At City Hall Monday, referendum backers turned in an estimated 34,000 signatures calling for repeal, well above the 19,000 signatures the measure needed to qualify for the ballot. The city clerk has 30 days to verify signatures. If backers meet the threshold, supervisors will decide whether to repeal the law; schedule a special election; or hold an election in June 2018, the date of the next regularly scheduled vote. The latter course is most likely.

Although backed by the tobacco industry, the repeal effort focuses primarily on issues of tobacco “harm reduction.” That’s the idea that health officials ought to promote policies designed to reduce the harmful effects of tobacco and other addictions, rather than insist on a more idealistic, yet less potentially successful, abstinence-based approach. In other words, it might help people if they switch from dangerous behaviors to less-dangerous ones, even if the less-dangerous ones aren’t totally safe.

There’s no debate about the dangers of traditional cigarette smoking and, perhaps to a lesser extent, other combustible tobacco products such as cigarillos and cigars. But the wide-ranging city ban also defines electronic cigarettes as tobacco. Vaping liquids are not actually a tobacco product, but most contain nicotine. All of these liquids are flavored.

Under the new ordinance, retailers will no longer be allowed to sell vaping liquids, which will make it more difficult for cigarette smokers to switch to them. Public Health England, Great Britain’s main public-health agency, deems vaping to be 95 percent safer than smoking. For that reason, the vaping industry, well represented at a Monday news conference on the City Hall steps, depicted the city’s ban as a threat to the public’s health.

As they explain it, under the new law, cigarettes (although not menthol ones, or fruity cigars) can still be sold legally in the city. But less harmful tobacco-related products such as snus (spitless Swedish-style tobacco that is placed under one’s upper lip) and vaping will be outlawed. Those addicted to nicotine will find it easier to just grab a pack of traditional cigarettes, given that these safer alternatives will be off store shelves.

During the debate, city officials rebuffed such harm-reduction arguments. “We’re focusing on flavored products because they are widely considered to be a starter product for future smokers,” said Supervisor Malia Cohen, who introduced the unanimously passed ordinance. She argued that tobacco companies target poor, young and minority communities with flavored products to hook them on a lifetime of nicotine additions.

Ordinance backers depicted vaping as another tool in Big Tobacco’s arsenal. Yet a news story this week from San Francisco’s public-radio station KQED seemed to confirm at least some of the points the vaping supporters were making. “Electronic cigarettes may be a helpful tool for those who are looking to quit smoking, according to a recent study,” noted the report by Anna Kusmer. “This complicates the public health narrative around this new tobacco product, which have grown in popularity in the U.S. over the past decade.” Complicate, it does indeed.

And a new survey from Chris Russell and Neil McKeganey from the Centre for Substance Use Research in Glasgow, Scotland has rebutted the idea of vaping as a gateway to traditional cigarette smoking. The researchers found that: “More than 75 percent of American adult frequent (electronic vaping product, or EVP) users surveyed were cigarette smokers when they began using e-cigarettes and have now successfully quit smoking.” Yet less than “5 percent of current EVP users were non-smokers before beginning e-cigarette use.”

Referendum supporters also pointed to the economic impact of shutting down such a large portion of the city’s convenience-store industry. For instance, possession and use of menthol cigarettes and vaping products will still be legal in San Francisco, but consumers will have to travel to other localities or order the products online. The city’s Office of Small Business opposed the ban because, in part, of the ease of buying products other places.

CNN also reported on some recent data: The U.S. Centers for Disease Control and Prevention reported that tobacco use among high-school and middle-school students remained unchanged from 2011 to 2016, but that from 2015 to 2016, there were decreases in use of any tobacco product, e-cigarettes and hookahs among high school students. For middle-schoolers, rates of e-cigarette use dropped slightly as well. E-cigarette advocates say that’s evidence vaping is not becoming the teen epidemic that its proponents suggest.

However, California’s Tobacco Education and Research Oversight Committee, which oversees spending from the state’s recently enacted $2 a pack cigarette-tax increase, seems to view vaping as just another form of smoking. That’s a prevalent view among state and local health officials, who focus on vaping’s potential health concerns, rather than on the lower risks it creates in comparison to traditional cigarette smoking. They promote the use of medically approved tobacco-cessation devices instead, despite their low rates of success.

The new law’s backers also point to studies that suggest potentially bad health effects from the use of e-cigarettes. But referendum supporters note the irony that San Francisco, a city that has long pioneered harm-reduction policies when it comes to sexual behavior and drug use (safe sex programs and needle exchanges for heroin users), is instead taking a Prohibition-oriented approach when it comes to tobacco products, especially as the state legalizes the once-prohibited marijuana.

