Jerry Ralston grew up in the heart of tobacco country and now is superintendent of Barren County schools, a county where tobacco was once king.
But without a 70-cent increase in the cigarette tax proposed by Gov. Steve Beshear — and the cuts in education that increase might prevent — Ralston would have to reduce his approximately $27 million budget by $905,000. That will mean eliminating after-school services, delaying purchases of new buses, laying off classified or non-teaching staff, reducing travel and eliminating transportation for half-day pre-school students.
“Not only would we have a hard time doing that, but next year is even more of a concern,” Dr. Ralston said.
Ralston prefers increasing tobacco taxes, even though Barren County was once the leading burley county in the state. It’s located near the Tennessee border and its retailers sell tobacco products to residents of that state who come to Kentucky for cheaper smokes.
“Increasing the cigarette tax may be difficult for some but it would also have a positive effect on some of our health care issues,” Ralston said. “And we’re not as dependent on tobacco — it’s not the economic lifeline it used to be.”
Also at its meeting in Frankfort on Thursday, the state Board of Education passed a resolution supporting Beshear’s call for an increase in tobacco taxes.
Bill Phelps, manager of Media Affairs for Altria, the parent company of Phillip Morris USA, counters the tax will not produce the revenues expected and will hurt retailers and tobacco growers.
He said cigarette sales have declined by 2 percent in each of the last 10 years and by 5 percent last year.
“And it becomes an incentive for people to look for other places to buy cigarettes,” Phelps said. “We see an increase like this producing short-term political gain for legislators but long-term pain for taxpayers, particularly smokers.”
Beshear’s budget director, John Hicks, said he’s “very confident” in the administration’s projections for revenue from the increased tobacco taxes. Hicks said the model they used is based on other states’ experience and was used when Kentucky previously raised the tax from 3 cents to 30 cents.
“In theory,” Beshear said, “we would hope that eventually you would collect no dollars from the tax from a health standpoint.”
The tobacco tax increases hinge on the Republican Senate, which refused to go along with a 25-cent increase last spring. Senate President David Williams, R-Burkesville, hasn’t ruled out an increase but he’s not endorsed the idea either.
Senate budget chairman, Sen. Charlie Borders, R-Grayson, said Thursday he hadn’t seen the details of Beshear’s plan to cover the $456 million state shortfall and increase tobacco taxes. It’s too early to say whether the Senate can support the tobacco taxes, Borders said. But he’s pleased Beshear found a way to spare education, which he called “the kingpin of everything,” from deeper cuts.
Ralston planned to tell his board it “looks like we’re still going to have to cut 2 percent but we need to realize it’s still very dependent on what the General Assembly does and it could be worse than 2 percent.”
Ronnie Ellis writes for CNHI News Service and is based in Frankfort. He can be reached by e-mail at rellis@cnhi.com.
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