W.Va. Senate Approves Tobacco Tax Hike, Leadership Starts Talking Final Budget

May 19, 2016

By a narrow margin, state Senators have approved a tax that will generate some $70 million annual in state revenues.

Senators voted to increase taxes on tobacco products in West Virginia 17-16--with all but one Democratic member of the chamber voting against it and one Republican member, Sen. Robert Karnes, leaving the chamber minutes before the vote.

The bill increases the state’s cigarette tax by 45 cents per pack, increases taxes on smokeless tobacco products, and creates a new tax on e-cigarette liquids.

The first $1 million generated by the new tax would be dedicated to the state’s smoking cessation fund. The next $43.5 million is dedicated to funding PEIA, the state’s Public Employee Insurance Agency, although the additional revenues do not fully fund the program to avoid rate increases for state employees.

“I would hate to be the person that voted no on this bill,” Senate Majority Leader Mitch Carmichael said after the vote. “It’s indefensible; it’s just completely ridiculous to vote no on that bill.”

Senate Minority Leader Jeff Kessler said his caucus, with the exception of Kanawha County Sen. Corey Palumbo, chose to vote no because the majority has yet to share with them a comprehensive plan to balance the 2017 budget.

“We pass this, that creates $70 million, perhaps, but that still leaves a $200 million budget deficit,” he said. “How are we going to fix it?”

The Senate majority plans to present its final budget proposal to the chamber’s Finance Committee Monday. With the passage of the tobacco tax bill, Carmichael said the bill will likely include a 2 to 3 percent cut across the board for all state agencies with the exception of public education and the Department of Health and Human Resources.

That across the board cut, according to Carmichael, would account for $20-30 million. The majority leader said there is another $10 million to be found in various programs in the state Department of Education and the rest will come from Rainy Day.

Carmichael said once the bill is approved in the committee, it will be put on a fast track on the Senate floor.  He expects a final vote in the upper chamber Tuesday.