The scientific and public-policy debates aren’t going away. But this much is certain. The coming San Francisco referendum will show whether vaping’s supporters will be able to halt the wave of flavored-tobacco bans. If they don’t succeed, there will be little to stop Bay Area and other California localities from moving forward with similar bans.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

But two months before the election, one of the highest-visibility measures also is fairly narrow in scope. Proposition 56 would raise California’s relatively low tobacco tax (relative to other states) by $2 a cigarette pack – and increase taxes by an equivalent amount on all other tobacco products (cigars, chewing tobacco, etc.). It also would significantly increase taxes on electronic cigarettes and vaping products. It has high visibility right now because of a series of advertisements opponents are running on radio stations across the state.

Supporters pitch the measure as a means primarily to boost public health. “An increase in the tobacco tax is an appropriate way to decrease tobacco use and mitigate the costs of health care treatment and improve existing programs providing for quality health care and access to health care services for families and children. It will save lives and save state and local government money in the future,” according to the initiative’s findings.

Gov. Jerry Brown recently signed into law a package of anti-tobacco bills that, among other things, raise the smoking age to 21. Studies of addiction show that teens who begin smoking are more likely to continue this dangerous habit throughout their lives. Backers of this initiative argue that raising the prices of cigarettes is another main way to dissuade people from smoking. And they point to the costs to the health system imposed by smokers.

But the measure’s opponents are focused increasingly on the spending aspects of the proposal. According to the official ballot argument against the measure, “Prop. 56 allocates just 13 percent of new tobacco tax money to treat smokers or stop kids from starting. If we are going to tax smokers another $1.4 billion per year, more should be dedicated to treating them and keeping kids from starting. Instead, most of the $1.4 billion in new taxes goes to health insurance companies and other wealthy special interests, instead of where it is needed.”

An analysis by the non-partisan Legislative Analyst’s Office confirms that only a small percentage of the estimated $1.4 billion in new revenues are earmarked to such programs. The main priority of the new funds, based on the LAO analysis, is to “replace revenues lost due to lower consumption resulting from the excise tax increase.” That reinforces the odd conundrum faced by California and other states. They use tax and regulatory policies to promote public health by reducing smoking, but then struggle to find funds to pay for ongoing programs as the number of smokers – and therefore the number of tobacco-taxpayers – keeps falling.

The initiative then earmarks some funds to law enforcement, to University of California physician training, to the state auditor and to administration. But 82 percent of the remaining funds go to “increasing the level of payment” for health care related to Medi-Cal, the state’s health-care program for low-income people. Prop. 56 opponents therefore argue it’s designed mainly to benefit health-insurance companies and other interest groups – and includes few limits on how they spend the money they receive.

Furthermore, the initiative bypasses educational-funding requirements under Proposition 98, the 1988 initiative that now requires approximately 43 percent of state general-fund revenues to be directed to the public-school system. As the LAO explained, “Proposition 56 amends the state Constitution to exempt the measure’s revenues and spending from the state’s constitutional spending limit. (This constitutional exemption is similar to ones already in place for prior, voter-approved increases in tobacco taxes.) This measure also exempts revenues from minimum funding requirements for education required under Proposition 98.”

It’s not unusual for a major tax hike measure to ignite controversies over how the new revenues will be spent. But there’s a serious question about whether this initiative will meet its health-improvement goals given the way the tax hammers a common product used by people to quit smoking.

In a research paper co-authored with my R Street Institute colleague Cameron Smith, we note the measure boosts excise taxes on vaping by 320 percent. The key, stated goal of the tobacco tax increase is to dissuade people from buying cigarettes. By the same logic then, the massive boost in taxes on e-cigarettes seems designed to dissuade people from using them.

Yet as Public Health England explained: “The comprehensive review of the evidence finds that almost all of the 2.6 million adults using e-cigarettes in Great Britain are current or ex-smokers, most of whom are using the devices to help them quit smoking or to prevent them going back to cigarettes.” That government health agency urges public-health officials to promote vaping as a way to improve public health. Some U.S. studies come to similar conclusions.

Proposition 56 backers argue that vaping hasn’t been proven safe and the devices haven’t been around long enough to know long-term health effects. They also fear teens will begin vaping and then move on to combustible cigarettes, which everyone agrees are dangerous. And they point to a recent University of Southern California study suggesting teens who vape are six times more likely to begin smoking cigarettes than teens who don’t vape.

