By Jack Gurner
COFFEEVILLE – Mississippians can expect to see a hike in the state’s tobacco tax included in the 2010 budget, according to District 24 State Representative Dr. Sidney W. Bondurant.
Bondurant made his prediction when he spoke at the Yalobusha Historical Society meeting Nov. 20 about the upcoming legislative session beginning in January.
“The only way the state has to raise money is through tax revenues,” said Bondurant, a Grenada physician who represents the southern portion of Yalobusha County.
“We’re not like the federal government, he said. “We don’t have a printing press and we can’t put out state of Mississippi dollars. It all comes from the tax payers.”
Both houses have been in favor of a tobacco tax increase but the governor has been reluctant to go along with it. This year the governor said he would follow the recommendation of his tax study commission that has recommended an increase of up to 50 cents per pack.
“Some members of the House had wanted to go to a dollar a pack and some members of the Senate had wanted to go to between 50 and 60 cents a pack,” Bondurant continued. “All that means is that you are going to see some different bills to come out about recommended changes in tobacco tax. But, almost certainly there will be a tobacco tax increase.”
Bondurant explained that he is writing a bill that would call for a 50 cents per pack hike in the tobacco tax while reducing the state income tax for the lower income brackets.
“The tax increase on tobacco would just about be the same as the shortfall from giving people a break on their income taxes. So, it would work out about even,” he said.
Bondurant couldn’t predict exactly how much revenue a tobacco tax hike would generate. He explained that the current Mississippi tax on cigarettes is 18 cents while it is 62 cents in Tennessee, a 44 cents difference.
But, he continued, if you raise the tax too much people in Tennessee who have been coming to DeSoto County to buy tobacco will stay in Tennessee. And, some DeSoto County people will drive to Memphis to buy cigarettes. “You have to remember human nature and that’s a difficult thing to predict.”
Some members of the House of Representatives want to make the tax increase on tobacco specific to Medicaid. Bondurant would rather just put it in the general fund so it can be allocated to the income tax reduction.
“There’s going to be a lot of fight about that,” he predicted.
Bondurant commented that one thing the governor did not recommend is a change in the grocery tax. “Right now Mississippians pay a seven percent sales tax and that applies to groceries as well,” he added. “There’s been a lot of talk about it in the legislature because a lot of states don’t have that.”
In early November the governor announced budget cuts for 2009 of some $42 million. “The law says that if we have a shortfall in revenue the governor is required to cut state agencies by certain amounts to make sure we live within our revenues,” Bondurant said.
Many state agencies are going to be cut by two percent, he continued. “The governor has asked for a budget from each agency that reflects a four percent cut. He hopes it doesn’t have to go to that. Hopefully we can keep it at two percent.”
“If you will remember earlier in the years we had a big flap about Medicaid. We had a $90 million deficit in Medicaid funding,” he said.
Medicaid is a joint state and federal program. The program is funded by state money matched by federal money. The percentage varies depending on each state’s poverty level.
“Unfortunately Mississippi is the poorest state in the nation. Fortunately, what that does for us is to get our Medicaid match to be the highest in the nation. In Mississippi it is three to one. So, for every 25 cents we put in the feds put in 75 cents. The problem with that is we have to put in that 25 cents to make up one Medicaid dollar,” said Bondurant.
Medicaid has to be funded, he emphasized. “It is what is called an entitlement program. If the person meets the criteria you have to give them Medicaid. You have to pay those bills. So, we are not going to cut Medicaid.”
To further complicate matters, Medicaid costs actually go up during a recession. “More people get out of work. When you are out of work you don’t have income and that drops your income down to the eligibility level,” he said.
“What we’re going to be looking at coming up is an allocation of the money we do have,” said Bondurant. “We can’t run a deficit. We have to live within a balanced budget.”
(Moderators note: For more information about the Yalobusha Historical Society and the minutes of their meeting, go to the Footnotes in History section of this website or click on this link.)