Debate over Kentucky's tobacco and alcohol taxes reopens the state's rural-urban divide

A split between rural and urban legislators threatens a deal to raise tobacco and alcohol taxes in Kentucky, which has one of the highest state smoking rates and produces 40 percent of the nation's liquor. (UPDATE: The bill passed the state House this afternoon, 66-34. UPDATE, Feb. 12: After a 9-7 committee vote today, the bill is set for a Senate floor vote Friday. UPDATE, Feb. 13: The Senate passed the bill 24-12. In the end, adding the alcohol tax gained rural votes that offset the loss of urban votes.)

Democratic Gov. Steve Beshear proposed raising the cigarette tax 70 cents to $1 a pack, and doubling taxes on other tobacco products, as part of a plan to balance the state's recession-starved budget. The plan drew fire from rural and Republican lawmakers, many of them from border areas, which get a boost in retail sales because Kentucky's cigarette tax is one of the lowest. Many of those areas have voted to maintain Prohibition, and some of their "dry" voters said that if taxes on tobacco were raised, levies on alcoholic beverages should be too -- even though Kentucky already has relatively high alcohol taxes.

So, Beshear and leaders of the Democratic-controlled House and Republican-controlled Senate agreed to a 30-cent increase on cigarettes and applying the 6 percent sales tax to packaged alcoholic beverages, now free of sales tax. That drew objections from urban legislators, who said it was another example of rural areas benefiting from taxes paid by their city cousins. "Some urban legislators who normally would vote for any tax increase are saying no to an increase they consider an inadequate fix and overly burdensome to their constituents," Larry Dale Keeling writes in the Lexington Herald-Leader.

One Louisville lawmaker went so far as to introduce an amendment to require alcohol taxes to be spent only in counties where the sale of alcohol is legal. Keeing says that was "a takeoff on the coal severance tax," about half of which is spent in coal counties. The bill is scheduled for a House floor vote today. (Read more) For a map of wet, dry and so-called "moist" jurisdictions in Kentucky, click here.