Governor calls for increase in cigarette tax for economic development fund

There may be momentum behind a proposal to raise the state cigarette tax. Governor Vilsack has suggested using the extra money to help finance a two billion dollar state economic development fund. A one-dollar increase in the state tax on cigarettes would bring about 80-million dollars into state coffers. Senate Republican Leader Stewart Iverson of Dows says no decisions have been made, though.House Speaker Christopher Rants, a republican from Sioux City, says lawmakers are investigating another financial maneuver: refinancing state debts for the same reason home owners are refinancing their mortgages — to get a lower interest rate. Rants says if the state can lower its payments on existing debt, the extra cash could be used as collateral for the economic development fund. Rants says this is the first time the governor has come forward with a proposal to finance the fund, so it will be discussed.House Democrat Leader Dick Myers of Iowa City says he supports raising the cigarette tax for health reasons. Myers says research shows about 30 percent of smokers would quit if the price of a pack went up a dollar. The state tax on cigarettes is 36 cents per pack.