SALEM, Ore. (AP) – The Oregon House approved an increase in the state’s tobacco tax to bridge a Medicaid shortfall.

Lawmakers voted 39-21 to increase the cigarette tax by $2 and to impose a new tax on e-cigarettes. The measure heads to the Senate but would ultimately need approval from the voters in 2020.

The tax is central to the governor’s proposed funding package for the Oregon Health Plan, which is the state’s version of Medicaid. The state is facing a $346 million Medicaid shortfall because of less federal funding.

The cigarette tax would be raised from $1.33 per pack to $3.33. E-cigarettes and cigars will be taxed at 65% of wholesale price.

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