In reality, the study seems mainly to reflect “the difference between teens inclined to experiment and teens not so inclined,” according to a public-health expert we quoted. Furthermore, the e-cigarette industry doesn’t claim vaping is safe – they say it is a safer alternative to cigarette smoking. Research suggests they are about 95 percent safer.

California has the second-lowest smoking rate in the nation at around 12 percent. Only Utah has a lower percentage of smokers. So Proposition 56 doesn’t effect a broad swath of the public – but it is a contentious measure given questions about where the tax dollars will go and about its heavy-handed treatment toward vaping. Compared to many of the other initiatives on the ballot, this one might seem simple, but it’s about far more than whether the state government should boost taxes on a pack of cigarettes by two dollars.

Steven Greenhut is Western region director for the R Street Institute. He is based in Sacramento. Write to him at sgreenhut@rstreet.org.

Transparency measure close to qualifying

Good morning! TGIF

Is it worth giving the public more time to consider major pieces of legislation if it also gives special interest groups more time to unravel the deal?

That’s the debate over a transparency measure that appears headed for the November ballot. It would require all bills be made available online in their final form at least 72 hours prior to a floor vote in either chamber of the Legislature.

It would also require all open legislative meetings to be recorded, with the videos posted online within 24 hours. It also allows individuals to record and share their own videos of open meetings.

CalWatchdog has more. 

In other news:

• Even though Trump is the likely GOP nominee for president, California Republicans are still split on the business tycoon. Congressman Darrell Issa of Vista has endorsed Trump, reports The San Diego Union-Tribune. Meanwhile, Assembly Republican Leader Chad Mayes has said not yet, according to the Los Angeles Times. And Capitol Weekly takes a look at how Republican Latinos feel about the candidate largely hated by Latinos. 
• It looks like the state Supreme Court might not block Gov. Jerry Brown’s proposed ballot measure to reduce prison sentences for some nonviolent offenders. The measure is being challenged on procedural grounds. The Sacramento Bee has more.  
• While Democratic leaders pat themselves on the back for raising the smoking and vaping age to 21, there are lots of disappointed and annoyed nicotine addicts who will now be either forced to quite or to get nicotine illegally. The Redding Searchlight has more. 
• Republican leaders in both chambers of the Legislature are seeking an additional $200 million in low-income dental services in Brown’s revised budget, which is set to be released next week. The Sacramento Bee has more.

Assembly:

• Gone ’til Monday. 

Senate:

• Gone ’til Monday. 

Gov. Brown:

• No public events scheduled.

Tips: matt@calwatchdog.com

Follow us: @calwatchdog @mflemingterp

New followers: @myolio @AFPPennsylvania

Triggering the sort of speculation about nationwide change California’s new regulations often inspire, legislators approved bills raising the legal age for smoking and vaping to 21.

“The California state Senate voted Thursday to raise the legal age to buy and use cigarettes and other tobacco products from 18 to 21 years old,” Slate noted. “The anti-smoking legislation had already been passed by the state Assembly and is now just the governor’s signature away from making California only the second state (along with Hawaii) to raise the age individuals can consume tobacco products, including e-cigarettes and smokeless tobacco.”

Domino effect

Analysts swiftly turned attention to the likelihood of other states adopting similar rules. Already, the Associated Press reported, “dozens of cities, including New York and San Francisco, have passed similar laws of their own.” Thomas Carr, the American Lung Association’s director of national policy, told the Huffington Post he suspected “Massachusetts and New York are likely candidates” to follow suit, “since their biggest cities have raised the smoking age to 21 in recent years.” But some observers, according to the Huffington Post, have noted that cigarette use tends to plunge more as a result of higher taxes than age restrictions.

Only one loophole survived California’s new strictures. “American law and custom has long accepted that people can make adult decisions on their 18th birthday and live with the consequences,” opponents insisted, according to the AP, noting that the milestone permits Americans to “register to vote, join the military, sign legally binding contracts, consent to sex and do just about any legal activity besides buying alcohol. In response, Democrats changed the bill to allow members of the military to continue buying cigarettes at 18.”

That concession granted, the legislation advanced. “The higher age limit, part of a package of anti-tobacco bills, won approval despite intense lobbying from tobacco interests and fierce opposition from many Republicans, who said the state should butt out of people’s personal health decisions, even if they are harmful,” the AP noted.

A vape crackdown

TBEC Review / flickr

Perhaps the most significant change ushered in by the six interrelated laws making up the suite of anti-smoking legislation — assuming they receive Gov. Jerry Brown’s signature — affects electronic cigarettes, “classifying them as tobacco products. ‘Vaping’ devices are not regulated by the Food and Drug Administration, and critics have described them as a gateway to more harmful, combustible tobacco,” the Orange County Register noted.

