By Martin Swant | The Associated Press

MONTGOMERY — Gov. Robert Bentley has proposed a number of ways to raise revenue to heal Alabama’s ailing budget.

One possible way is a higher cigarette tax. Alabama lawmakers are considering two proposals that would raise cigarette taxes to fill a major hole in the state’s general fund.

Lawmakers this month received the first rough draft of the state’s general fund budget, showing agency cuts as deep as 11.5 percent. Talks will soon begin to decide how to fill a large shortfall. House General Fund Budget Chairman Steve Clouse said the plan paints a picture that is “bleak.”

So far there are two proposals for how high to increase Alabama’s cigarette tax beyond the current rate of 42.5 cents per pack.

One of those is backed by Bentley, whose budget solution calls for an additional 82-cent tax on every pack sold in the state. The new rate per pack would total $1.25.

Revenue gained from the higher rate is expected in the hundreds of millions. Bentley’s entire tax increase package would total $541 million. Along with the tobacco tax, the plan would raise the sales tax on automobile purchases. It also includes ending some corporate tax loopholes and deductions.

Clouse, R-Ozark, said the problem with the governor’s proposal is it’s “just a little too high.”

“Some folks make an argument ‘let’s just go to a dollar,’” Clouse said. “But there’s a fine line somewhere. Why not go to $1.50 or $2? We’ve got to be concerned about our border states and what they’re charging because even though it’s a legal product, a lot of our retailers along the borders depend on that revenue.”

One of the groups worried about cross-border purchasing is the state’s grocery industry.

Alabama Grocers Association President Ellie Smotherman Taylor said any sales tax increase would hurt sales for the state’s grocers. She said people near Alabama borders could go across state lines to buy cheaper cigarettes — and then do the rest of their shopping for the week while they’re there.

Alabama isn’t the first state to raise cigarette taxes in recent years. According to The Tax Foundation, a nonpartisan research think tank based in Washington, D.C., 30 states and the District of Columbia have raised cigarette tax rates between 2006 and 2013.

When compared with other states, Alabama’s current rate is 20 cents lower than Tennessee, 26 cents lower than Mississippi and 92 cents lower than Florida and 5 cents higher than Georgia.

Another proposal, sponsored by Rep. Patricia Todd would raise tax rates by 32.5 cents per pack.

Clouse said there might be more support for Todd’s bill, which would place Alabama in line with the border states’ average. But he said even hers might be on the high end.

“We can’t get too far out of line because on the eastern side of the state and the northern side of the state we already have so many residents now that are crossing over to buy lottery tickets that if they can buy their cigarettes for $5 to $8 a carton cheaper than Alabama, we get into a bootleg situation and we lose the whole sale instead of what we’re getting now.”

Experts say the bootleg situation already is a problem.

Scott Drenkard, an economist at The Tax Foundation and co-author of a study on the link between cigarette tax rates and smuggling, says raising taxes too much in one state leads to smuggling from another.

House Speaker Mike Hubbard, R-Auburn, said before the state talks about taxes, it will talk about cuts.

“The last thing we want to do is to raise taxes, that would be an absolutely last resort … we’re going to see what’s not an essential service of government and see if we can trim back or eliminate some areas before we even talk about any taxes, but obviously we’re responsible for putting out a budget,” Hubbard said.