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2004 House Bill 5632: Raise cigarette tax by 75 cents

Public Act 164 of 2004

  1. Introduced by Rep. Larry Julian (R) on March 10, 2004, to raise the state cigarette tax by 75 cents a pack beginning Oct. 1, 2004, increase taxes on other tobacco products by a proportionate amount, and use most of the money to avoid budget cuts by reducing general fund contributions to Medicaid. The cigarette tax would increase to $2 a pack, making it the second highest in the nation. The proposal is related to Gov. Jennifer Granholm’s Fiscal Year 2005 budget recommendation. It would also eliminate the earmark of a portion of a 2002 tobacco tax increase to the budget stabilization fund (rainy day fund).
    • Referred to the House Commerce Committee on March 10, 2004.
    • Substitute offered by Rep. Larry Julian (R) on May 19, 2004, to replace the previous version of the bill with one that would raise the state cigarette tax by 75 cents a pack beginning July 1, 2004, but not increase taxes on other tobacco prouducts. All of the increased revenue generated between July 1 and Sept. 30, 2004 would go to the School Aid Fund to make up a shortfall in the 2004 school aid budget. Almost all of the new revenue generated in FY 2005 would go to the general fund. The substitute failed by voice vote in the House on May 19, 2004.
  2. Failed 44 to 53 in the House on May 19, 2004, to raise the state cigarette tax by 75 cents a pack beginning July 1, 2004, increase taxes on other tobacco products from 20 percent to 32 percent, and use most of the money to avoid budget cuts by reducing general fund contributions to Medicaid.
    Who Voted "Yes" and Who Voted "No"

  3. Received in the House on May 19, 2004.
    • Moved to reconsider by Rep. Randy Richardville (R) on May 19, 2004, the vote by which the bill was defeated. The motion was gaveled through on a "voice vote," and then postponed for the day. This means the bill could be brought up for another vote at any time.
    • Substitute offered by Rep. Larry Julian (R) on May 26, 2004, to replace the previous version of the bill with one that raises the cigarette tax by 75 cents beginning July 1, 2004, and also increases taxes on other tobacco prouducts. Almost all of the new revenue generated in FY 2005 would go to Medicaid. There would also be increased funding for government programs intended to reduce smoking. The bill eliminates a requirement in current law that $154 million of next year’s tobacco tax revenue to the Budget Stabilization Fund (BSF or "rainy day" fund). Note: Under current law, previously adopted Single Business Tax (SBT) cuts are postponed until the BSF balance rises above $250 million. The substitute passed by voice vote in the House on May 26, 2004.
    • Amendment offered by Rep. Gretchen Whitmer (D) on May 26, 2004, to earmark the revenue raised from the extra tax collected on cigarettes that are already in vendors' inventory to the General Fund, instead of the Medicaid Trust Fund. The amendment was later reconsidered and defeated, but an identical amendment was eventually adopted. The amendment passed by voice vote in the House on May 26, 2004.
    • Amendment offered by Rep. Stephen Ehardt (R) on May 26, 2004, to increase Medicaid payments by four percent to auxiliary medical, nursing home, pharmacist, and ambulance services. The bill already gives the increase to hospitals. The amendment was later reconsidered and defeated, but an identical amendment by Rep. Hart was adopted. The amendment failed by voice vote in the House on May 26, 2004.
    • Amendment offered by Rep. Larry Julian (R) on May 26, 2004, to not increase the tax on other forms of tobacco, including cigars and smokeless tobacco. The amendment passed 56 to 49 in the House on May 26, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. Larry Julian (R) on May 26, 2004, to give tobacco sellers a two week "grace period" after July 1 to phase in the tax after it goes into effect, so they can sell off inventory on which the previous lower tax has already been paid without having to remit the difference in tax rates to the state. Smokers would still have to pay the higher tax beginning July 1. The amendment passed 62 to 43 in the House on May 26, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. John Garfield (R) on May 26, 2004, to raise the tax by $10 a pack, and use half the money for programs intended to reduce smoking, and half for schools. The amendment was not seconded, and not voted on.
    • Amendment offered by Rep. Lauren Hager (R) on May 26, 2004, to use one percent of the additional revenue to fund actions intended to reduce cigarette smuggling. The amendment passed 65 to 41 in the House on May 26, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. Lauren Hager (R) on May 26, 2004, to lower the tax back to $1.25 a pack on June 30, 2007. The amendment passed 58 to 46 in the House on May 26, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. Gretchen Whitmer (D) on May 26, 2004, to earmark the revenue raised from the extra tax collected on cigarettes that are already in vendors' inventory to the General Fund, instead of the Medicaid Trust Fund. The amendment was later reconsidered and defeated, but an identical amendment was adopted. The amendment passed by voice vote in the House on May 26, 2004.
    • Amendment offered by Rep. Virgil Smith, Jr. (D) on May 26, 2004, to earmark all of the tax on tobacco products other than cigarettes to hospitals that are level I trauma centers. The amendment was not seconded, and not voted on.
    • Amendment offered by Rep. Doug Hart (R) on May 26, 2004, to increase Medicaid payments by four percent to auxiliary medical, nursing home, pharmacist, and ambulance services. The bill already gives the increase to hospitals. The amendment passed by voice vote in the House on May 26, 2004.
    • Amendment offered by Rep. Clark Bisbee (R) on May 26, 2004, to reduce the amount of cigarette tax revenue that goes to the Medicaid Trust Fund, and earmark a portion of the revenue to the Budget Stabilization Fund (BSF or "rainy day" fund). The amendment failed 50 to 57 in the House on May 26, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. Jacob Hoogendyk, Jr. (R) on May 26, 2004, to reduce the amount of cigarette tax revenue that goes to the Medicaid Trust Fund, and earmark a portion of the revenue to the Budget Stabilization Fund (BSF or "rainy day" fund). amendment was not seconded, and not voted on.
    • Moved to reconsider by Rep. Randy Richardville (R) on May 26, 2004.
  4. Passed 55 to 53 in the House on May 26, 2004, to raise the state cigarette tax by 75 cents a pack beginning July 1, 2004, not increase taxes on other tobacco products, and use most of the money to avoid budget cuts by reducing general fund contributions to Medicaid. The cigarette tax would increase to $2 a pack, making it the second highest in the more details on how the increased revenue will be spent. The 75-cent tax hike would sunset in 2007, unless the legislature votes later to extend it.
    Who Voted "Yes" and Who Voted "No"