“The bill passed by the Legislature classifying e-cigarettes as tobacco products would subject them to the same restrictions on who can purchase them and where they can be used, meaning they would be banned from bars, workplace break rooms and hotel lobbies.”

“Among Orange County teens, the 2014 California Healthy Kids Survey found that 9 percent of 11th-graders polled had smoked cigarettes, while 20 percent reported vaping e-cigarettes,” the paper added. Vapes have been big business in California, driven by shifting preferences among consumers largely convinced that e-cigarettes offer a less hazardous product with a comparably enjoyable experience to traditional tobacco smoking.

Foregone conclusion

Although the governor’s office declined to comment on the likelihood of the bills being signed into law, overwhelming support among Sacramento Democrats has cemented the view that Brown won’t stand in their way. “An expanded ban on smoking in workplaces and permission for counties to begin introducing local taxes on tobacco sales were among the other proposals passed Thursday, almost entirely with support from Democratic lawmakers,” the Sacramento Bee reported. “The only proposal to attract notable opposition from Democrats was the expanded ban on smoking in workplaces, which will remove exemptions for hotel lobbies, warehouse facilities, gaming clubs, bars and businesses with five or fewer employees.”

Photo credit: 401kcalculator.org

There has been some movement on the tax initiative front.

In August, I offered the following list of the top five measures most likely to make the ballot: 1) Prop. 30 Extension, 2) Cigarette Tax, 3) Split Roll Property Tax, 4) Service Tax, 5) Oil Severance Tax.

Circumstances have changed.

One move that few saw coming is that not one – but two – Proposition 30 extension measures have been filed. The teachers union has offered up an extension of Prop. 30 that was originally passed in 2012 based on the argument that money was needed for schools. The unions want to argue that this income tax on the wealthy, originally labeled temporary, would remain so for 12 additional years. The provision on the sales tax increase in Prop. 30 would be dropped.

Then came a second Proposition 30 extension proposal offered by, among others, the California Hospitals Association and related health care unions. I’m not sure if use of the term “extension” applies to this proposal since the idea it not to extend the temporary status but to make the tax on upper-income taxpayers permanent. Again the sales tax piece is dropped but additional income tax rates have been added.

Another major development occurred when the coalition of left-leaning advocacy groups that had been pumping for the split-roll property tax to hit commercial property announced in an email to supporters that they would not pursue a ballot measure for 2016. While it is still possible that others could file a split-roll initiative, the wind is out of the sails on this proposal.

However, a different kind of property tax increase proposal has been filed and could advance. This one would tax all property, commercial and residential, valued at over $3-million, and dedicate money for the purpose of relieving those in poverty. This measure is moving forward.

Finally, there was the announcement by NextGen founder and billionaire, Tom Steyer, that he would spend to support a cigarette tax. Steyer was the leading advocate for an oil severance tax. Certainly, he has the wherewithal to fund a tax on oil while contributing to a cigarette tax effort, but his announcement seems to pump up the cigarette tax while lessen the likelihood that we’ll see an oil severance tax measure in 2016 — especially if something comes out of the Special Session dealing with transportation that adds a new revenue source to fix roads and highways.

So, looking into the cracked and sometimes foggy crystal ball, here’s what I see in late October, about one year prior to the election, as the 5 most likely tax measures to appear on the 2016 ballot.

CIGARETTE TAX: Proponents have the means and the determination and now have a billionaire’s money.

PROP. 30 EXTENSION: You could really make this idea a co-number one with the Cigarette Tax. However, because of the two proposals, the exact tax measure probably has not been decided yet. Undoubtedly, the proponents of the two measures are trying to find common ground to back a single proposal. Whatever happens, however, most assuredly there will be some form of a Prop. 30 extension on the ballot.

PROPERTY TAX: Not the split-roll, but the poverty proposal. It is unclear how much support there is for this measure but proponents have established a committee and are starting to gather signatures.

MARIJUANA TAX: Does this even deserve to be on the list? I had not considered it before since the chief goal of a successful marijuana initiative is to legalize marijuana rather than create a new revenue stream. However, there will be a tax component to a marijuana proposal and the tax will be part of the debate over the measure.

ROAD FIX TAX: Unlikely that a road fix tax proposal would come via the initiative process although a powerful coalition of business and labor supports such a thing. Out of frustration they could move a proposal forward. There is also a chance a compromise transportation/infrastructure bill could come out of the Special Session which includes taxes. Neither the governor nor supporters of a road fix tax want to see it on the ballot, but that could be part of a final deal.

