N.C. Senate Lights Up Tax Hike

Cigarettes, poker, lottery affected by Senate budget plan

RALEIGH, N.C. -- North Carolina's cigarette tax would rise by 35 cents per pack, and the state would ban video poker while making changes to an anticipated lottery under a Senate budget proposal rolled out Tuesday.

According to the Associated Press, State Senate Democrats met for more than three hours behind closed doors before agreeing to a spending plan that would generate more than $750 million in new or extended taxes for the $16.95 billion budget. The money is designed to help narrow a potential budget shortfall of $1.3 billion in the upcoming fiscal [image-nocss] year.

Senate leader Marc Basnight (D) said most of the new money would benefit education and health programs, which take up nearly 80% of what state government spends annually.

The Senate hopes to approve the budget proposal this week, which passed the appropriations and finance committees late Tuesday. The bill then would go to the House, which will recommend its own spending plan. A final budget is supposed to be in place before July 1.

Democrats, who have a 29 to 21 majority in the Senate, agreed to raise the cigarette tax from 5 cents per pack to 40 cents. Senate Democrats had disparate views on how high it should go. Monday, there seemed to be a consensus on a 25-cent increase.

This has been a slow progression upward, Basnight said. We ultimately settled on 35.

Democratic Governor Mike Easley wants a two-tiered increase that would raise the cigarette tax to 50 cents by the middle of next year, but the Senate proposal keeps the tax at 40 cents throughout the two-year budget.

Peg O'Connell with North Carolina Alliance for Health, wanted a 75-cent per pack increase to help reduce teen smoking, said she was pleased with the late increase.

Reynolds American Inc. spokesperson John Singleton said the Winston-Salem, N.C.-based cigarette maker was disappointed with the proposed tax, adding it's not fair to place a disproportionate burden on the minority of every state's population that happens to be a smoker.

The budget bill would amend a state lottery proposal passed last month by the House only if that standalone bill were to become law. The provisions would earmark lottery proceeds to benefit Easley's education initiatives and school construction. Gone is a House provision that would designate some profits to college scholarships. A ban on lottery advertising in the House bill was removed.

State Senate Majority Leader Tony Rand (D) said the Senate could pass the House's lottery bill without changes, sending it to Easley for his signature to become law. Or the House could decide to alter the Senate lottery proposal in the budget.

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