The Democratic-led Mississippi House fell short Thursday night in an effort to inject cigarette and liquor taxes into a complicated formula to shore up the anemic Medicaid budget.
The chamber killed a bill that included a 1 percent sales tax on wine and hard liquor and an increase of 82 cents in cigarette excise taxes. The bill failed 55-53.
The attempt to add “sin taxes” directly contradicts the wishes of Republican Gov. Haley Barbour, who wants to rely strictly on a revamped set of hospital taxes to plug a $90 million hole in Medicaid, a health program for the needy.
The bill has been held for the possibility of more debate but it appears more likely House leadership will change strategies and try to pass a bill that would move cash from the state’s rainy day fund into Medicaid. Passing that bill would take only a simple majority.
The rainy day fund provides a financial cushion for the state and Barbour has been boasting that the fund is full for the year that starts July 1.
Rep. George Flaggs, D-Vicksburg, said lawmakers can’t justify increasing taxes that he believes might be passed on to privately insured hospital patients, then “leave the big ol’ killers alone,” referring to tobacco companies.
Throughout Thursday the liquor tax was added to the Medicaid bill by one committee, taken out by another and then put back in during debate on the House floor. All that happened before the bill itself failed.
Legislators are in the second week of a special session, and it’s not clear whether the House even has the legal authority to bring cigarette taxes up for debate.
The federal government said several years ago that Mississippi had to stop using part of the Medicaid formula that had been in place since the early 1990s, but the state has delayed fixing the problem by using other sources, including millions of dollars the federal government sent for Medicaid after Hurricane Katrina in 2005.
The Senate voted 41-7 Wednesday to approve the governor’s proposed new plan.