Finally, since I mentioned it last time but do not include it in the top five, Senator Bob Hertzberg has a plan to tie the tax system more closely to the current state economy by taxing services. Hertzberg also has a strategy that if many different taxes are headed for the ballot, that could present an opening for him. He could argue that his answer to California’s tax system flaws is a better overall fix than the myriad of other proposals. Remember, he also has potential financial support from another billionaire, Nicolas Berggreun’s Think Long Committee.

Last week, the Los Angeles Times reported that the First 5 committee, which received funding from a previous cigarette tax increase, was concerned that fewer smokers would mean less revenue. The First 5 group, which focuses on improving early years of children’s lives, is attempting to rally the Legislature to add revenue from any new cigarette tax to include First 5 in those groups that receive new revenue.

But the cycle will certainly continue for First 5 and any agency that receives cigarette money. A tax increase will likely once again reduce the number of smokers and cigarette purchases and at some point reduce the revenue agencies expect to receive.

The cigarette tax revenue for First 5 has dropped about 17 percent, to $460 million, over a five-year span.

According to the article, First 5 is looking at an alternative for additional revenue by examining the promotion of a marijuana initiative and the tax revenue such an action would bring in to help fund their organization.

Others groups undoubtedly will also have their eyes on marijuana tax money despite the recent report from Lt. Gov. Gavin Newsom’s committee studying marijuana legalization that declared tax revenue should be low priority in considering legalizing marijuana.

By the numbers

According to the bill’s supporters, the ban would be instrumental in dramatically reducing not only teen smoking but smoking in general. “Sen. Ed Hernandez, D-West Covina, said he introduced the bill, SB151, out of concern that an estimated 90 percent of tobacco users start before age 21,” the Los Angeles Times reported.

That statistic emerged from a recent Institute of Medicine study making the rounds in policy circles. Researchers suggested that “teen smoking could be curbed by 12 percent if the age limit was raised to 21,” as LAist noted, “making it harder for minors to find somebody to buy cigarettes for them.” In real numbers, the study concluded, the age-21 limit would ensure “more than 200,000 fewer premature deaths nationally for those born between 2000 and 2019.”

Although critics have pointed out that people older than 18 are adults eligible to be drafted and bound to signed contracts, the Times observed, momentum has gathered to raise the legal smoking age for reasons unrelated to consistency in the treatment of individual rights and responsibilities.

Tobacco-related illness has long represented a significant chunk of aggregate health care costs. For policymakers, that problem grows more serious the more those costs are shifted onto government and taxpayers. “Tobacco-related disease killed 34,000 Californians in 2009 and cost the state $18.1 billion in medical expenses, according to studies by UC San Francisco,” according to the Times.

A developing trend

Some evidence of the policy’s likely impact has accumulated in states where the smoking age was previously hiked. “Although most states set the minimum age at 18, Alabama, Alaska, New Jersey and Utah set it at 19, and some localities have set it at 21,” according to The Washington Post. “Higher age limits seem to correspond with lower smoke rates in these states; Utah and New Jersey also have among the lowest smoking rates in the country, No. 1 and No. 5, per Gallup, while Alaska has the most improved, and Alabama is somewhat of an outlier in the South, as it’s not among the states with the highest smoking rates, like its neighbors Mississippi and Louisiana.”

California could be the first state to deny tobacco to under-21s. But other western states could swiftly follow suit. According to KPPC, “Legislatures in Oregon and Washington are considering similar bills and lawmakers in Hawaii have passed a bill and sent it to the governor.” Among the localities setting the legal age at 21, Hawaii County has been joined by New York City.

Next, vaping

Traditional tobacco products were not the only ones on the state Senate’s chopping block. SB140, introduced by state Sen. Mark Leno, D-San Francisco, also passed handily, on a 24-12 vote.

As the San Francisco Chronicle reported, that bill “would include e-cigarettes in the definition of tobacco products in order to prohibit the devices from being used at workplaces, schools and public places, just as tobacco products are under the state’s Smoke Free Act. SB140 would also make it a misdemeanor to provide e-cigarettes to minors.”

The tandem advance of the state Senate’s anti-smoking and anti-vaping bills raised the prospect that the two approaches would converge in the near future, raising the vaping age to 21. “California bans the sale of e-cigarettes to anyone under 18,” the Chronicle observed, “but Leno said young teens still have access to them and they are becoming increasingly popular among middle and high school students.” If Hernandez’s bill were to pass before Leno’s, vaping would automatically be restricted in the same manner as traditional cigarette smoking.

