Declining Tobacco Tax Revenue Threatens Funding for Health, Child Development Programs

Health care programs funded through the state's tax on tobacco products are facing cutbacks due to declining smoking rates, the San Francisco Chronicle reports. In 1998, voters passed Proposition 10, which increased the tax on cigarettes by 50 cents and created additional levies on cigars and pipe tobacco. Revenue from the taxes is used to finance health, early childhood development, family support and anti-tobacco programs. The tax was expected to generate $700 million annually, but as tobacco sales have fallen, revenues have dropped from the $671 million raised during the first year of the tax to $653 million last year. This year, revenues are expected to fall to $641 million. In response, some localities are preparing to cut back on programs funded through the taxes. San Francisco, for example, expects an 8% drop in tobacco tax funds this year; while it has no immediate plans to cut programs, officials say they may make reductions in the next two to three years. Contra Costa County officials voted last month to cut $1 million from a $2.5 million tobacco tax-funded program that provides educational stipends to child-care workers. In Marin County, however, officials anticipated the decrease in tobacco revenue and solicited funds from other organizations, including Marin General Hospital, to fund a similar program. Next year, tobacco sales in California are expected to drop by 3% to 6% (Johnson, San Francisco Chronicle, 4/29).