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Topinka: Cigarette tax hike a “common sense solution”

Friday, May 18, 2012

* From a press release…

Illinois Comptroller Judy Baar Topinka on Thursday said she supports a proposed cigarette tax increase for Medicaid provided that it is tied to significant spending cuts and approval of a gaming expansion bill that includes a Chicago casino and slot machines at horse racing tracks.

The proposal offered by the state fiscal officer represents a compromise in the ongoing state budget and Medicaid negotiations.

“I am not inclined to support any tax or fee increases, but can back the cigarette tax provided that critical spending cuts are made and much-needed support of the horse racing industry is passed,” Topinka said. “Our biggest problem in this state is spending, and that has to be addressed. But the reality is that increased revenue also has to be a part of balancing the budget, and this compromise accomplishes that as well.”

The Governor and members of the General Assembly have been at odds over the proposed tax and gaming expansion. Republican legislators have opposed the cigarette tax, saying the state should focus solely on spending. At the same time, Gov. Pat Quinn has said he will not support gaming expansion legislation.

But given an estimated state bill backlog of $8.5 billion and the urgent need to pass Medicaid reform legislation, Topinka emphasized the importance of finding common ground.

“This is a common sense fiscal solution,” Topinka said. “And most importantly, it will provide important spending cuts and revenue enhancements to help put the state back on track to fiscal stability.”

That statement makes her the first Republican to back the tax hike. But she may not end up being the only one. From the Tribune editorial page

On Medicaid, lawmakers sound like they’re close to a $2.7 billion deal to resuscitate the ailing health care program for the poor. The cornerstone: $1.4 billion to $1.6 billion in cuts, including limits on prescription drugs and certain surgeries. The deal being discussed late Thursday would be relatively good news for hospitals and nursing homes: A proposed 8 percent rate cut has been whittled to 3 percent — $240 million — with protections for safety-net hospitals that treat a disproportionate share of Medicaid patients and for critical-access hospitals that serve large rural areas.

Republicans are signaling that they can live with a $1-a-pack cigarette tax as part of a deal that includes significant spending cuts. That would raise about $700 million, leveraging federal funds. It’s a reasonable way to spare more Medicaid cuts, and higher cigarette prices would encourage thousands of people to quit or never start smoking.

Also in the mix is a state waiver that could add 100,000 patients to Cook County’s Medicaid rolls. This provision would mean a windfall of federal reimbursements for the county’s cash-strapped health care system, but it wouldn’t cost the state a penny it isn’t already paying to care for those patients. It’s win-win.

All of this is in flux, but the lawmakers we’ve talked to hope that the Medicaid reform bills will be filed in the Illinois House on Monday and come to a vote as early as Tuesday. That’s an ambitious schedule for a Legislature content to kick this reform down the road too many times in the past.

Discuss.

- Posted by Rich Miller        

26 Comments
  1. - wordslinger - Friday, May 18, 12 @ 9:49 am:

    Given Quinn’s apparent movement on slots, it seems JBT is helping soften up the ground for a grand, bi-partisan compromise.

    Gee, just like government is supposed to work.


  2. - OneMan - Friday, May 18, 12 @ 9:52 am:

    Slots and Smokes….

    Sounds like a win/win to me…


  3. - mark walker - Friday, May 18, 12 @ 9:59 am:

    JBT continues to impress.


  4. - cassandra - Friday, May 18, 12 @ 10:06 am:

    With Hillary a possible presidential contender in 2016 and JBT sounding stateswomanlike, we are looking at some potential examples of the age of the mature woman in high political office in a few years. After all, if JBT had beaten Blago, we wouldn’t be in this mess. Could JBT be considering a primary run in 2014?

    Anyway, such a trend is way, way overdue.


  5. - Team Sleep - Friday, May 18, 12 @ 10:09 am:

    User taxes and sales taxes are actually taxes which I can get behind. You can control what you pay a lot easier than you can control what you pay on your personal and property taxes. As long as the money generated from the cigarette tax is locked in for Medicaid/child healthcare spending, I am all for it.


  6. - Shore - Friday, May 18, 12 @ 10:15 am:

    I’m done with the cigarette taxes. I’m not a smoker and have supported them in the past but enough is enough. We have other vices causing public health issues in this country we can tax-like sweets and enough is enough.


