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State House votes to add $1 to pack of cigarettes to help Medicaid

FILE PHOTO.  | Jeffrey D. Nicholls~Sun-Times Media

FILE PHOTO. | Jeffrey D. Nicholls~Sun-Times Media

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Updated: July 3, 2012 10:41AM



SPRINGFIELD — Another major reform to the state’s Medicaid program fell into place for Springfield lawmakers Friday with House passage of a $1-per-pack cigarette tax increase to help plug a $2.7 billion hole in the state’s health-care program for the poor.

The bill needed 60 votes to advance through the chamber and just reached that number, passing by a tally of 60-52. It now moves to the Senate, which passed a $1-a-pack cigarette tax hike in 2009.

After both chambers voted to send Gov. Pat Quinn a bill on Thursday that cut $1.6 billion in the program, legislators agreed to a tax on cigarettes and other tobacco products that supporters say will generate $800 million.

“This is an important revenue-generating measure so that we do not have to make further cuts in Medicaid,” said House Majority Leader Barbara Flynn-Currie (D-Chicago), the chief sponsor of the tax legislation.

The move represents a victory for Quinn, who earlier this year pressed legislators to hike cigarette taxes as part of a broader push to reel in the state’s burgeoning Medicaid program.

“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,” Quinn said in a statement afterward.

The House vote also marks a dramatic turnaround from the last time the chamber tried raising cigarette taxes. A bid to hike the cigarette tax by $1.01 a pack in January 2011 failed in the House by a 51-66 vote. The state’s 98-cent-a-pack cigarette tax has been in place since 2002, and Illinois rests in the middle of the pack nationally among states with cigarette taxes. New York has the highest state cigarette tax in the country at $4.35 a pack.

In addition to cigarettes, the current legislation increases the tax on packs of “roll-your-own” cigarettes, “little cigars” and moist snuff from 18 percent to 36 percent of the product’s price. 

Additionally, private Illinois hospitals would give the state a total of $290 million, with $50 million of that going to Medicaid and an additional $50 million from matching federal dollars.

In return, public hospitals would receive a tax credit equal to their property tax liability or the amount of free or discounted services they provided during the previous year.  Private hospitals would also be exempt from sales and property taxes if the amount of charity they provide is greater than their property tax liabilities.

The tobacco taxes together with matching federal money would bring in $700 million, and the hospital assessment money going toward Medicaid would be an additional $100 million.

The bill drew bipartisan backing, drawing 17 Republican votes and 43 Democratic votes.

In other action, the Senate approved legislation favored by Mayor Rahm Emanuel and Cook County State’s Attorney Anita Alvarez to arm county prosecutors with a new weapon to combat street gangs.

The bill sponsored by Sen. Antonio Munoz (D-Chicago), which passed 46-1, with six members voting present, would create a state-level racketeering law similar to what federal prosecutors have at their disposal.

“This tool will be utilized to go after the leaders,” Munoz said.

In a prepared statement, Emanuel said the legislation, which now moves to the House, “will close loopholes that have allowed violent gang leaders to escape punishment for their crimes. If someone wants to be part of a gang, we will hold them responsible for the actions of the entire gang. This law sends a clear message: the streets of Chicago belong to the law-abiding residents of Chicago.” 



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