Assemblyman Pennacchio objects to what he feels has been "a misguided approach" to the handling of New Jersey's cigarette tax and tobacco settlement funds. Now, the administration has leaked information that another cigarette tax hike will be offered, and rumors it will borrow $1.5 billion off of its anticipated revenues. That will bring the total "cigarette debt" owed to $4.5 billion. "New Jersey went from the tobacco industry owing us $7 billion, to New Jersey owing $4.5 billion, an $11.5 billion shift. -- incredible!," contends Assemblyman Pennacchio. "State debt, under the current administration, has gone up by 45% over the past 2.5 years."

While cigarette taxes have gone up, recent testimony before the Assembly Appropriations Committee contends that small businesses have seen a 16% decrease in cigarette sales. That same testimony pointed out that New Jersey's citizens are not purchasing cigarettes in New Jersey, but are going out-of-state or on-line to avoid recent sales tax increases, The tobacco settlement is based, in part, by the amount of cigarette sales in New Jersey. Pennacchio contends that, "decreased sales because of out-of-state and on-line purchases, due to high taxes, jeopardizes the payments to cover the $4.5 billion of cigarette and tobacco bonds. How much will the New Jersey tax payers be on the hook if these bonds default??" asked Pennacchio.