  7. - Anonymous - Friday, May 18, 12 @ 10:17 am:

    Aslong as the money generated from the cigarette tax is locked in for Medicaid/child healthcare spending…”

    Worked so well when the legislature promised to dedicate the Lottery revenue to education. They just cut the general fund contribution and education was no better off.


  8. - mokenavince - Friday, May 18, 12 @ 10:21 am:

    They have taxed the hell out of booze, they should tax the hell out us for smokes. Beer is food, smokes are killers.


  9. - Pat Collins - Friday, May 18, 12 @ 10:32 am:

    Of course, will there really be the spending cuts?

    That is the real q.


  10. - Bill Edley - Friday, May 18, 12 @ 10:37 am:

    It’s the system NOT the spending!!!

    Defunding Medicaid and other health programs is merely delaying the inevitable. The problem isn’t the aggregate level of health care spending, but the terribly inefficient health delivery process in America compared to every other developed country in the world. Over the long-term, we can’t raise taxes high enough to pay for it!!!

    According to recently a released OECD report, U.S. health care spending (2009) totaled $7,960 per capita, with $3,795 from public sources, $3,189 private, and $976 out-of-pocket, amounting to 17.4% of GDP. In the United Kingdom, where I’ve spent the last year, health is spending per capita totaled $3,487, with $2,935 from public sources, $188 private, and$364 out-of-pocket representing 9.8% of GDP.

    In other words, in rough terms, if the U.S. system was as efficient as the British system we could fund health care for all Americans from our $3,795 public sources that we are already spending and still have another $300 to spare. Japan’s total spending is even less, at $2,878 and 8.5% GDP. Germany’s at $4,218 and 11.6% GDP.

    Our slavish devotion to a utopian “Free-Market” fee-for-service system is madness!!!


  11. - Anonymous - Friday, May 18, 12 @ 10:43 am:

    Bill,

    It may be “madness”, but it’s great for the doctors, who make much more in the US and make campaign contributions, and the hospital administrators, who make much more in the US and make campaign contributions, and the nursing home operators, who make a bundle and make campaign contributions, and the medical device makers, who make much more in the US and make campaign contributions, and the pharmaceutical companies, who make much more in the US and make campaign contributions . . . . You get the picture.


  12. - 3rd Generation Chicago Native - Friday, May 18, 12 @ 10:46 am:

    increased Cigarette tax coming from a smoker…


  13. - Small Town Liberal - Friday, May 18, 12 @ 10:46 am:

    - Of course, will there really be the spending cuts? -

    Are you not paying attention? Do you think all of these folks wringing their hands are doing it because everything is staying the same?


  14. - Freeman - Friday, May 18, 12 @ 10:47 am:

    === including limits on prescription drugs and certain surgeries. ===

    What sort of surgeries are we talking about here?

    There’s a MAJOR difference between cutting bariatric surgery and cutting organ transplants.

    While I would prefer cutting neither (as weight loss surgery may also wind up saving someone’s life), our state tells us this is the option of last resort. So, let’s make certain any cuts are as intelligent as possible - after weeding out ineligible enrollees, etc.


  15. - steve schnorf - Friday, May 18, 12 @ 11:00 am:

    As is usual, Judy is more common sense than most in the political business. We don’t get to choose between good and evil most of the time, just among the imperfect choices available to us, and Judy gets that. “A” isn’t perfect, but it’s better than “B”. Once again, good for her!


  16. - TwoFeetThick - Friday, May 18, 12 @ 11:05 am:

    Ironic and sad that one of the most reasonable and level-headed GOPers out there was successfully portrayed by Blago’s campaign as out of touch and crazy.


  17. - Bill Edley - Friday, May 18, 12 @ 11:17 am:

    Anonymous,….Of course, you’re right….the medical industry’s vested interests have a straggle hold on the political process and are squeezing the last drop of blood out of taxpayers to fund it. The cigarette tax is an easy vote, as if any tax vote is easy, but in a no-growth economy, the choices are going to become much harder going forward. We need to stop pouring financial resources into a leaky bucket, and fix the bucket!!!