A new wave of anti-smoking legislation is wafting through the halls of the state Capitol. And it’s been more than four years since former Gov. Arnold Schwarzenegger folded his cigar “smoking tent” on the Capitol grounds.

First out of the pack is a bill that would boost the smoking age statewide to 21 years from the current 18. Tapping into longstanding fears concerning children and public health, legislators have teed up a stronger political conflict around health care costs and personal responsibility.

State Sen. Ed Hernandez, D-West Covina, is the author of Senate Bill 151, an expansion of the so-called Stop Tobacco Access to Kids Enforcement Act, or STAKE.

Existing law prohibits the furnishing of tobacco products to, and the purchase of tobacco products by, a person under 18 years of age. According to the new bill’s language:

“A person is prohibited from making various promotional or advertising offers of smokeless tobacco products without taking actions to ensure that the product is not available to persons under 18 years of age. Existing law also requires the State Department of Public Health to conduct random, onsite sting inspections of tobacco product retailers with the assistance of persons under 18 years of age.”

SB151 revises those provisions such that Californians under 21 years of age are covered. And it authorizes random compliance inspections of retailers by the State Department of Public Health.

In a statement, Hernandez cast his bill as essential to preventing children from becoming addicted to cigarettes. “We can no longer afford to sit on the sidelines while big tobacco markets to our kids and gets another generation of young people hooked on a product that will ultimately kill them,” he said.

Defining children upward

But the Sacramento Bee reported something about SB151 on Hernandez’ own website. The site quotes the California branch of the American Lung Association saying 90 percent of smokers begin before they turn 19.

Critics of raising the smoking age also point out that people age 18 can vote, join the military and get a driver’s license without parental permission. And although the drinking age in California is 21, that’s because drunkenness can cause immediate harm to others, especially through car accidents.

Although the numbers does not make a strong case for Hernandez’s level of concern, the numbers likely don’t matter to his legislation’s fortunes. According to the Los Angeles Times, SB151 already counts the support of the American Cancer Society, the California Medical Association and, importantly, the American Lung Association.

The Times reports, “Smoking contributes to the deaths of more than 40,000 Californians each year, according to Kimberly Amazeen, vice president for the American Lung Association in California. She said 21,300 California kids start smoking each year.”

Targeting e-cigarettes

As the Washington Times notes, legislation similar to SB151 has failed elsewhere across the country, including in Colorado, Maryland, New Jersey and Utah. California, however, boasts a stronger anti-smoking constituency and a more effective anti-smoking lobby than those states.

In yet another demonstration of many Californians’ preference for prohibition, state Sen. Mark Leno, D-San Francisco, has introduced an anti-smoking bill of his own. SB140 would restrict “vaping” e-cigarettes to the same extent that smoking traditional cigarettes is restricted.

As the Bee reports, Leno’s rhetoric focuses on the addictive qualities of smoking in the same manner as Hernandez’s. Leno said in a statement:

“No tobacco product should be exempt from California’s smoke-free laws simply because it’s sold in a modern or trendy disguise. Addiction is what’s really being sold. Like traditional cigarettes, e-cigarettes deliver nicotine in a cloud of other toxic chemicals, and their use should be restricted equally under state law in order to protect public health.”

Although e-cigarettes are demonstrably safer than traditional cigarettes to smokers and bystanders, the science is secondary to the cultural politics that surround vaping.

As the San Francisco Chronicle observes, “California bans the sale of e-cigarettes to minors, but other efforts to legislate them have failed. State Sen. Ellen Corbett, D-San Leandro, originally proposed stronger restrictions in 2013, but the language in her proposed bill was watered down to ban e-cigarette sales in vending machines and was defeated in an Assembly committee last year.”

E-cigarettes are widely seen as both a popular substitute for traditional cigarettes and as a more tempting option for people who would not consider taking up traditional smoking. That tension helps account for the push for increased regulation and for the failure of recent legislation to meet its mark.

With de Leon slated to become the next Senate president pro-tem later this year, SB768 enjoys increased clout behind it.

According to the bill, the money would go into “the Cigarette and Tobacco Products Surtax Fund, the Breast Cancer Fund, the California Children and Families Trust Fund, and the General Fund, to offset the revenue decrease directly resulting from imposition of additional taxes by this article.”

