Lawmakers unreceptive to tax hike

Bloomington resident Joel Rennard smokes a pack of menthol lights a day. \nDragging away at a cigarette, he bristles at Gov. Frank O'Bannon's plan to raise cigarette taxes to offset a massive revenue shortfall. Speaking before the General Assembly Monday, O'Bannon suggested suspending a 1999 property tax cut and hiking cigarette taxes by 50 cents a pack.\n"I don't think it's fair," Rennard said while exhaling a cloud of smoke. "And people are going to quit smoking, and they're not going to get their money. It's really a lost cause."\nO'Bannon said he doesn't think so. \nHe estimates the state will bring in $650 million during the next two years by raising the 15.5-cent tax per pack. The hit on the pocketbooks of people like Rennard would help the state ride through the $923 million shortfall announced last week, O'Bannon said.\n"Our choice, while difficult, is very clear," the governor said in a statement. "Either we move backward, halting the progress we have made, or we make the tough choices that will allow Indiana to move forward."\nIn proposing the first tax hike since 1987, O'Bannon said the state must meet its commitment to education, Medicaid and other priorities. His budget proposal would raise K-12 and higher education funding by 4 percent during the next two years, an increase to keep pace with inflation. \n"We greatly appreciate the leadership shown by Gov. O'Bannon in seeking to fund education adequately in a difficult budget year," University spokeswoman Susan Dillman said. "We strongly agree with him that the long-term interests of the state and its citizens are best served by continued progress in education funding."\nThe governor's budget would also provide start-up funding for the School of Informatics and matching funds for the Purdue University nanotechnology project. And it would tap into gambling revenue to give public universities $25 million a year in technology funds.\n"We are particularly pleased with the governor's call for start-up funding for our School of Informatics, which will provide a vital boost for high-tech jobs development in Indiana," Dillman said. "While it is still difficult at this point to determine what the final details of the budget might be, we are encouraged by the governor's proposal."\nBut O'Bannon's plan won't see the light of day in the Statehouse. \n"It won't get to the floor of either chamber," said Rep. Patrick Bauer, D-South Bend. "The Senate Republicans won't go for the tax hike, and neither will House Democrats representing counties that grow tobacco."\nBauer -- who drafted the House version of the budget -- said lawmakers are looking at spending cuts.\n"We'll just have to adjust the budget," he said. "I don't see anyone going for a tax hike or further use of riverboat gambling funds. It means we're going to have to do some trimming -- university and K-12 funding will have to be cut."\nWith a mere two weeks left in this session, lawmakers will have to convene a special session to craft a budget. While deceased legislation sometimes rises from the grave as the summer stretches on, few have faith in O'Bannon's proposal.\n"I don't know if I would pronounce it dead," said John Schorg, a spokesman for the House Democrat caucus. "But it would be difficult for many legislators to work up enthusiasm about it"