Oregon's cigarette tax

Gov. Ted Kulongoski plans to announce a renewed push to increase Oregon's cigarettes tax to pay for expanded children's health care when he delivers his state-of-the-state address today in Portland.
Details are being worked out, but the Democratic governor is expected to announce he is resurrecting an idea that was left for dead after Oregon voters trounced Measure 50, which would have increased the state tax on a pack of cigarettes by 84.5 cents.
"The failure of Measure 50 last November was a setback, but I refuse to treat it as a defeat. Kids can't wait," Kulongoski said Thursday.
The cigarette-tax increase is one of the key elements of Kulongoski's annual address in which he also will outline plans to seek more revenue to upgrade Oregon's transportation system, possibly with gas- tax increases or higher state vehicle- registration fees.
Additionally, Kulongoski said he will push to increase the corporate minimum tax — set at $10 in 1931 and unchanged since — and dedicate the money to Oregon's rainy-day fund to shield schools, health-care providers and other services from getting hammered in the next economic downturn.
Kulongoski's chief of staff, Chip Terhune, acknowledged that the shaky economy could make those revenue increases a tough sell with lawmakers.
"This is ambitious," Terhune said. "He is reaching hard for this one. But frankly, the governor continues to believe that making sure that children have health insurance is critical and that transportation infrastructure is in dire need of reinvestment."
Kulongoski also will outline further plans to combat global warming, which could include offering new incentives to encourage use of all-electric cars. He also will push for reallocating existing state revenue to provide increases in funding for K-12 and for higher education, as well as for Head Start preschool programs.
Terhune said Kulongoski's proposals amount to a "road map" for the coming election year in which he will try to drum up support for those ideas before forwarding them to the 2009 Legislature for consideration.
The cigarette-tax increase will reprise a long political battle in 2007, which ended with voters soundly defeating the proposal after a record-shattering $12 million TV blitz financed by the tobacco industry.
Terhune said Kulongoski's new cigarettes tax proposal will be less than the 84.5-cent-per-pack proposal that was rejected by voters. And he said it will be written in more specific terms to make it clear that all of the money goes to children's health programs.