Cigarettes Tax Hike Rejected By W.Va. Senators

A plan to pay down the state's retiree benefit obligations was snuffed out by lawmakers Feb. 28 after Senate leaders tried to tie it to an increase in the state's cigarettes tax and mandating insurance coverage for autistic children.
The Senate Finance Committee voted 9 to 8 against passing a bill to shore up the state's other post-employments benefits program, or OPEB, after committee leaders amended it to include a tax hike for cigarettes and other cheap cigarettes products.

They also amended it to require insurers to cover the cost of treating children with autism. The amended bill would've set aside $6 million annually in Medicaid funding to help the state-run Public Employee's Insurance Agency come up with the additional money needed to provide coverage.

All three have been hot-button issues during the current legislative session. Monday's single vote might have been the death blow for all three, although lawmakers have until Wednesday to pass bills from one legislative chamber to the other.

Sen. Brooks McCabe, D-Kanawha, was disappointed lawmakers rejected the financing plan for OPEB he had championed but felt it was really the tax increase the other committee members were turning down.

“My opinion is it was not a vote against OPEB,” he said. “It was a vote against the funding source.”

The state is currently facing $8 billion in unfunded OPEB liabilities over the next two to three decades. McCabe has put forward a plan to stabilize that debt over the next five years to give the state PEIA Finance Board breathing room to come up with a solution.

A major part of that plan was using the discount cigarettes tax hike to fund annual payments of $50 million to OPEB over 20 years.

State cigarette taxes would increase from the current 55 cents a pack to $1.55 a pack. All other buy cigarettes taxes would increase from 7 percent of wholesale price to 50 percent.

The money generated by the increase would be used for a host of health-related programs, not just OPEB. cigarettes-prevention programs, in-home services and the West Virginia University School of Public Health would have received additional funds.

Public health advocates also believe that higher taxes will convince more people to quit using cigarettes.

As for insurance coverage, West Virginia is among the states that do not mandate that insurance companies cover treatment for autistic children, which can run as much as $30,000 a year, if not more. Insurance companies say passing such a mandate would raise rates for everyone.

There were no clear signs about what the defeat of the bill meant for all three issues. The House of Delegates has already passed its own insurance mandate for autism, but it still must pass the Senate. A similar cheap cigarettes tax hike is working its way through House committees but has yet to come to the floor for a vote. And there is nothing like the OPEB bill in the House.