Indiana GOP closes $2B budget gap with cigarette tax hike, health cuts

Republican leaders plan to make up a $2 billion budget revenue shortfall by raising the cigarette tax, cutting public health and higher education funding, and spending down budget reserves.

Legislative leaders unveiled some details of the final budget bill Wednesday.

GOP budget writers said they started closing the revenue shortfall by making cuts and then turned to a $2 per pack cigarette tax increase, along with a proportional increase in the tax on other tobacco products such as cigars and vaping, to finish closing the gap. The money from that increase is earmarked for Indiana's Medicaid programs.

Senate President Pro Tem Rodric Bray (R-Martinsville) said that tax hike will also help people stop smoking — or prevent them from starting in the first place.

"I think that's going to have a huge benefit for Medicaid costs going forward," Bray said.

But Rep. Greg Porter (D-Indianapolis) said cutting local public health funding down to $40 million a year — from $150 million this year — is very disappointing.

"Is that making Indiana healthy again?" Porter said. "I think it's making us extremely vulnerable when it comes to health care."