Gov. Janet Mills unveiled a tobacco tax hike Friday in her two-year budget plan that serves as the final one of her tenure, and she opens with work to do to win over fellow Democrats who may not all rally behind that major change.
Mills and her office said the $1 per pack increase to Maine’s $2 cigarette tax, alongside a commensurate increase to the excise tax on other tobacco products, will generate about $80 million over two years. Those changes plus cuts to food assistance, health and child care programs, will help close a projected $450 million spending gap.
The governor noted Maine last raised its cigarette excise tax from $1 to $2 in 2005, while every other New England state raised theirs since 2013. She highlighted public health angles, such as how more than a third of annual cancer deaths in Maine are attributable to smoking. Maine’s smoking rate of 15 percent is above the national average of 12.9 percent.
Getting enough support from her party’s lawmakers who saw their majorities narrow in the November elections could prove difficult, particularly given several rural Democrats have banded with Republicans to block past attempts at flavored tobacco bans.
Democrats have only a narrow 75-73 advantage in the House and a 20-15 edge in the Senate. Some of their members from rural districts may oppose it for reasons of personal freedom, while progressives have often disliked these tax hikes because they hit poor residents the hardest.
“I’m not really a fan of disproportionate taxes,” freshman Rep. Cassie Julia, D-Waterville, said Friday. “But I’m also a money person and a numbers person.”
Julia noted the governor focused on public health benefits in pitching the cigarette tax hike, such as how Medicaid-related smoking expenditures cost Maine taxpayers $281 million annually. Julia said savings in smoking-related health care costs “can go far in other places.”
Another freshman Democrat, Rep. Marshall Archer of Saco, said earlier Friday he wanted to understand “the why” behind the cigarette tax increase before deciding whether to support it, mentioning concern for “marginalized populations.”
“If it’s a tool to help reduce the budget [gap], I’m not a big fan of that,” Archer said.
Democratic leaders put out neutral statements Friday afternoon that said they looked forward to digging into the budget details and hearing the public on the plan. They did not mention the proposed cigarette and tobacco-related tax hikes, but House Minority Leader Billy Bob Faulkingham, R-Winter Harbor, said he heard not all Democrats are fans of the plan.
Republicans signaled opposition to any tax increases, noting the governor is also proposing tax increases on marijuana and streaming services such as Netflix and Spotify. Sen. Jeff Timberlake, R-Turner, said he is a former smoker but opposes a higher “sin tax.”
“I think it should be spread out amongst all Mainers, not just those who choose to smoke,” Timberlake said.
Mills emphasized Friday her budget rejects “broad-based tax changes,” such as income and sales tax hikes, while also not drawing from a “rainy day fund” that was essentially maxed out last year at roughly $968 million.
New Hampshire taxes a pack of 20 cigarettes at $1.78, which could lead to Mainers flocking across the border if the higher tax takes effect, said Curtis Picard, CEO of the Retail Association of Maine. That could lead to less revenue than projected for Maine.
“Consumers are pretty aware of what things cost these days,” Picard said.
The leader of the Campaign for Tobacco-Free Kids, a national nonprofit that supports a flavored tobacco ban in Maine, lauded Mills’ plan Friday by saying it will save lives and money. Still, plenty of lobbying and spending from tobacco interests have swayed past Maine proposals.
“The evidence is clear that increasing the price of cigarettes and other tobacco products is one of the most effective ways to reduce tobacco use, especially among kids,” Yolonda C. Richardson, the campaign’s CEO, said.
Interest groups on opposite sides of the political spectrum were also not rallying behind the tax changes. The conservative Maine Policy Institute called it another example of Mills breaking her 2022 campaign promise to not raise taxes.
The liberal Maine Center for Economic Policy criticized the cuts or lack of additional investments in various health care and child care programs that Mills said would help close the funding gap. James Myall, the center’s economic policy analyst, said they “have some reservations about it.”
Asked if she thinks the tax increases have enough support to pass, Mills said Friday she was “not going to handicap it at this moment.”
“Nobody’s taken a vote on anything,” she added.
