Smokers are likely to pay $1 more a pack after the Illinois House on Friday approved a cigarette tax increase to avoid even deeper cuts to health care for the poor. The House has long been the stumbling block to higher tobacco taxes, so the 60-52 vote is viewed at the Capitol as tantamount to passage. The bill now moves to the Senate, where Democrats in the past have backed raising the cigarette tax. The $1 increase would bring the state cigarette tax to $1.98 and push the cost of smokes to nearly $11 a pack in some parts of Chicago.
Friday's vote came a day after lawmakers approved $1.6 billion in cuts to taxpayer-subsidized Medicaid services. If the tax increase had failed in the House, lawmakers would have had to look for more cuts. "Today's action will improve the health of our people and lower the burden of smoking-related conditions on our Medicaid system, while helping to fill the $2.7 billion Medicaid shortfall and stabilize the system for those that need it," Gov. Pat Quinn said in a statement. The tobacco debate unfolded as House members appeared poised to take action as early as Saturday on plans for a revamp of public employee pensions, which have been major drivers of spending in a state that can't pay its bills and has the nation's most underfunded retirement plan. House Speaker Michael Madigan is hoping to reduce automatic compounded cost-of-living increases to save billions. Madigan's concept, which he unveiled during an interview with the Illinois Channel website, offers government workers a choice.
They could opt for a pension plan that would pay less to future retirees but guarantee access to state health insurance, or lose access to state health insurance and keep getting annual cost-of-living increases though future raises would not be included in calculating their pension. Under discussion are plans that would allow current retirees to keep their state health insurance by taking a lower cost-of-living increase. Those who continue accepting the 3 percent adjustments would have to find their own health insurance. A provision to raise the retirement age for state employees from 65 in most cases to 67 was dropped from negotiations. In addition, Madigan is pushing a plan to force local school districts and public universities to pay into state retirement plans, something that could boost local property taxes and tuition rates.
Also Friday, senators sent the House a measure that would force local governments to pick up the tab if it hires a former lawmaker for a short-term job with a big salary that automatically increases a state pension. The measure was prompted by a pension-sweetening deal discovered by the Tribune and WGN-TV in which former Rep. Robert Molaro, D-Chicago, nearly doubled his pension by working one month as an aide to powerful Chicago Ald. Edward Burke. But it was the tax increase that took Friday's spotlight in Springfield. The cigarette tax hike had long been viewed as a key but controversial component of Illinois' Medicaid funding problem. Under the plan, the state also would tax small cigars at the same rate as cigarettes. Taxes would hit so-called roll-your-own cigarettes, and the levy on other tobacco products would double.
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