Published: February 23, 2009 10:59 am      

Beer and cigarette prices jump April 1

Feb. 18, 2009 — Folks, get ready to shell out extra cash for booze, cigarettes and chewing tobacco.

Gov. Steve Beshear signed into law Friday an increase in the state tobacco and alcohol tax in order to put revenue back into the state’s budget, expected to be short by $456 million.

Although some senators made clear their position, the bill passed the upper chamber 24-12 just before noon, with a yes vote from local Sen. Charlie Borders, R-Grayson.

Borders said voting the order into legislation saved major cuts that would have affected education and the Medicaid programs.

“I have never been one to vote for tax increases,” he commented Tuesday. “But we found ourselves in dire straits and up against the wall. We had to make a choice. Do we cut services like putting people out of nursing homes and the school systems or do we tax non-essential areas? It’s not like we are taking milk from babies. Tobacco and liquor are items people don’t need to live. They just choose to use them. Even though we are not pleased about putting this tax on the people. It was the only way to go in order to put revenue back into the state’s budget.”

According to lawmakers, the bill is basically a Band-Aid to get the state through the next four months, at which time the budget will be balanced. And although the education program won’t be presently affected, there is expected to be some major cuts to education at a later time, said Sen. Walter Blevins, D-Sandy Hook.

In fact, the state is looking at close to a billion dollars in cuts in all – that includes education and other area not discussed – and involves the tobacco and liquor tax just passed.

Borders said the state’s “rainy day fund” totaling $250 million would be used to balance the budget in June and then the fund will be replenished with the tobacco and alcohol tax dollars.

When can folks expect to begin paying the added cigarette and alcohol tax?

Beginning April 1, a 6 percent sales tax will be added to packaged wine, beer and liquor across the state.

Likewise, a tax on all tobacco products will double with a state increase of 30 cents and a federal increase of 62 cents per pack.

The hike also includes a can of snuff that will rise from 9.5 cents to 19 and chewing tobacco will jump from 7.5 to 15 percent.

The additional tax on alcohol is expected to add $97.6 million each year to the state’s revenue and the state hopes to collect approximately $10 million of it by June.

As for the tobacco tax, $81.5 million yearly is expected into the state’s revenue with about $42 million by June 30.

What’s this mean for smokers and those who like a swig every now and then?

Packaged alcohol is presently exempt from the state’s 6 percent sales due to the 11 percent tax added to the wholesale prices.

For example, a six-pack of Budlight in the bottle presently cost $5.49 – based on where it’s purchased.

With the added tax, the price will increase .33 cents making the package $5.82.

With the price of Marlboros averaging $3.92 in the area, the state increase will be 30 cents and the federal increase 62 cents per pack – costing the smoker $4.21.

Following Friday’s preceding, Beshear applauded legislators for passing the bill that will help balance this year’s state budget.

Meanwhile, Blevins said legislators are hoping President Obama’s stimulus package will have a positive affect on Kentucky’s budget.

“We are not sure right now what’s in it for Kentucky,” he said. “We do expect to be at least one billion short next year in the budget, but that will be based on the stimulus package.”

Carter County Clerk Mike Johnston owns the Hitchins Post and said he does believe the passing of the tax bill will cause some folks to change brands of cigarettes –or even cause smokers to roll their own.

“I really think it might force people to switch to cheaper brands,” he commented Tuesday. “In Hitchins we already have people buying the rolled tobacco and the tubes to roll their own. One guy told me he was saving about $30 a week by doing it. I’m sure a lot of people will start smoking as cheap as they can.”

Johnston said he does believe the tax hikes will affect the key players in the tobacco and booze industry. “The companies that make the major brands of cigarettes will feel the crunch,” he said. “I just feel like people will stop buying them and find an alternative.”

Despite the tax hikes, Johnston said Kentucky would continue to be competitive with Ohio and West Virginia in the sales of alcohol and cigarettes. “When people are across they river they will most likely buy their cigarettes where they are cheaper,” he said

And while the entire economy is changing, changes are needed in the tax structure, he said. “Legislators who voted against the cigarette and alcohol tax said we need to do a complete tax reform and not just tax tobacco and alcohol,” Blevins said. “That is correct, but that will take time.”

What do local smokers and drinkers think about the tax hike?

James Messer of Grayson said the alcohol and cigarette hike won’t affect him but hopes it has a positive impact on those who use the products.

“I don’t smoke or drink,” he commented. “But, maybe those who do will see it’s costing them too much and quit both habits. That would save lives by people being healthier and not having so many drunk drivers on the roads.”

Carol McCarty of Morehead enjoys her Salem Lights and said she “isn’t happy” about Friday’s bill being passed and said some local taxpayers should thank the smokers.

“It’s always the smokers that get slammed with extra taxes,” she commented. “We already can’t smoke anyway but in our own homes and cars. It’s like we are condemned from society. Oh, but then the lawmakers use us to help get the state out of hock. All you hear is cancer this and second-hand smoke that, and how everyone should stop smoking. Well, if we didn’t smoke, where would Frankfort have gotten the money to save the budget without cutting education? I think everyone who works in the school system should thank us for filling our lungs with smoke. We may have temporarily save their jobs,” McCarty continued.

Roll Call

YES

Walter Blevins, D-Sandy Hook

Charlie Borders, R-Grayson

David Boswell, D-Owensboro

Perry Clark, D-Louisville

Carroll Gibson, R-Leitchfield

David Givens, R-Greensburg

Denise Harper Angel, D-Louisville

Ernie Harris, R-Crestwood

Tom Jensen, R-London

Ray Jones, D-Pikeville

Dan Kelly, R-Springfield

Alice Forgy Kerr, R-Lexington

Vernie McGaha, R-Russell Springs

Gerald Neal, D-Louisville

R.J. Palmer, D-Winchester

Jerry Rhoads, D-Madisonville

Dorsey Ridley, D-Henderson

Tim Shaughnessy, D-Louisville

Brandon Smith, R-Hazard

Robert Stivers, R-Manchester

Johnny Ray Turner, D-Drift

David Williams, R-Burkesville

Ken Winters, R-Murray

Ed Worley, D-Richmond



NO

Tom Buford, R-Nicholasville

Julian Carroll, D-Frankfort

Julie Denton, R-Louisville

Bob Leeper, I-Paducah

John Schickel, R-Union

Dan Seum, R-Louisville

Kathy Stein, D-Lexington

Katie Stine, R-Southgate

Gary Tapp, R-Shelbyville

Damon Thayer, R-Georgetown

Elizabeth Tori, R-Radcliff

Jack Westwood, R-Crescent Spring



NOT VOTING

Joey Pendleton, D-Hopkinsville, claimed a conflict of interest because he has relatives in the alcohol industry.

Mike Reynolds, D-Bowling Green, was elected Tuesday and hasn't yet taken office.