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During a session in which new revenue growth could have major impacts on what gets funded in the next two-year state budget, lawmakers did not advance three proposals that have been passed in other states and could have added to the state’s checkbook.
But House Speaker Todd Huston, R-Fishers, has said repeatedly that Indiana lawmakers don’t make policy simply to raise money.
“If we feel like we need to raise revenue, we can do it in those ways that are good overall public policy, but we’re just not chasing dollars,” Huston said Thursday when asked about why the moneymaking bills including a proposed hike in the cigarette tax or the legalization of medical marijuana died without hearings.
The Indiana House approved a $46.7 billion state budget proposal Thursday that one lawmaker described as “vanilla” and that scales back extracurricular spending and focuses additional funding on expanded school vouchers and increasing Medicaid costs.
Here are three bills that would have raised revenue but have died without action. All three proposals could still be revived.
Cigarette tax
Indiana’s current cigarette tax is 99.5 cents per pack, which hasn’t been increased since 2007.
Yorktown Republican Rep. Elizabeth Rowray’s House Bill 1251 would have increased Indiana’s tax to $2 a pack. The bill was never scheduled for a hearing in the Ways and Means Committee.
Democrats on the committee tried to amend a cigarette tax increase into the budget bill, but majority Republicans voted the proposal down.
Taylor Hughes, Indy Chamber’s chief strategy officer and chief of staff, previously told IBJ that increasing the tax to $2 a pack could have raised $356 million in annual revenue, which could have helped mitigate a shortfall in the state’s Medicaid budget. Advocates have also argued that raising the cigarette tax would reduce smoking and eventually lead to Medicaid savings of $795 million a year.
The bill’s fiscal analysis estimated a higher tax would generate about $205 million in new revenue.
Several states have raised tobacco taxes significantly, including Midwest neighbor Illinois at nearly $3 per pack. Indiana is one of a dozen states that has a tax of a dollar or less.
Since 2018, the Indy Chamber has pushed the Legislature to adopt a higher cigarette tax as part of efforts to develop a healthier workforce and reduce health care costs for employers and Hoosier workers. The Centers for Disease Control and Prevention said increasing the price of tobacco products is one of the most effective methods to curb use.
Democratic caucus leaders told reporters they are interested in seeing a cigarette tax increase revived later this session.
Online gambling
Lawmakers have seemed especially reticent to consider gambling related legislation since a former lawmaker pled guilty to favoring casino legislation in exchange for a lucrative position at a casino company. However, one gambling bill did gain some traction before dying.
House Bill 1432 would have legalized online lottery and casino games. The House Public Policy Committee—chaired by Rep. Ethan Manning, the Logansport Republican who authored the bill—passed the legislation 9-2 in January.
Manning said legalized online gambling could bring in $300 million a year in new state revenue. And advocates say that Hoosiers are already playing these games online through illegal sites now, and legalization would provide regulatory safeguards.
Critics have said the measure would worsen Hoosiers’ gambling addictions through increased access.
From the House Public Policy Committee, the bill moved to the House Ways and Means Committee, which considers all legislation with an impact to taxes and revenue. But House Ways and Means Chairman Jeff Thompson never scheduled the bill for a hearing, and it died when a committee deadline passed last week.
Huston told reporters Feb. 13 that the bill was a bit too complex to not be in the right shape to move forward.
“There’s a lot of different moving parts,” he said. “And I think just trying to find something there was some consensus on—felt like it was a pretty tough spot to be in.”
Marijuana
An array of marijuana legalization bills filed this session died without committee consideration.
Republican Rep. Heath VanNatter, R-Kokomo, had the most oomph behind his House Bill 1630 this session.
A new marijuana lobbyist group, called Safe and Regulated Indiana, backed his bill and spent money on advertisements to garner support for legalization. The bill also had support from two other Republicans: Rep. Steve Bartels of Eckerty and Rep. Jake Teshka of North Liberty.
The bill died without a hearing in the House Courts and Criminal Code Committee.
The bill’s fiscal note estimated it would raise $42 million to $82 million per year in sales tax revenue and $60 million to $117 million in excise tax revenue. However, those estimates could be low. Indiana’s neighbors have raised hundreds of millions of dollars annually from taxes on legal marijuana sales.
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Todd Huston either doesn’t know about or care about cost-benefit analysis in developing and promoting effective, beneficial public policy. He is trapped in a “think small” mindset with that leads to missed opportunities. Frankly, “pennywise and pound foolish” is a stuck-in-the-mud form of governance.