Tobacco Tax Measure Raises Financial Concerns

Opponents of Proposition 86 agree with supporters that tobacco sales would decline, but opponents say the decreasing revenue would harm existing programs that benefit from the current tax, the Sacramento Bee reports. In addition, opponents say the end result would be less funding for health services that the new measure is intended to benefit.

Proposition 86 would increase the state tobacco tax to fund health care programs.

Revenue from the existing state tobacco tax has declined by about 10% since 2000, according to the Legislative Analyst's Office. The revenue funds breast cancer research and treatment and early childhood development programs.

Opponents of the new measure say these programs will lose more revenue as tobacco purchases decline.

Donna Arduin -- a former finance director in the Schwarzenegger administration and a paid consultant to the No on 86 campaign -- said that the tax increase would create a "funding gap" in the state budget and exacerbate existing budget problems.

The measure is estimated to create $2.1 billion a year in additional revenue, but Arduin estimated that the figure is closer to $1.4 billion annually.

Larry McCarthy, president of the California Taxpayers Association, which opposes the measure, said, "Private sector for-profit and nonprofit hospitals should not have access and a right to taxes."

Supporters of the tax say that the money is needed to keep emergency departments from closing because of financial problems and that the measure could provide funds to help enroll about 800,000 California children in public insurance programs (Benson, Sacramento Bee, 10/25).

The Humboldt County Board of Supervisors this week voted 4-1 to support Proposition 86, the Eureka Times-Standard reports.

Allen Katz, executive director of the Community Health Alliance of Humboldt and Del Norte counties, said the county should support the measure because the revenue will provide "permanent stable funding" locally for children's health coverage and deter children from smoking (Faulk, Eureka Times-Standard, 10/25).

The NAACP National Board of Directors on Saturday voted to endorse Proposition 86.

"By passing this resolution, the NAACP has gone on the record again as being opposed to smoking and in favor of better health care for children and adults," NAACP President and CEO Bruce Gordon said (NAACP release, 10/21).

The California chapter of NAACP opposes the measure.

Philip Morris USA this year paid $100,000 to a consulting firm owned by Alice Huffman, president of the California NAACP. The donation came from a campaign account set up by the tobacco company to oppose Proposition 86.

Huffman said that the measure would impose a "regressive tax that could hurt low-income minority communities." She said the California chapter's opposition to the measure is unrelated to her business with Philip Morris (California Healthline, 10/12).

NPR's "Day to Day" on Tuesday reported on Proposition 86. The segment includes comments from:

• Serena Chen, policy director for the American Lung Association of California;
  
  
• Craig Fischel, spokesperson for RJ Reynolds Tobacco; and
  
  
• Michael Salomon, president-elect of the California chapter of the American College of Emergency Physicians (Varney, "Day to Day," NPR, 10/24).

• Chen;
  
  
• Fischel;
  
  
• Peter Harbage, senior program associate of the health policy program at the New America Foundation and president of Harbage Consulting; and
  
  
• Salomon (Varney, "The California Report," KQED, 10/24).