California’s current tobacco tax is is 87 cents a pack. So $2 on top of that would be a 230 percent increase. The bill’s language diverts some of the revenues to the “General Fund” because a new cigarette tax would reduce cigarette purchases due to people quitting and increased black-market smuggling. The reduced sales thus would cut the sales taxes that also are collected on cigarettes.

Even though Democrats have supermajorities in both houses of the Legislature, it might not be easy to get two-thirds voting margins in an election year. Moderate Democrats with lots of Republican voters might shy away from being labeled “tax increaser.”

Initiative

As a result, as a backup option, tobacco-tax advocates are firing up the California Tobacco Tax for Healthcare Initiative. It has been approved for circulation in California as a contender for the November 4, 2014 ballot. The initiative’s name is “The California Healthcare, Research and Prevention Tobacco Tax Act of 2014.”

The initiative also would raise taxes by $2 a pack, although the money would be disbursed differently from SB768. According to the Legislative Analyst, the money would go to anti-tobacco campaigns, cancer research and to abate budgets that lose money because of reduced cigarette sales.

In an estimate that also would apply to SB768, the Legislative Analyst estimates that a $2 a pack tax increase would increase revenues from $1.1 billion to $1.5 billion a year. However, after backfills, only $830 million to $1.4 billion would go to the specified projects.

Prop. 29

The new proposals are advancing less than two years after Proposition 29 was rejected by voters in June 2012. It would have increased taxes $1 a pack to fund cancer research, anti-smoking programs and law enforcement.

If the new tax increase goes on the November ballot, it also would have a tough time passing because it would be twice the amount proposed by Prop. 29. However, Prop. 29 barely lost, 50.3 percent to 49.7 percent, giving hope to tax increase proponents.

And SB768  is backed by the same coalition which supported Prop. 29: the American Heart Association, the American Lung Association, the American Cancer Society, the Service Employees International Union and Health Access California. All would benefit from the proceeds of the higher tax.

Black market 

The Tax Foundation published a study in Jan. 2012 which found nearly 60 percent of the cigarettes sold in New York state are smuggled from other states, or come from Indian reservations with lower tobacco taxes. The study found that tobacco smuggling and the tax rate have risen in tandem since 2006, a strong indication that tax increases and smuggling go hand-in-hand.

The New York State tax on cigarettes has risen 190 percent since 2006, while the rate of smuggling increased 170 percent. New York’s current rate is $4.35 a pack, a fair amount above the $2.87 tax California would impose should a $2 new tax be enacted by either the Legislature or the voters. But it’s clear, as the Leg Analyst also noted, that smuggling would increase.

The National Taxpayers Union Foundation released an excellent study in August detailing the recent history of tobacco taxes in the states. It found:

* States with low cigarette taxes have lower overall tax burdens;

* Tobacco tax hikes are rarely used to cut other taxes;

* Tobacco taxes don’t forestall other tax increases;

* Tobacco tax hikes may encourage other tax hikes down the road;

* Cigarette taxes don’t spur economic growth.

Other new taxes

Californians already pay the highest gas, sales and income taxes in the nation. Yet California lawmakers, on top of the potential new tobacco tax, also are introducing proposals that create new taxes and fees, including:

* SB241 by Sen. Noreen Evans, D-Santa Rosa, would impose a 9.9 percent oil severance tax;

* SB622 by Sen. Bill Monning, D-Carmel, would create a one cent per ounce tax on soft drinks and sweetened beverages;

* SB700 by Sen. Lois Wolk, D-Davis, would create a five cent tax on single-use paper or plastic bags.

By John Seiler

The backers of the Proposition 29 cigarette tax increase finally snubbed out the butt of their vigil over the June 5 vote. It lost by just 28,000 votes.

Proponents blamed the $47 million spent by the Big Tobacco companies to defeat the measure. Lance Armstrong, the bicycle champion still fighting doping allegations from his racing days, said, “Big Tobacco lied to voters to protect its profits and spent $50 million to ensure it can continue peddling its deadly products to California kids.”

Actually, what really defeated the measure was the state’s political Establishment, led by the Los Angeles Times and the California Budget Project. The Establishment realized that jacking up cig taxes $1 a pack to raise $735 million a year and give it to an new unaccountable cancer research bureaucracy only would worsen the state’s fiscal mess.

The Establishment understands that California is paddling toward Greek fiscal territory and any extra tax money that can be scrounged up has to go to solving the budget mess. Indeed, on June 8, the Times even ran an extra editorial, “The wrong cigarette tax,” reiterating its opposition to Prop. 29 but calling for a new cigarette tax dedicated just to the budget:

“We urged voters to cast ballots against Proposition 29 because at a time when the state cannot afford to fulfill its most basic responsibilities, the initiative would have put most of the new revenue — more than $500 million a year — toward an entirely new agency and a new state function: the funding of disease research that already is relatively well funded by the federal government….

