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WHEELING, W.Va. -- Saying that West Virginia needs to fund its Medicaid program and doesn't need a reputation as a place to go buy cheap cigarettes, Gov. Bob Wise said he is inclined to push for an increase in the state's cigarette tax next year.
Wise is trying to head off a projected $200-million hole in the state's 2003-04 budget, caused primarily by double-digit inflation in Medicaid and Public Employees Insurance Agency costs, and by lower-than-projected returns on pension fund investments because of the downturn in the stock market, according to the Charleston (W.Va.) Gazette.
Because each penny increase in the cigarette tax amounts to about $1 million in revenue, an increase could go a long way toward bridging that gap, particularly if it's used to draw down 3-to-1 federal Medicaid matching funds, Wise said.
With increases that went into effect last month, three border states have cigarette taxes well above West Virginia's 17-cent-per-pack tax. Pennsylvania and Maryland now impose a $1 a pack tax, while Ohio charges 55 cents a pack. While that appears to be increasing cigarette sales in border counties, Wise said the additional tax revenue -- estimated at between $300,000 and $500,000 -- is insignificant compared to the costs of treating smoking-related health problems, the report said.
"I don't think we want to be known as the state that sells cigarettes at the cheapest rate," Wise said.
Wise said studies have shown that as much as one-third of the state's Medicaid expenses are for treatment of smoking-related illnesses.
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