Senators began work Tuesday on legislation to raise the West Virginia cigarette tax by somewhere between 45 cents and $1 a pack (SB 420), with no certainty whether the bill has a chance to pass the Legislature.
“I don't know what the House will do. I don't have any assumptions,” Senate Finance Chairman Mike Hall, R-Putnam, said of the bill's prospects.
While a pending amendment would dedicate part of the new tax revenue to fully fund Public Employee Insurance Agency benefits, Hall said Tuesday he is confident that funding will happen whether the tax hike passes or not.
“We're not going to take away the health insurance benefits of these participants to spend on something else,” he said.
Hall said that when the 2016-17 budget passes at the end of the session, it will include a total of about $67 million in additional funding for employers' share of PEIA premiums — avoiding $120 million of benefits cuts through severely higher co-pays, deductibles and out-of-pocket maximums for PEIA insurees.
He said the question now is whether that $67 million will come from a new revenue source, such as the tobacco tax increase, or will be cut out of other items in the budget.
“There's other things that could be cut before this,” Hall said. “This is not the first item that goes if you're short revenue.”
Tuesday evening, the committee recessed with an amendment pending that would raise the tax from $1 a pack, as proposed in the governor's bill, to $1.55 a pack, with part of the additional revenue dedicated to PEIA.
The break was to allow time to get precise figures on how much revenue the additional tax would raise, how much PEIA needs to be fully funded and to determine if any remaining revenue should go into the general revenue fund or be dedicated to Medicaid, the state-managed health insurance program for low-income, elderly and disabled West Virginians.
“I think we all agree we've got a severe health problem — West Virginia leads the nation in smoking-related illnesses. The economic impact is $3 billion a year,” Sen. Roman Prezioso, D-Marion, said in proposing the higher tax rate.
He said the first priority for the additional funding should be PEIA.
“It should go to the teachers, the service personnel, the people who work for the state,” Prezioso said.
He said many public school and state employees came to work with the assumption that they would have good benefits in lieu of higher pay.
“It's incumbent for us to live up to what we agreed to,” he said.
Budget estimates indicate that a $1.55-a-pack tax would raise an additional $61 million a year over the $78 million a year of new revenue from the governor's proposal to take the tax to $1 a pack.
The cigarette tax was last increased in 2003, going from 17 cents to the current 55-cents-a-pack rate.
The committee will resume work on the bill at 3 p.m. Wednesday.
Earlier Tuesday, in floor speeches in both houses, Democrats decried what they see as a lack of action to come up with PEIA funding.
“I have heard there is going to be a bipartisan plan,” House Minority Leader Tim Miley, D-Harrison, said. “However, I have not been made aware of such a plan.”
“Nearly 60 percent of the way through the session, we have yet to have a plan on PEIA,” added Delegate Isaac Sponaugle, D-Pendleton. “It's going to be very unfortunate if we get to the 60th day and nothing has been done on PEIA.”
Reach Phil Kabler at philk@wvgazettemail.com, 304 348-1220, or follow @PhilKabler on Twitter.