Kentucky could tax opioids to close budget gap

Posted at 8:07 PM, Feb 28, 2018
and last updated 2018-02-28 20:07:51-05

FRANKFORT, Ky. (AP) — Kentucky has one of the highest opioid drug overdose death rates in the country. Now legislative leaders say it could become the first state to tax opioid prescription painkillers to help pay for public schools.

House Republicans released their two-year spending proposal Wednesday. Budget chairman Steven Rudy said lawmakers added the opioid tax because the state did not have enough money to meet its obligations, particularly paying for its public schools.

The proposed tax, 25 cents per dose, would be collected on the distributor and the price increase couldn't be passed along to the patient. Lawmakers said the tax, plus in the tax on cigarettes, would generate an extra $377 million over the next two years.

"This will send a clear message that we are serious about addressing our opioid epidemic," Rudy said.

The extra money is enough for the state to increase its per-pupil funding for public schools to more than $4,000 for the first time ever. It would eliminate Republican Gov. Matt Bevin's proposed 6.25 percent cuts for public colleges and universities. And it restores Bevin's $127 million cut for public school buses, a decrease many districts had worried would make it difficult for them to get students to school.

Bevin proposed those cuts because he had to make room for $3.3 billion in spending to prop up the state's public pension systems, which are among the worst-funded retirement plans in the country. State officials are at least $41 billion short of the money needed to pay retirement benefits over the next 30 years. Bevin's proposal did not include a tax increase.

The proposed tax increases are unusual for Kentucky. This is the first time in nearly 100 years Republicans have had a majority in the state House of Representatives, and legislative leaders have repeatedly said there is no appetite to raise taxes. Plus, it's an election year where Democratic voters are energized two years into Republican Donald Trump's presidency.

"We're not here to get re-elected. We're here to solve the problems of Kentucky," acting House Speaker David Osborne said.

The proposed cigarette tax increase follows an intense campaign from the Foundation for a Healthy Kentucky. The group spent more than $100,000 in the first month of the legislative session, with 98 percent of that spent on advertising. Altria, the parent company for cigarette maker Phillip Morris and other tobacco companies, spent more than $44,000 lobbying lawmakers during the same time period.

Kentucky has resisted efforts to raise its cigarette tax in the past. The state is one of the country's top tobacco producers and has an entrenched smoking culture that has made it difficult for lawmakers to vote on an increase.

"We have too many people that smoke. We have a health problem. We have horrible cancer rates," Rudy said when explaining why lawmakers included the cigarette tax increase.

Other tax changes could be coming. Rudy and Osborne said they are committed to passing "comprehensive tax reform" this year.

The budget and tax proposal now heads to the full House of Representatives, which is expected to vote on it Thursday. The taxes could face considerable opposition in the state Senate, a smaller legislative body dominated by Republicans.

But the proposal was well received by both parties in the House of Representatives. Rep. Rocky Adkins, the Democratic minority leader, said he voted "yes" because "there are some critical gaps that have got to have revenue during this session."

The spending proposal also restored funding for the Kentucky Poison Control Center . Bevin had recommended eliminating it from the budget, which would have made Kentucky the first state to not have access to a poison control hotline that gets about 50,000 calls per year from parents, police and hospitals.

The budget also restored funding for the Kentucky Mesonet, a network of 69 weather monitoring stations used to issue warnings for severe storms.