West Virginia Mulls Tobacco Tax Hike

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West Virginia Mulls Tobacco Tax Hike

WHEELING, W.Va. -- Gov. Bob Wise is considering an increase in the cigarette tax as a way to avoid a projected $150 million deficit in the state budget in the next fiscal year.

If he decides to pursue the tax hike, he'll be joining a big crowd. Many states have recently turned to tobacco for additional revenues as the national economy poked holes in their budgets. Legislatures in Ohio, Pennsylvania, New York, Indiana and Connecticut have voted to raise cigarette taxes, according to Jonathan Collegio, a spokesman for Americans for Tax Reform. Increases are under consideration in California, Delaware, Michigan, New Jersey and Oregon.

Other states, including Alaska and Rhode Island, have looked to funds won in a 1998 settlement between states and tobacco companies to plug holes in their budgets, Collegio said.

West Virginia isn't in as dire a situation as many other states, according to the Charleston (W.Va.) Daily Mail. It began the fiscal year Monday with a budget surplus of about $15 million, while legislatures in 15 other states were struggling in special sessions to plug multi-million holes in their budgets.

But Administration Secretary Greg Burton said he expected the state's good fortunes to run out next fiscal year. Burton said increasing pension and health care costs and slowing lottery revenue growth were expected to combine to create a $150 million deficit.

The Wise administration is thinking about ways to raise additional money. One of the options on the table is increasing the state's 17-cent per pack cigarette tax, which is one of the lowest in the nation. The Legislature voted last year to impose a 7 percent tax on smokeless tobacco, which would amount to about 17 cents on a $2.40 can of tobacco.

Senate Finance Chairman Oshel Craigo, D-Putnam, said boosting the cigarette tax too far could drive buyers across state lines to purchase their tobacco products.

West Virginia's tax is already higher than the 3-cent per pack taxes in Virginia and Kentucky. But increasing the tax could put the state in danger of outpacing Ohio, which recently boosted its tax to 55 cents per pack, the report said.