Beebe signs tobacco tax rise, sings its praises

LITTLE ROCK — Gov. Mike Beebe signed the $86 million cigarette and tobacco tax increase into law Tuesday, saying the money will greatly improve health care in Arkansas.

The bill-signing ceremony was promoted by Beebe's office as the "comprehensive health-care initiative," even though House Bill 1204 - now Act 180 of 2009 - does nothing but raise taxes.

During the event, attended by dozens of people in healthcare fields, Beebe didn't mention what the bill, which takes effect March 1, did. Instead, he emphasized the programs the taxmoney would fund: a statewide trauma system for emergency rooms, an expansion of ARKids First Medicaid health insurance for children, community health centers and 20 other health-related programs.

Beebe joked later that he had confidence that the news media would remind people that the legislation raises taxes.

Beebe emphasized the difficulty of getting the three-fourths favorable vote necessary for the tax increase.

"The real heroes are the people of this state who spoke to their elected officials and expressed the will and worked so hard to make this happen," Beebe said.

He praised the support and work of legislative leaders, in-cluding House Speaker Robbie Wills, D-Conway, Senate President Pro Tempore Bob Johnson, D-Bigelow, and the bill's sponsors, Rep. Gregg Reep, D-Warren, and Sen. Tracy Steele, DNorth Little Rock.

Cigarette manufacturer Altria, which opposed the tax increase, last month estimated that the Arkansas tax increase and the federal cigarette tax increase would bring the cost of a pack of cigarettes to $5.33. But this estimate came before Altria raised its price by 18 cents a pack.

"I truly believe that health care in Arkansas is better off today as a result of this bill," Reep said.

Reep said "it was a difficult vote" for his colleagues, but "they did it for the right reason." He said Wills has been "the rock through this whole thing."

Steele said he and others have been working on ways to establish a trauma system since it failed in the Legislature in 2007 over a funding disagreement - some wanted to fund it with insurance premium surcharges; other wanted additional driving citation fines.

"But this stepped to a new level when the governor got involved," Steele said. "This was a vote to save lives."

The bill increases taxes on:

Cigarettes, 56 cents a pack, added to the current 59 cents, for a total of $1.15 a pack. The federal government recently increased its taxes by 62 cents a pack.

Other tobacco products, by 36 percent on the selling price, up from the current 32 percent, for a total rate of 68 percent.

Beebe said he's confident the Legislature will approve substantive legislation or changes to appropriation bills to fund the programs in his health plan.

"We're going to get each and every item appropriated and funded," he said.

The money from the tax will go straight to general revenue and won't be earmarked for health programs.

Beebe has said that's because none of the health programs should have a preference in funding over other programs in the state budget in the event of a revenue shortfall.

"Anytime the economy falls, nothing is sacred except K-12 [education]," Beebe said. "Everybody else suffers together."

But he said the health programs would be placed in a "very high" priority when the budget is produced later this session.

About 20 legislators, all Democrats, attended the bill signing.

Few Republicans voted for the increase, but Beebe, a Democrat, focused on the ones who did vote for it.

"We couldn't have passed it without Republicans," he said.

The House passed the measure 75-24, the exact number of favorable votes necessary to pass it there. Six of the 28 House Republicans voted for it.

The Senate passed it 28-7, one favorable vote more than needed, with 26 Democrats and two Republicans voting for it. Six Republicans and one Democrat voted against it.

Opponents of the tax cited a variety of reasons: Some said it discriminated against smokers; others said the state shouldn'traise taxes during the economic turmoil; others said that tobacco taxes are a declining revenue stream; and others said it was unfair to low-income smokers.

Here are details of where the money would go in fiscal 2010:

$25 million - Trauma system to improve and coordinate emergency rooms across the state.

$15 million - State support of the 59 federally-funded community health centers across the state.

$5 million - Home and community based services for pay increases for personal care workers, many of whom make minimum wage.

$5 million - Substance-abuse treatment for children and pregnant women, serving about 3,000 people, including 2,200 children.

$4 million - Improvement of Medicaid's computer health records.

$3.8 million - Contracts with the Arkansas Cancer Coalition for a cancer plan, charitable clinics for targeted health treatment, the state Acute Stroke Care Task Force, and the state Tobacco Control Board to improve its tax collection system.

$3.6 million - Expanding the ARKids First Medicaid program through the Human Services Department from 200 percent of the federal poverty income limit to 250 percent. This would likely expand the number of eligible low-income children from 60,000 to 80,000.

$3.4 million - For medical training at the Area Health Education Centers.

$3 million - Operating funds for the Northwest Arkansas branch of the University of Arkansas for Medical Sciences.

$3 million - Improving care provided by school nurses, including $1 million in one-time computer purchases to help coordinate with the Medicaid program.

$2.7 million - Implementing a Medicaid adult dental care program.

$2.5 million - Providing Medicaid screening and treatment for breast and cervical cancer.

$2 million - To expand the ARHealthNet program, created in 2007, which provides health insurance for certain business employees.

$1.7 million - Immunizations through local branches of the Health Department.

$1.5 million - Autism treatment.

$1.2 million - Immunizations in schools.

$1 million - For food banks.

$1 million - To compensate school districts for use of facilities for community health needs.

$700,000 - Improving health data at UAMS.

$300,000 - For more autopsies of infants who die for more information about the state's high infant mortality rate.

Beebe also has proposed a $40 million tax cut. That bill, Senate Bill 88, would reduce the state sales tax on groceries from 3 percent to 2 percent, the next step in Beebe's effort to keep his 2006 campaign promise to remove the tax from groceries entirely without harming essential services.

At the time, the rate was 6 percent, but Beebe and the Legislature cut that to 3 percent in the 2007 legislative session.

The grocery-tax cut bill has been approved by the state Senate and is pending in the House tax committee.