Today Governor Patrick announced that continued revenue declines will mean more midyear budget cuts. As much as $1 billion in further cuts may be needed. “There’s a lot of pain, and it’s going to have to be spread around,” Patrick said.
But there’s one area where tax revenue is up, and it’s improving Bay State health as well.
In July, the legislature and governor increased the cigarette tax by $1 a pack, enacting a key priority of HCFA, the ACT!! Coalition and Tobacco Free Mass. The additional revenue goes to fund health reform. At the time, we said the increase would both decrease smoking and increase revenue – a win-win for Massachusetts.
Soon after the increase was put into effect, calls to the Mass Tobacco Control Program 1-800-TRY-TO-STOP quit-line soared.
Now the sales and revenue numbers are in, demonstrating the win-win policy is working. For the four months before the increase (Mar-Jun 08), cigarette sales totaled 92.2 million packs. For the 4 months following the increase (July-Oct 08), cigarette sales dropped to 80.7 million packs. The drop in sales was 12.5%.
The revenue numbers show the opposite effect. For the same 4 months before the increase, revenue was $139 million. For the four months following the increase, revenue was $201 million, an increase of 45%. The roughly $60 million increase will go to the Commonwealth Care Trust Fund, used for health reform coverage expansions.
With all the bad news around, this is something to celebrate.