This increase would raise an estimated $295 million for fiscal year 2005, and help offset an estimated $1.3 billion in budget cuts and/or revenue enhancements that will be needed to produce a balanced budget. $30 million of the tax increase would go to the Healthy Michigan Fund to support health promotion and smoking cessation programs. The balance would be dedicated to the Medicaid budget, which faces a $400 million revenue shortfall due to increased caseloads and other factors. Even with the cigarette tax increase, Medicaid would still face a cut of $87 million in 2005 according to the Governor’s budget.

The AAA 1-B Board of Directors and Advisory Council have taken a unanimous position in support of the proposed tobacco tax increase, provided that the revenue be dedicated to the Healthy Michigan Fund and Medicaid health care programs.

A tobacco tax increase is important because Medicaid health services have already been subject to significant cuts in recent years. Dental care for adults has been eliminated, Home Help services have been curtailed, and the MI Choice program has been reduced from an enrollment of 15,000 elderly and disabled individuals in 2001 to approximately 9,000 persons this year. Without the cigarette tax increase dedicated exclusively to the Healthy Michigan Fund and Medicaid health programs, the additional cuts necessary to balance the budget would be too severe. The AAA 1-B Board and Advisory Council also recognize that the secondary benefits of a cigarette tax increase, such as reductions in smoking rates among adults and children, are also important concerns to older adults and their families.

Important factors that the AAA 1-B considered in adopting support for the tobacco tax include the following:

• The cigarette tax increase to $2 per pack would make Michigan’s tax the second highest in the nation, to New Jersey, which levies $2.05 per pack.
  
• Approximately one in four Michiganders smoke, including 26% of children in grades 9-12, and 40% of individuals on Medicaid.
  
• Thirty other states have raised cigarette sales taxes in the past two years to help offset budget shortfalls.
  
• Medicaid funds match federal dollars, and for every $1 Michigan spends on Medicaid, it brings in an additional $1.24 in federal funds.
  
• Studies show that increases in the price of cigarettes cause a decrease in smoking. Governor Granholm estimates that the proposed increase would likely mean 60,000 fewer adult smokers and 94,000 fewer children smokers.

Advocates for the elderly are encouraged to contact their legislators and communicate your support for the Governor’s proposed tobacco tax increase. The most reliable way to locate and contact your legislator by e-mail is through the Michigan Legislator’s own website at www.michiganlegislature.org

About the Area Agency on Aging 1-B

The Area Agency on Aging 1-B is a nonprofit agency responsible for services to more than 420,000 persons aged 60 and older residing in Livingston, Macomb, Monroe, Oakland, St. Clair and Washtenaw counties. Through the provision of home care and community-based services, older adults are given options that can help maintain their health and independence in their homes and communities.

The national Older Americans Act created a network of local Area Agencies on Aging across the United States to provide supportive services that enable older adults to live with independence and dignity in a setting of their choice. The AAA 1-B, established in 1974, is a part of the national Area Agency on Aging network.