House committee approves cigarette tax, other Alabama revenue bills

MONTGOMERY, Ala. -- An Alabama budget committee on Wednesday approved a 25-cent-per-pack cigarette tax increase and other revenue bills as lawmakers try to fill a budget hole before the fiscal year begins in three weeks.

The House Ways and Means Committee action was the first sign of budding agreement among lawmakers after months of stalemate over a projected $200 million general fund shortfall. However, the proposals still face difficult floor and Senate votes ahead.

"Individual members, whether they voted no or not, are beginning to realize that we've got a critical situation that has to be addressed here by October the first. Whether or not we get this package through the House tomorrow or not, I'm not sure," said Ways and Means Committee Chairman Steve Clouse, R-Ozark.

The proposed cigarette tax, which would raise a projected $66 million annually, is the largest component of the House revenue proposals. The committee also voted for bills to raise the car rental tax from 1.5 to 2 percent; increase the car title fee from $15 to $28; place a provider tax on pharmacists and nursing homes to generate more money for the state Medicaid program; and adjust the business privilege tax so smaller businesses pay less and larger ones pay more.

The funds would generate about $120 million. Clouse said he is striving for a budget to level-fund prisons, Medicaid, mental health service, courts and child welfare services while giving cuts of up to 8 percent to other agencies.

The committee also approved a so-called "porn tax" to put a 10 percent tax on the sale of sexually explicit materials and admission to sexually explicit shows. It is not known how much the tax would generate.

Democrats on the budget committee largely voted against the tax increases.

Rep. John Knight, D-Montgomery, said the state should be looking at comprehensive tax reform and change policies that he said favor the wealthy while taxing the poor. Knight said a family of four making $12,600 are subjected to the Alabama income tax, while "the large multimillion corporations get all the exemptions and pay zero."

"I'm for raising taxes, but I want it to be in a fair effort to do so," said Knight, who chaired the budget committee for 12 years.

The House of Representatives will vote on the proposals Thursday. If approved, they will move to the Alabama Senate, which has been more resistant to raising taxes. Clouse said he did not want to predict what will happen.

"It's just hard to say. This whole process has been like herding kittens. Every time you think you've got them all in the basket, one jumps out right now," Clouse said.

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