- The Washington Times - Wednesday, February 12, 2003

GORDONSVILLE, Va.
Town officials faced with budget cuts and painful choices are talking about taxing something once untouchable in Virginia and across the South cigarettes.
When residents complain, Gordonsville Town Council member Robert Coiner tells them, "Everybody's going to have cigarette taxes soon."
He is not just blowing smoke.
Twenty states, including major tobacco producer Tennessee, increased their excise taxes on cigarettes last year. More than a dozen are considering new levies this year. Among them are Southern states, where tobacco has been the leading cash crop since Colonial times.
"It's been a sacred cow," said state Rep. John Draud, the Republican sponsor of a Kentucky cigarette-tax bill that would earmark funds for education. "But things are changing."
In some tobacco-producing states, budget problems are so severe that cigarette taxes are receiving serious consideration for the first time in decades.
Georgia Gov. Sonny Perdue has proposed raising cigarette taxes from 12 cents to 58 cents a pack, the first increase in 31 years. Georgia expects to come up $620 million short in tax collections this year.
In South Carolina, a cigarette-tax increase of up to 53 cents per pack was considered the only tax increase of any kind likely to make it out of this year's session. The tax has been 7 cents since 1977. South Carolina is dealing with a $340 million deficit.
Kentucky is considering raising its levy to 44 cents a pack from the 3-cent tax that has been in place since 1970. Kentucky is the top producer of burley tobacco and has the second-lowest tax in the country. It expects a $400 million shortfall in fiscal 2004.
Still, it is clear tobacco continues to wield considerable clout in the South.
In Virginia, where the 2.5-cent-per-pack cigarette tax is the lowest in the nation and hasn't budged since 1960, legislators quickly have sidelined about a dozen cigarette-tax bills this session despite an estimated multibillion-dollar deficit.
"It seems to me that we still have a large number of people in the state that continue to believe that tobacco is more important than I believe it actually is in today's economy," said state Sen. Mary Margaret Whipple, Arlington Democrat, who introduced a bill that would have raised the state's cigarette tax to 60 cents per pack.
Tobacco foes now see opportunities even in Richmond, the corporate headquarters of industry leader Altria Group Inc., formerly Philip Morris Cos. Inc.
The sheer number of tobacco bills introduced this year seemed to signal a shift.
"I'd say more [were filed] this year than have probably been proposed in the past 10 years put together," said David Bailey, a Virginia lobbyist for the American Lung Association. "It's major."
In North Carolina, Gov. Michael F. Easley hasn't ruled out calling for an increase in the 5-cent-per-pack tax, the nation's third-lowest, and legislators have promised bills raising the tax to as high as $1 per pack.
In Kentucky, a cigarette-tax bill proposed last session didn't even get a committee hearing. Mr. Draud said Kentucky's looming half-billion-dollar deficit gives his bill more than a fighting chance. A committee chairman has promised at least a hearing this time.
The state already has had to release prisoners early and make other difficult cuts.
"It's going to be cutting services for the needy, the old, the blind; letting people out of prison; mental health services; adoption for foster children I mean, we're going to have to cut across the board here," Mr. Draud said. "I think it's easy when you frame it in that context."
In neighboring Virginia, locals aren't waiting for the state to act.
Last month, officials in Alexandria, Portsmouth and Virginia Beach voted to increase their cigarette taxes to 50 cents a pack, joining the city of Chesapeake in the highest such tax in Virginia.
In Gordonsville, a railroad town of 1,500 just east of Charlottesville, water revenues are off by more than $100,000 after the closing of a textile mill. Assistance from the cash-strapped state has plummeted.
The 10-cent-per-pack cigarette tax is expected to raise an estimated $35,000 a year for Gordonsville. That is not enough to cure the town's fiscal malaise, but critics say it is more than enough to cause hardship.
Brenda Morrison, owner of the town's 7-Eleven store, told the council that the same plant closings and cutbacks that have hit city revenues also are hurting her loyal customers. If they can drive a couple of minutes down the road to a convenience store outside the city limits, they will taking their sales taxes with them.
"I can't afford to lose one customer," said Miss Morrison, whose store is one of four tobacco purveyors in this town without stoplights. "They're already counting their pennies."
Short of quitting their habit, Walter and Robin Moon do what they must to save on cigarettes. They have switched to a cheaper brand and cut back to a pack a day.
If the town council approves the new tax, they say, they will go elsewhere to buy their smokes, as much as they hate to do it.
"If the town needs some money," Mrs. Moon told the council during a hearing on the tax, "they need to get it from all the people."
The council tabled the tax ordinance until later this month to allow for more study, but it didn't show any sign of backing down.
"There's no such thing as an equal tax," said Mr. Coiner, the Gordonsville council member. "We're in a fix."

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