  5. Received in the Senate on May 27, 2004.
    • Referred to the Senate on May 27, 2004.
    • Substitute offered by Sen. Bob Emerson (D) on June 17, 2004, to raise the state cigarette tax by 75 cents a pack beginning July 1, 2004, increase taxes on other tobacco products by a proportionate amount, and use most of the new revenue for Medicaid. The substitute failed 16 to 21 in the Senate on June 17, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Substitute offered by Sen. Ken Sikkema (R) on June 17, 2004, to raise the state cigarette tax by 75 cents a pack beginning July 1, 2004, increase taxes on other tobacco products from 20 percent to 32 percent, and place the revenue in the state general fund, instead of the Medicaid trust fund, so that it could be used to support state spending on various items, not just Medicaid. The substitute failed 5 to 32 in the Senate on June 17, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Substitute offered by Sen. Tom George (R) on June 22, 2004, to replace the previous version of the bill with one that revises the distribution of the new tax revenue. As introduced, this would have used all of the new revenue for Medicaid until Oct. 1, 2004. After that, only 75 percent would go to Medicaid. Around half of the balance would go to the state general fund to pay for other government spending, and the other half would be used for subsidies to companies in the biotechnology business. However, this formula was replaced by the Swiatalski amendment. See Senate-passed version for details. The substitute passed 22 to 13 in the Senate on June 22, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Sen. Michael Switalski (D) on June 22, 2004, to amend the George substitute so as to use all of the new revenue for Medicaid until Oct. 1, 2005, when 25 percent of it would go to the state general fund to pay for other government spending. The amendment passed by voice vote in the Senate on June 22, 2004.
  6. Passed 20 to 15 in the Senate on June 22, 2004, to raise the state cigarette tax by 75 cents a pack beginning July 1, 2004, increase taxes on other tobacco products from 20 percent to 32 percent, and use all of the new revenue for Medicaid until Oct. 1, 2005, when 25 percent of it would go to the state general fund to pay for other government spending. The Senate version does not contain the House provision allowing tobacco sellers a two week "grace period" after July 1 during which they would retain the increased tax revenue.
    Who Voted "Yes" and Who Voted "No"

  7. Received in the House on June 22, 2004.
    • Amendment offered by Rep. Rick Johnson (R) on June 23, 2004, to expand the free smokers quit kit program distributed as part of the state's anti-smoking programs to include a nicotine patch or nicotine gum, and divert up to half the money in certain portions of the program (approximately $1.5 million) for this use. The amendment passed 103 to 4 in the House on June 23, 2004.
      Who Voted "Yes" and Who Voted "No"

    • Amendment offered by Rep. Lauren Hager (R) on June 23, 2004, to sunset the increased tax on June 30, 2007. The amendment failed 53 to 51 in the House on June 23, 2004.
      Who Voted "Yes" and Who Voted "No"

  8. Passed 55 to 52 in the House on June 23, 2004, to concur with the Senate-passed version of the tobacco tax hike, with one minor change (see Johnson amendment). This final version will raise the state cigarette tax by 75 cents a pack beginning July 1, 2004, increase taxes on other tobacco products from 20 percent to 32 percent, and use all of the new revenue for Medicaid until Oct. 1, 2005, when 25 percent of it would go to the state general fund to pay for other government spending.
    Who Voted "Yes" and Who Voted "No"

  9. Received in the Senate on June 24, 2004.
  10. Passed 20 to 15 in the Senate on June 24, 2004, to concur with the House-passed version of the bill, which did not make any substantive changes to the Senate version of the tax increase.
    Who Voted "Yes" and Who Voted "No"

  11. Signed by Gov. Jennifer Granholm on June 24, 2004.

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