$1-a-pack tax increase may be up in smoke

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AUGUSTA (AP) – Gov. John Baldacci’s top two allies in the Legislature told reporters Wednesday his proposal to raise the cigarette tax by a dollar-a-pack has failed to win enough support to pass.

“One dollar is a very unlikely political reality,” House Speaker Glenn Cummings said.

Cumming’s comments, echoed by Senate President Beth Edmonds, were an early jolt for the governor, who unveiled his budget blueprint for fiscal 2008 and 2009 less than three weeks ago.

Committee deliberations on the two-year spending package containing the proposed increase have not yet begun and Edmonds and Cummings, who offered their warning at an informal and wide-ranging media session, did not rule out the possibility of legislative approval of a smaller hike.

Edmonds, D-Freeport, and Cummings, D-Portland, also acknowledged it would be a challenge to make up for anticipated revenue loses that would result if some or all of the Baldacci proposal were scrapped.

“The next question is how do you pay for things,” Cummings said.

Still, the leaders’ tone about the prospects of a full dollar boost was plainly pessimistic.

Baldacci’s tobacco tax plan would produce about $66 million a year and bring the tax per-pack in Maine to $3 – the nation’s highest among the states.

A spokesman said Wednesday the governor planned no immediate public response.

House Minority Leader Josh Tardy, R-Newport, reiterated Republican opposition to new taxes. “Republicans continue to believe that balancing a budget with new revenue is not in the best interests of the people of this state,” he said.

House Majority Leader Hannah Pingree, D-North Haven, said she believed her caucus would still be discussing the viability of a cigarette tax hike, as well as alternatives and the consequences of doing without one.

Edmonds and Cummings additionally told reporters they expected some action on another of the central pieces of Baldacci’s budget package – school system consolidation – but added that legislative enactment would almost certainly not mirror the governor’s plan.

“Some amount is going to happen,” Edmonds said. “I think we expect a hybrid, quite frankly,” said Cummings.

Baldacci hopes to shrink 152 district administrations to 26 units known as regional centers. Administration officials have booked $36.5 million in savings from such a consolidation for fiscal 2009.

Lawmakers also face several other major school system overhaul proposals. A marathon public hearing on the various plans has been scheduled for Feb. 5 at the Augusta Civic Center.

“What we hope to do is have the meat of those discussed on the 5th,” Edmonds said.

The Appropriations Committee is tentatively scheduled to move into its full biennial budget hearings a week later.

On Jan. 5, Baldacci detailed a $6.4 billion budget package that would increase state spending by an average 4.6 percent in each of the next two years.

Containing no-broad-based tax increases, the Baldacci blueprint would substantially boost funding for K-12 education while drastically reducing local layers of school system administration.

The proposal for the biennium beginning July 1 would create a Department of Commerce combining the existing departments of Economic and Community Development and of Professional and Financial Regulation.

Additionally, within the Department of Health and Human Services, it would save an estimated $11.5 million through managed care for behavioral health services, $20 million through adjustments in payment rates for services and $42 million by expanding clinical management of MaineCare members, officials said.

The budget plan could also let the state move to a private contractor for processing Medicaid claims.

“The system has certainly improved, but it is not where it needs to be,” Health and Human Services Commissioner Brenda Harvey said in a statement Wednesday. “We continue to move quickly down the path that brings a certified computer system to Maine as quickly and cost-effectively as possible.”

Looking farther along in the legislative session, Edmonds and Cummings said they wanted to establish a special panel – already dubbed in some quarters the prosperity committee – to look at economic development issues from a broad perspective.

The prosperity panel would be expected to take in recommendations from the Legislature’s regular committees on topics ranging from research and development to land preservation with an eye toward packaging related bills.

The new committee could be formed by the end of February.

“There’s a lot of demand” to participate, Cummings said.

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