ORIGINAL ARTICLE HERE from American Heart Association

A plan to hike the tax on cigarettes in Oklahoma by $1.50 per pack to help stave off deep cuts to the state’s health care system passed its first major hurdle in the Legislature on Monday as lawmakers raced to close a $1.3 billion hole in the state budget.

A House budget committee voted 16-11 for the bill, which is projected to generate about $180 million in revenue each year.

Republican Rep. Doug Cox, an emergency room physician from Grove, said the tax will generate revenue for the Legislature to appropriate to state agencies that receive federal Medicaid funding. And he said the bill will have the added benefit of reducing the number of people who smoke.

“The greatest deterrent to young people starting (smoking) is the price,” Cox said. “And for people who are already smoking, there will be a certain percentage of those who will stop.”

But some Democrats complained the bill targets many low-income Oklahomans who are addicted to cigarettes. Rep. Richard Morrissette, D-Oklahoma City, said rather than raising taxes on cigarette smokers, legislators should rescind an income tax cut approved two years ago that went into effect on Jan. 1 and is projected to cost the state about $135 million next year.

“We need the money? Then why don’t we roll back those disgusting tax breaks we gave the rich and the wealthy?” Morrissette said.

The bill, which still needs to pass a similar Senate committee before it is considered by the full Legislature, is one of several measures approved in the Legislature Monday to help close the $1.3 billion hole in next year’s budget. The Senate gave final approval on Monday to several bills designed to raise revenue, including some that would eliminate various tax credits, including some for low-income Oklahomans.

Cox said the money is needed to help prevent a cut as deep as 25 percent to the rate that health care providers are reimbursed for services provided to Medicaid recipients. Groups representing Oklahoma hospitals and nursing homes have said cuts that deep will force some facilities to close and others to stop providing services to Medicaid patients.

Among the bills passed in the Senate is one that adjusts an earned-income tax credit claimed by an estimated 330,000 low-income Oklahomans that will generate about $29 million in revenue. Another bill would generate about $90 million by eliminating a double income tax deduction in Oklahoma.

The House passed several revenue bills, including one that requires motorists to obtain a new license plate, generating about $15 million for the state.

One bill that failed to pass a House budget committee would have ended a tax subsidy for wind production in 2017, rather than 2020. House Speaker Jeff Hickman said the bill would have saved the state about $300 million over ten years, starting in fiscal year 2018.