Lt. Governor Phil Bryant told the Hattiesburg American this week that the legislature could be called back for a special session in October. This special session would be for the purpose of considering raising the tax on cigarettes. The Lt. Governor says that he thinks Governor Barbour might now agree to allow the legislature to consider such an increase and that we might be able to use some of the revenue generated from the increase to fund our Medicaid program. It is truly unfortunate that over $600,000.00 of Mississippi Taxpayers' money was spent this summer without resolving the Medicaid shortfall. However, I am encouraged to learn that the governor and Lt. Governor now think that an increase in the tax on cigarettes as a part of a long-term solution to the yearly Medicaid shortfall is sound fiscal policy.

During the summer-long special session to solve the Medicaid "crisis", Governor Barbour and Lt. Governor Bryant told the legislature repeatedly that an increase in cigarette taxes was not an option. The Senate was presented with a bill co-authored by nearly half of its members that would have raised the tax on cigarettes by $ .50 per pack and utilized the governor's bed tax plan to raise the rest of the needed funds. The Lt. Governor ruled this compromise legislation outside of the governor’s call for the special session. That bill could have been considered, debated, voted on and passed in the first week of June. Instead, the Lt. Governor ruled that it would be unconstitutional to even consider the bill because the governor said we couldn't. The governor has apparently had a change of heart on the issue and presumably the Lt. Governor has undergone a similar transformation.

The challenge for the legislative leadership will now be to reach an agreement on how much of an increase in cigarette taxes would be appropriate and how best to spend the increase in revenue. It would be unwise and fiscally imprudent to return to Jackson without an agreement worked out. If the compromise model were used, it would involve some assessment on hospitals coupled with an increase in the cigarette tax. As Mississippi's cigarette tax ranks 49th at $ .18 per pack, it could stand an increase of $1.00 per pack. A cigarette tax of $1.18 would put Mississippi somewhere in the middle of the pack in relation to taxes imposed on cigarettes by other states. Some experts say that an increase of $1.00 per pack alone would fund the Medicaid shortfall. On the other hand, there are those who believe that it would not be a good idea to make the Medicaid program dependent upon the increase in revenue generated by an increase in the cigarette tax as it will be a declining revenue source.

However, a tax increase of $1.00 per pack together with one-half of the hospital assessment championed by Governor Barbour would raise more than enough money to cover the Medicaid shortfall. As the revenue source would be more dependable because it incorporates an annual hospital assessment, the plan would be considered more fiscally sound. This model would result in new additional revenues that could be used to reduce Mississippi's second highest tax on groceries - a tax reduction that should only be considered if it could be demonstrated that it will not cause a burden to our municipalities. Of course, the variations on the model cannot be discussed in this space as they go on ad infinitum. Regardless of the details of proposals that come out of this new paradigm, I am encouraged that the legislature may finally get to consider all options to solve the annual Medicaid problem instead of only one - the governor's bed tax - which no one seems to like.