“But our objections to the specifics of Proposition 29 do not mean that we don’t support a new cigarette tax. We do….

“As Proposition 29 would do, part of the money should go toward smoking prevention programs, as well as for smoking cessation treatments. The rest could productively be spent on treatment for smoking-related diseases, so the people who pay the tax receive the direct benefit and the state budget gets some relief.” 

The value of Establishment support or opposition, especially a Times editorial, is worth an unknowable exact amount, but probably many tens of millions of dollars. So expect a new initiative, as the Times suggested, on the November 2014 ballot along the lines indicated. It might raise taxes $1 a pack to fund lung cancer and other smoking-related treatments, relieving the general fund of spending on such treatments through Medi-Cal.

California Budget Project

Another major Lucky Strike against Prop. 29 was a study by the influential liberal think tank, the California Budget Project. Its longtime executive director, Jean Ross, recently became the head of the Ford Foundation, a pillar of the Eastern Establishment. Usually the CBP looks favorably on tax increases. But a May Budget Brief found, in particular, that Prop. 29 would slam poor people:

“Increasing the cigarette tax would have a disproportionate impact on low-income Californians because they spend a larger share of their incomes on tobacco products. National data show that in 2009, individuals with incomes in the bottom fifth of the distribution spent an average of 0.9 percent of their incomes on cigarette taxes, compared to an average of less than 0.1 percent for those in the top 1 percent. In part, this disparity stems from the fact that the cost of a single pack of cigarettes makes up a larger share of the incomes of low-income individuals.

“It also reflects the fact that low-income individuals are more likely than others to smoke. In 2008, for example, nearly 20 percent of California adults with household incomes of $20,000 or less were smokers, compared to fewer than 10 percent of those with household incomes of more than $100,000 (Figure 4).”

The implication is clear: Poor people will have less money because of the cigarette tax. They then will have to depend more on state services. Which will put even more pressure on the general-fund budget. The state’s deficit will get even worse.

The Budget Project looked at the big budget picture:

“Programs funded by Proposition 29 would be “locked in,’’ limiting the ability of the Legislature to modify spending in response to economic, budget, and demographic changes or other health-related research needs that may emerge in the future. In addition, these revenues would not be available to support other programs or to help close future budget gaps. 

“Finally, to the extent that voters approve new revenues for a specific purpose through an initiative, such as Proposition 29, lawmakers or voters may feel less inclined to subsequently approve additional revenues regardless of the purpose.”

That’s a key concept. The Establishment’s push now is for Gov. Jerry Brown’s $8.5 billion tax increase on the November ballot. Had Prop. 29 passed, voters might consider that they already had performed their socialist duty for 2012 in June, and didn’t need to do so again in November.

Black market

There’s also strong evidence that a hefty tax increase, such as Prop. 29’s $1 a pack, would make much worse already worrisome black market activity. When New York was boosting smoke taxes a couple of years back, the Huffington Post reported:

“NEW YORK — The big cigarette tax increases that many states are instituting to balance their out-of-whack budgets are raising fears that the trend will make black-market smokes more profitable and lead to more cigarette smuggling.

“Cigarette smuggling has been going on for generations and already costs states untold billions in lost tax revenue.

“Criminal gangs stock up in low-tax states like Virginia and Missouri, truck the cigarettes north and illegally resell them in high-tax states like Michigan and New Jersey. Other buy cartons and cartons of tax-free smokes on Indian reservations and sell them elsewhere. Buyers order untaxed cartons of murky origin on the Internet. And ships arrive from China carrying cargo containers filled with counterfeit cigarettes.

“Law enforcement officials and others worry that the widening price spread between taxed and untaxed cigarettes will only make the situation worse.”

California is too far from Virginia and other states in the Tobacco Belt to worry much about smuggling from there. But there are many local Indian reservations with low-tax cigs. And our Los Angeles, Long Beach, San Diego and San Francisco ports are among the largest in the world, daily unloading billions of dollars of goods.

Those born in America generally don’t have much of a taste for foreign cig brands. But they might acquire such a taste if the price of U.S.-made smokes is high. And California, of course, has a large immigrant population, whose smokers picked up the habit puffing brands from other lands.

For now, at least, a new cigarette tax has been defeated. But the demise of Prop. 29 clears the ash tray for the big push for Brown’s tax increase in November.