The leader of the state Senate is making no promises on whether proposals to increase the cigarette tax and create a tax on pain pills will be considered in his chamber.
On Thursday, the Republican-led state House of Representatives passed a revenue bill that would increase the cigarette tax by 50 cents per pack and create a 25-cent tax that distributors would have to pay for each dose of opioid pills sold in Kentucky.
Senate President Robert Stivers, a Republican from Manchester, said he wants to have more analysis on the issue before weighing in.
“I want to look at it, I want to review it, I want to hear their thoughts and comments before I say it’s something that will be considered or should be considered,” Stivers said.
The tax proposals would generate about $250 million per year and help avoid some cuts proposed in Gov. Matt Bevin’s budget, which was released in January.
Along with the revenue bill, the House passed a budget that includes some of Bevin’s cuts, but also increases the primary funding source for K-12 education and restores cuts made to public school transportation funds.
Rep. Jim Wayne, a Democrat from Louisville, said the new taxes aren’t sustainable sources of revenue.
“We are imposing taxes on cigarettes and we don’t want people to smoke cigarettes. Over the long haul, this will be a diminished source of income for us,” Wayne said.
“This is nothing but pea gravel and sawdust for the deep potholes that pave the way for the commonwealth.”
Part of Kentucky’s budget woes are due to the state’s ailing pension systems, which have a combined unfunded liability of $40 billion.
The House budget includes Bevin’s request to set aside massive amounts of money for the state’s pension systems — about $3.3 billion, or 15 percent of state spending over the next two years.
Rep. Steve Rudy, chair of the House Appropriations and Revenue Committee, said the cigarette and opioid tax measures were the beginning of a larger proposal on reforming the state’s tax code, which he hopes will pass by the end of this year’s General Assembly on April 13.
Senate President Stivers said it was unlikely his chamber would consider a standalone tax increase, but he would be “glad” to consider a comprehensive tax reform measure.
“If there’s comprehensive tax reform where you look at all areas — you look at loopholes, you look at getting rid of some taxes, increasing others in a comprehensive tax reform, that’s very possible,” Stivers said.
Now that the House has passed a budget, the Senate gets to write its own version. Towards the end of the legislative session, lawmakers from both chambers will hammer out a final version, which would have to be signed by Bevin.