  18. - wishbone - Friday, May 18, 12 @ 11:17 am:

    “Our slavish devotion to a utopian “Free-Market” fee-for-service system is madness!!!”

    +1 Unfortunately too many members of the 99% still vote for people who represent only the 1%. Romney anyone?


  19. - Anyone Remember? - Friday, May 18, 12 @ 11:46 am:

    cassandra -

    Having observed and appreciated JBT since her Senate days, I disagree with your statement
    ========
    After all, if JBT had beaten Blago, we wouldn’t be in this mess.
    ========

    The current pension obligations eating up the budget (last week Treasurer Rutherford stated the income tax increase was totally used up by the increase in pension costs) are enshrined in Jim Edgar’s 1994 pension reform law.

    Now, if you’re saying JBT wouldn’t have made the boneheaded mistakes Blago did, no argument there.


  20. - Rich Miller - Friday, May 18, 12 @ 11:51 am:

    ===The current pension obligations eating up the budget (last week Treasurer Rutherford stated the income tax increase was totally used up by the increase in pension costs) are enshrined in Jim Edgar’s 1994 pension reform law.===

    Not quite true. RRB skipped some pension payments, which was harshly criticized by JBT. That is a big reason why we’re so far behind right now.


  21. - steve schnorf - Friday, May 18, 12 @ 11:52 am:

    ah, yes, if only Edgar hadn’t passed that plan, we would be in the gravy now


  22. - just sayin' - Friday, May 18, 12 @ 12:38 pm:

    Topinka probably just sends a staffer over to Indiana to get her smokes.


  23. - Pension Junkie - Friday, May 18, 12 @ 1:14 pm:

    Hi Rich (@ 11:51am),

    I’m no Blago fan but want to correct the record.

    On p. 122 of JBT’s most recent Annual Report ( http://www.comptroller.state.il.us/index.cfm/linkservid/083E57BA-1CC1-DE6E-2F48783E3F984EF7/showMeta/0/ ) the Blago (partial holidays) of 2006-2007 were made up from 2008-2010:

    “Public Act 94-0004 decreased the required funding levels for fiscal years 2006 and 2007 to $938.400 million and $1.375 billion,
    respectively, and requires the State’s contribution to increase in equal annual increments from fiscal years 2008 to 2010 to ensure that the fiscal year 2006 and 2007 decreases have no long term effect on contributions.”

    And to Steve’s comment, what’s the cost of the 15 year ramp-up period in Edgar’s 1995 “Plan” that took all those (1995-2009) years of minimal funding and back-loaded those underfunded amounts into the future (starting with the FY2010 contributions)? That “plan” plus two stock market melt-downs (2002 and 2008-2009) is why Quinn is stuck with staggering pension contributions that are required now. (BTW, for good measure, we can throw in the highly optimistic return assumptions that the pension funds continue to use in light of the poor market returns they’ve experienced, as also contributing to today’s pension requirements - those are part of the “actuarial losses” we’re paying for this year and next.)


  24. - Yellow Dog Democrat - Friday, May 18, 12 @ 1:36 pm:

    @Schnorf -

    You’ve gotta admit — even if you blame it on Hindsight — it would have made much more sense to pay MORE into the pension system during the boom years of the late 90’s, rather than using Jim Edgar’s ramp.

    I’ve suggested a ramp based on revenue growth, but the actuaries hate it.


  25. - Cook County Commoner - Friday, May 18, 12 @ 1:40 pm:

    An increase in cigarette taxes is a great idea. For Indiana. According to the Dept of Labor, Indiana led the nation in April with a 17,100 gain in payrolls. I work in downtown Chicago, with lots of co-workers who commute from Indiana. Co-workers who smoke without easy access to Indiana get regular deliveries. So let’s increase the tobacco tax and send some more Illinois dollars to our Hoosier friends so they can create more jobs.


  26. - George - Sunday, May 20, 12 @ 9:12 am:

    Pension Junkie, what you’re missing is the fact that when we were “making up” the missed payments, we just bonded out the payments. Debt on one line-item moved to debt on another line-item. That’s like paying your mortgage with your credit card. You might as well count those as missed payments, too, because we didn’t REALLY pay them.


Sorry, comments for this post are now closed.


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