen Ellyn)
Timothy L. Schmitz (R-Geneva)
How Area State Senators Voted
Don Harmon (D-Oak Park)
Steven M. Landek (D-Bridgeview)
Kirk W. Dillard (R-Hinsdale)
Chris Lauzen (R-Aurora)
John Millner (R-Carol Stream)
Christine Radogno (R-Lemont)
Ron Sandack (R-Downers Grove)